Arrow Exploration Corp, a high-growth operator with a strong portfolio of assets in key Colombian hydrocarbon basins, has made a strategic move into the Canadian market. The company has acquired a 100% working interest in an oil-producing property located in Thorsby, Central Alberta. This acquisition is set to enhance Arrow’s production capabilities and financial health, providing a robust foundation for future growth.
The Thorsby property is a highly cash-generative asset, having generated approximately $2.0 million CAD in operating income over the last 12 months. The acquisition price was $12.15 million CAD (approximately $8.9 million USD), funded directly from Arrow’s cash reserves. This strategic investment underscores Arrow’s commitment to expanding its operational footprint while maintaining a strong financial position.
The Thorsby Property: A Strategic Asset
The Thorsby property currently produces 550 boepd (barrels of oil equivalent per day) and boasts low decline rates of 15%. A third-party reserve report, effective as of 31 estimates the property’s total proved reserves (1P) at 4.973 million boe and total proved plus probable reserves (2P) at 7.537 million boe. The pre-tax NPV 10 for these reserves is $38 million CAD ($27 million USD) for 1P and $71 million CAD ($51 million USD) for 2P.
The property spans 9,501 net acres of 100% working interest land, located approximately 200 km north of Calgary. The acquisition includes all associated infrastructure, positioning Arrow for immediate operational efficiency. The Alberta Energy Regulator has identified 55 million stock tank barrels of original oil in place, with a 3% recovery to date. Arrow believes there is significant potential for secondary recovery to boost the recovery factor further.
Development Plans for the Sparky Reservoir
Arrow’s management has identified 22 low-cost, quick payout drilling locations on the property, focusing on the lower Cretaceous Sparky reservoir. This reservoir, with a net pay average of 15 meters at a 9% cutoff, offers substantial development opportunities. The company plans to drill 2-mile lateral horizontal wells each costing approximately $2.2 million CAD. Each well pad is designed to contain three wells, optimizing operational efficiency.
The Sparky wells are known for their high initial production rates of 300 BOPD (barrels of oil per day) and low decline rates, ensuring quick payback periods. Historically, the Sparky reservoir has responded positively to secondary recovery methods such as water flood, further enhancing its production potential. This strategic focus on the Sparky Formation aligns with Arrow’s expertise and experience in similar geological settings.
Enhancing Arrow’s Portfolio and Financial Health
Marshall Abbott, CEO of Arrow, highlighted the strategic significance of the Thorsby acquisition. ‘The Thorsby acquisition represents a low-risk, exceptional return inventory suite of development drilling opportunities,’ Abbott stated. ‘The development focus is on the Cretaceous Sparky Formation, a proven reservoir where management has years of geologic fluency. It gives the Company a significant increase in reserves, a low-risk development program with 22 initial drilling locations, while the Company remains debt-free and financially healthy.’
The Thorsby property complements Arrow’s existing operations in Colombia, where the company has a strong presence in the Llanos, Middle Magdalena Valley (MMV), and Putumayo Basin. The geologically similar play types and trapping mechanisms in Thorsby align well with Arrow’s Colombian assets, providing additional drilling inventory and enhancing This acquisition is expected to generate significant cash flow and internal rates of return (IRRs) exceeding 500% on a well-by-well basis.
Arrow’s seasoned team, led by a hands-on executive team supported by an experienced board, is well-positioned to capitalize on this strategic acquisition. The company is listed on the AIM market of the London Stock Exchange and on TSX Venture Exchange under the symbol ‘AXL’. This acquisition underscores Arrow’s commitment to pursuing high-return opportunities in both Canadian and Colombian jurisdictions.
The technical information contained in this announcement has been reviewed and approved by Grant Carnie, senior non-executive director of Arrow Exploration Corp. Mr. Carnie, a former member of the Canadian Society of Petroleum Geologists, holds a B.Sc. in Geology from the University of Alberta and has over 35 years’ experience in the oil and gas industry. The technical information has been prepared in accordance with the standards contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (COGEH) and the reserves definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101).
