Arrow Exploration Corp. (LSE:AXL) has expanded its operations beyond its core Colombian portfolio through the acquisition of a producing oil property in Thorsby, Central Alberta, Canada, adding immediate production, reserves and cash flow to the business.
The company has acquired a 100% working interest in the asset for C$12.15 million, funded entirely from existing cash resources. The property currently produces approximately 550 barrels of oil equivalent per day and is characterised by a relatively low production decline rate.
The acquisition adds 4.973 million boe of proved reserves and 7.537 million boe of proved plus probable reserves. Arrow will also gain 9,501 net acres containing a number of identified future drilling opportunities.
Despite funding the transaction with cash, Arrow expects to remain debt-free, preserving balance-sheet flexibility while increasing its production base and development inventory.
Thorsby asset brings established cash generation
The acquired property generated approximately C$2.0 million of operating income during the past 12 months, providing Arrow with an additional source of cash flow from the outset.
The asset has a pre-tax NPV10 of approximately C$38 million for proved reserves and C$71 million for proved plus probable reserves. As part of the transaction, Arrow will assume approximately C$8.7 million of associated decommissioning liabilities.
The combination of existing production, substantial reserves and identified development opportunities gives the company scope to increase the value of the asset through further drilling.
Arrow targets Sparky reservoir development
Management intends to pursue a development programme focused on the Lower Cretaceous Sparky reservoir, using two-mile horizontal wells to access additional oil resources.
Arrow has initially identified 22 drilling locations across the acreage. The company expects these wells to offer attractive economics, including strong initial production rates and relatively rapid investment payback periods.
The Canadian development inventory is expected to complement Arrow’s existing Colombian operations, giving the group greater geographic diversification while adding another portfolio of potentially high-return drilling opportunities.
More about Arrow Exploration Corp.
Arrow Exploration Corp. is a publicly traded oil and gas exploration and production company focused primarily on underexploited hydrocarbon assets in Colombia.
Its Colombian operations are concentrated across the Llanos, Middle Magdalena Valley and Putumayo basins. The portfolio benefits from Brent-linked light oil pricing, relatively low royalty rates and a high proportion of operated assets with substantial working interests.
Arrow is listed on AIM and the TSX Venture Exchange under the symbol AXL. The addition of the Thorsby property introduces a producing Canadian asset to its portfolio while maintaining the company’s broader strategy of pursuing production growth, cash generation and high-return development opportunities.
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