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Arrow Exploration Corp. has acquired a producing oil property in Thorsby, Central Alberta, giving it a 100% working interest in an asset producing around 550 barrels of oil equivalent per day. The acquisition, valued at CAD 12.15 million, or approximately USD 8.9 million, has been funded from the company’s cash reserves. The property generated about CAD 2 million in operating income over the past 12 months and has 4.973 million boe of proved reserves and 7.537 million boe of proved plus probable reserves.
Arrow Exploration Corp. has acquired a producing oil property in the Thorsby area of Central Alberta, Canada, in a deal that gives the company a 100% working interest in the asset. The property is currently producing approximately 550 barrels of oil equivalent per day and was acquired for CAD 12.15 million, equivalent to about USD 8.9 million. The purchase has been funded entirely from Arrow’s existing cash reserves.
The property has generated approximately CAD 2 million in operating income over the past 12 months. The transaction also adds a sizeable reserve base to Arrow’s portfolio, with a third-party reserve report estimating 4.973 million barrels of oil equivalent of proved reserves and 7.537 million boe of proved plus probable reserves.
The reserve report places the pre-tax NPV10 of the 1P reserves at CAD 38 million, or around USD 27 million, while the 2P reserves have a pre-tax NPV10 of CAD 71 million, or approximately USD 51 million. Arrow will also assume decommissioning liabilities of CAD 8.7 million, equivalent to about USD 6.3 million.
The Thorsby property covers 9,501 net acres, all held with a 100% working interest. It is located around 200 kilometres north of Calgary, and the transaction includes the associated infrastructure and land. The asset has a current production decline rate of about 15%, while around 27% of current production consists of oil and liquids. Oil and liquids account for approximately 55% of the 1P and 2P reserve volumes.
Arrow plans to develop the lower Cretaceous Sparky reservoir, where management has identified 22 potential drilling locations. The company plans to drill two-mile horizontal wells, with each well expected to cost approximately CAD 2.2 million. Each well pad is planned to accommodate three wells.
The Sparky reservoir reaches a thickness of up to 25 metres in some areas, with an average net pay of 15 metres at a 9% cut-off. According to the company, Sparky wells have historically delivered initial production rates of around 300 barrels of oil per day and have relatively low decline rates. The reservoir has also responded positively to secondary recovery methods such as water flooding.
The property has further recovery potential. The Alberta Energy Regulator estimates original oil in place at around 55 million stock tank barrels, with only about 3% recovered to date. Arrow believes the remaining oil in place provides scope for secondary recovery measures that could help reduce production declines and improve the overall recovery factor.
The acquisition also marks an expansion of Arrow’s operating footprint beyond its established Colombian assets. The company currently operates oil assets across Colombia’s Llanos, Middle Magdalena Valley and Putumayo basins. Management said the geological characteristics of the Thorsby property are comparable in some respects to its Colombian operations, particularly in terms of the structure and trapping mechanisms of the reservoirs.
Arrow said the new asset would add production, reserves and additional drilling inventory while the company remains debt-free. Management also indicated that the company intends to continue pursuing development opportunities in both Canada and Colombia.
Source Reuters
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