Arrow Exploration Corp. (AIM: AXL) has reported encouraging results from the Icaco-2 (IC-2) exploration well on the Tapir Block in Colombia, with the successful well now on production and management suggesting the Icaco discovery could become a material contributor to the company’s future growth.
The IC-2 well was drilled on schedule and below budget, reaching total depth in just eight days after spudding on 18 May. Log analysis identified multiple hydrocarbon-bearing intervals across three productive formations, delivering a combined 100 feet of net pay.
The largest interval was encountered in the Ubaque Formation, which contained 74.5 feet of net pay, alongside 19.5 feet in the Carbonera C7 formation and 6 feet in the Gacheta formation.
The well has already been placed on production from the Ubaque reservoir and is currently producing approximately 830 barrels of oil per day gross, equivalent to 415 barrels per day net to Arrow’s 50% working interest. Production is currently restricted while reservoir performance is evaluated.
Importantly, the oil is of relatively high quality at 13.4° API and is being produced with only a 1% water cut, indicating a clean oil-bearing system.
The success of IC-2 has strengthened management’s confidence in the broader Icaco development opportunity. Chief Executive Marshall Abbott described the discovery as potentially material to the company and highlighted the presence of four hydrocarbon-bearing zones identified through drilling to date.
Arrow has already moved quickly to follow up the discovery. The IC-4HZ horizontal well targeting the Ubaque Formation was spudded on 13 June, while a further vertical appraisal and development well, IC-3, is scheduled to follow. The company is also constructing five additional drilling cellars, demonstrating confidence in the future development potential of the field.
Including production from IC-2, Arrow’s total gross corporate output has increased to approximately 5,000 barrels of oil equivalent per day.
Financially, the company remains in a strong position. Arrow reported an estimated cash balance of US$26.7 million as of 2 June and continues to operate without debt. Management also highlighted that average realised oil prices during May reached approximately US$97.48 per barrel, benefiting from elevated Brent crude prices during the period.
Beyond operational progress, the company remains optimistic regarding the extension of the Tapir Block licence. Management reported constructive discussions with Colombian authorities and believes all requirements for an extension have been satisfied.
For investors, the significance of the update lies in the combination of a successful new discovery, rapidly expanding development activity, strong oil prices and a debt-free balance sheet. If future horizontal wells perform as expected, management believes payback periods could be measured in months, potentially creating substantial value from the emerging Icaco field while further strengthening Arrow’s financial position.
