LONDON (ShareCast) - (Sharecast News) - Exploration and production firm Arrow Exploration said on Friday that it has acquired a producing oil and gas property in the Thorsby area of central Alberta for CAD $12.15m (£6.66m), funded entirely from existing cash reserves.


Arrow said the deal gives it a 100% working interest in an asset producing around 550 barrels of oil per day with low decline rates of about 15%. It said the field generated roughly CAD $2.0m (£1.06m) of operating income over the past year, and comes with 4.97m boe of proved reserves and 7.54m boe of proved‑plus‑probable reserves.

The AIM-listed firm stated a third‑party report valued those reserves at CAD $38m (£20.24m) and CAD $71m (£37.82m) on a pre‑tax NPV10 basis. Arrow will assume CAD $8.7m (£4.63m) in decommissioning liabilities.

Arrow said the acreage covers 9,501 net acres, with all land and infrastructure included in the transaction. The Alberta Energy Regulator estimates 55m barrels of original oil in place, with only 3% recovered to date.

Management plans to launch a development programme targeting the lower Cretaceous Sparky reservoir, which reaches up to 25 metres thick and averages 15 metres of net pay. Arrow has identified 22 low‑cost, quick‑payout drilling locations across the property.

Chief executive Marshall Abbott said: "The Thorsby acquisition represents a low-risk, exceptional return inventory suite of development drilling opportunities. The development focus is on the Cretaceous Sparky Formation as 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.

"Management believes that the Thorsby acquisition complements the Colombian operations very well. Geologically the play type and trapping mechanisms are very similar. That is three-way structure juxtaposed against a sealing barrier. This also represents very similar reserve capture and adds significant cash flow and IRRs that exceed 500% on a well-by-well basis. Thorsby also represents additional drilling inventory that is complementary to Colombian inventory. This provides significant optionality in pursuing highest value add prospects."

As of 1100 BST, Arrow Exploration shares were down 1.09% at 27.30p.



Reporting by Iain Gilbert at Sharecast.com

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