good update incr reserves and navArcan Announces a 67% Increase in Reserves Volumes and a 65% Increase in Reserves Value
07 Nov 2011 09:00 ET
Marketwire Canada - NFD
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan" or the "Corporation") announces the results of an independent reserves evaluation prepared by GLJ Petroleum Consultants ("GLJ"), Arcan's independent qualified reserves evaluator, for 100% of Arcan's oil and gas properties (the "GLJ Update Report"). The GLJ Update Report, effective September 30, 2011, was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the COGE Handbook and is dated November 4, 2011.
In accordance with the updated information provided by the GLJ Update Report, Arcan is pleased to report a current estimated net asset value ("NAV") of $7.17 per share as at October 7, 2011 (after including the shares and debentures issued and the related proceeds from the October 7, 2011 financing), up from $5.56 per share at December 31, 2010 based on reserves of 35.2 million barrels of oil equivalent ("MMBOE") and a $773 million net present value at September 30, 2011 (total proved plus probable ("P+P") 10% discounted).
Highlights:
-- Estimated NAV of $7.17 per share up from $5.56 per share at December 31,
2010. Pursuant to the GLJ Update Report, reserves were recorded on
approximately 57 sections of land in the Swan Hills area - leaving Arcan
with approximately 114 sections of land with no reserves yet recorded on
them.
-- $773 million net present value of future net revenue of working interest
total P+P reserves before tax at 10% discount rate up 65% from $468
million posted as at December 31, 2010.
-- 35.2 MMBOE total P+P reserves, as at September 30, 2011, representing
67% growth in 2011 versus 21.1 MMBOE total P+P reserves as at December
31, 2010.
-- 19.7 MMBOE total proved reserves, as at September 30, 2011, representing
42% growth in 2011 versus 13.8 MMBOE total proved reserves as at
December 31, 2010.
-- The GLJ Update Report included 66.3 net proved producing wells in the
Swan Hills area with a total of 151.4 net total P+P well locations
booked at September 30, 2011. Future capital has increased by $211
million to $411 million in the GLJ Update Report since December 31,
2010.
-- Arcan's reserves are 94% light oil and NGLs.
Arcan's Swan Hills Beaverhill Lake Asset
Arcan is spearheading the development of the Swan Hills Beaverhill Lake reservoir. Based on waterflood recoveries of up to 40% in offsetting areas of the reef, Arcan is of the view that this has the potential to translate into recoveries over 270 MMBOE (95% light oil), with Arcan having recorded under 15% of those recoverable reserves at 35.2 MMBOE in the $7.17 per share NAV estimate. Arcan estimates that there are over 400 drilling locations through the center of its land base and anticipates that with 171 net sections of land drilled to four wells per section, the inventory of locations could continue to show substantial growth.
Net Asset Value
As detailed in the table below, Arcan's NAV of $7.17 per diluted share (on the basis of total P+P reserves discounted at 10% at September 30, 2011) has increased by 28% over the $5.56 per diluted share reported at December 31, 2010. As at the date of this release, Arcan estimates that it has invested $175 million and grown the present value of the Corporation's reserves by $305 million (total P+P PV 10) in 2011. Arcan's 2011 expenditures to date include its acquisition of Stimsol Canada Inc. ("Stimsol") on September 13, 2011. Arcan anticipates total capital expenditures for 2011 of $225 million and, as at October 7, 2011, estimates that it has $25.0 million in positive working capital, $171.3 million in outstanding debentures and $120 million of available bank lines, leaving Arcan with approximately $145.0 million of available capital capacity.