Arcan Resources Ltd ARNBF

RE:RE:RE:RE:RE:RE:RE:Arcan stock is

[skeksis]

I agree with most of your points except market value being $60k per flowing barrel. That sounds like what you would expect from a gas-weighed transaction.  Arcan is a light oil company with high operating netbacks (especially at current spot prices).  Spartan energy just bought production with similar or worse netbacks for north of $100k per flowing barrel.  All of CPG's recent light oil purchases have been at $100k per flowing barrel or higher.  The Aspenleaf bid is really a lowball one. 

I hope one of the reasons Arcan approved it was as a final effort to force out any potential higher bids.  I don't agree with you at all that it would be straightforward for LTS or CPG to pick up assets in a bankruptcy sale.  If they want the assets it would be easier to put in a competitive bid at this stage. 

Even with the disappointing metrics we are getting, you are right about how important it is to free up cash flow to grow production.  I am OK with this deal if nothing better comes along.  I am surprised a better offer hasn't surfaced, because Aspenleaf is really getting quite a steal.  I believe they are also getting all of Arcan's very large tax pools since they are consuming the company.  I am not sure what the market value of those tax pools is, but it's certainly non-zero.

I anticipate that the fairness statement for the transaction is going to focus on the market price of the stock and not on the value that has been assigned in other transactions to high netback light oil assets.  I think this is a shame because it is painfully obvious how illiquid Arcan's stock is and how quickly the price is affected when anyone buys or sells in any significant volume.  I mean, there was a runup to almost 90 cents this past fall on no news whatsoever, and when Lightstream took its 20% position it pushed the stock to $1.30 in a very short period.  If Arcan's management had presented at an investor conference or even held a year end conference call and really made an effort to sell their story, it could have had a huge impact on market perception (especially with the ROIs on those last 4 wells they drilled).