Arcan Resources Ltd ARNBF

New royalty structure

[opg210]

The new royalty regime should be a great blessing to Arcan. When the previous NRF was introduced in 2007, ARN took about a $.60/share hit in Net Asset Value as per their website. A lot of that should be clawed back.
The real kicker is that these high productivity HZ wells would attract the highest royalty rates, especially at $80+ oil. So having that rate reduced by 10% will do wonders for the economics of these things. I think from their slide show they have an NPV per well of $18.25 million per well. I would guess that this could increase by at least $1 million per well with the lower royalties.
At $1 million increased NAV per well, even on 100 wells would add $100 million in NAV, or $1.25/share. If it adds $2 million per well, then $2.50/share. Adding in part of the $.60/share that was given back earlier, and it is quite likely that the new royalty structure added at least $1.50/share in value.
All speculative of course until a) a lot more wells are drilled, or b) someone steps up to buy them. But as long as these wells continue successfully, which many of us are betting on, this new royalty regime has added a LOT of value to Arcan.
That's enough from me. Looking forward to hearing more about these pumps...