Waiting for news, in the meantime...There should be significant news out soon - reserve numbers for the year, more production test results, and hopefully some guidance for the rest of the year. There are two possible topics that I'd love to hear something on: 1. Additional lands that ARN has purchased and their plans for them, and 2. A reaction to the apparently spectacular results Coral Hills got to the south, on lands Arcan has deemed inferior (deemed inferior because they never tried too hard to pick up lands at last years land sales between the Arcan block and the Coral Hills block. If Arcan thought they were golden they would have went after them.)
I don't know what's up with the share price. Obviously someone thinks it's overvalued and is shorting. It was very illuminating the day Coral Hills news came out - First Energy, a known Arcan hater, was a huge and panicky purchaser, meaning most likely a very scared short cover. That is very supportive of Arcan to me. However, if the short sellers are correct, there is trouble with Arcan's vision. I really don't think so, but someone is gambling that there is. Could be purely personal though.
Regardless, the Coral Hills, Pengrowth, PennWest, and Apache actions are speaking volumes to me. Here is something that the CEO of PennWest had to say last week about the Swan Hills play (sorry, chart didn't copy):
Bill Andrew, chief executive officer of Penn West Petroleum Ltd., said his and other companies active in the Beaverhill Lake play are focusing their efforts outside the main Swan Hills reef system and looking at geological areas that in the past could not be exploited.
"We've been quite public -- and so have some of the other players -- that we're playing away from the original main reefs, which would be the Swan Hills complex (south Swan Hills) and up where there were pinnacle reefs in the Red Earth country and we're drilling out in front of them and into the platform and out to the active edge in the reef margin."
He said there are actually "two or three types of plays" that are prospective for Beaverhill Lake oil. The first is the pure platform rock that supports the reef system and which is spread out in front of the reef. Andrew noted that the platform has long been known to offer good hydrocarbon storage capacity but that permeability has been a deterrent.
"This is where the horizontal wells are coming in with the ability to stimulate over the length of the horizontal," he said. "Our thrust has primarily been on the platform play."
Andrew said the second play is what geologists refer to as the reef margin, "or active edge of the complex."
"That's where you start to come off the platform and drop into the basin. If you think about it, it's the edge so you've got a little bit of flex in there and you get some fracturing, so that's another area we're keying on," he said.
According to Andrew, the third Beaverhill Lake "play" is driven by technology and is allowing more oil to be produced from in and around the previously exploited reefs in Swan Hills.
"We haven't talked about this part before, but one thing this technology is helping with is just allowing you to sweep up oil in and around the reefs," he explained.
"So the near-reef oil that generally we were getting with vertical drilling and not doing a super-effective job with, we can now go in with horizontal wells and get more oil."
Andrew said that Penn West has been encouraged by its early results in the Beaverhill Lake and the company plans to ramp up activity as it continues to prove up the play.
"Our average rate on the first 12 wells that we drilled was almost 200 bbls per day and we've got several wells that are up in the 250 bbls per day range and that's after three months and our flush rate on those are two to three times that," he said.
"So the reward is there. The difficulty is de-risking the play and the wells are relatively expensive. They're not Horn River or Montney expensive, but they are in the range of $4 million."
Andrew said the company has drilled a total of more than 20 wells into the play to date and it is featured prominently in the 2011 capital program.
"Our plan for the area was to put a fair amount of our budget in there -- $200-plus million to $250 million into that area. That should get us 50 to 60 wells plus some infrastructure," he said, adding that Penn West has in the neighbourhood of a half-million acres over the complex.
"It's fairly early on but we haven't drilled a dud and we've started stepping out fairly aggressively. If we can keep an average in a range where after three months the wells are producing in excess of 150 bbls per day, I think you've got a good play."
Notice the bolded text sections. The results they are getting is very similar to Arcan, which they consider a complete success, especially the second bold section - if after 3 months wells are producing in excess of 150 b/d you've got a good play, with $4 million wells. Arcan has that. So PennWest believes, and some market yahoos do not - who would you believe?
Happy waiting! Remember markets are not efficient...
opg210