ARN......BOOOOOM!!!!!!!!!!Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan") announces that it has achieved excellent 30-day initial production rates from two new Ethel wells at 1-04-68-8W5 ("1-04") and at 5-35-67-8W5 ("5-35"). In addition, Arcan is providing an operational update on its 2011 capital program.
Ethel Well Results
Arcan's 1-04 and 5-35 single leg horizontal wells in the Swan Hills Beaverhill Lake play were drilled from the pad-site at 5-34-67-08W5 and were completed using 14 separate, 100 cubic meter hydrochloric acid fracture stimulation treatments. Arcan is pleased to announce that over its first 30 days of production, the 1-04 well averaged approximately 732 barrels of oil equivalent ("BOE") per day of 40 degrees API light sweet oil with approximately five percent associated solution gas and cumulative production of 21,946 BOE. The 5-35 well averaged approximately 681 BOE per day of 40 degrees API light sweet oil with approximately five percent associated sweet solution gas and cumulative production of 20,437 BOE in the first 30 days. Both wells are in the Ethel area and do not have the benefit of pressure support from the anticipated fourth quarter 2011 waterflood implementation.
Arcan's 1-04 and 5-35 wells reflect a change in stimulation volume size from the previous 600 cubic meter stimulation to a heightened 1,400 cubic meter hydrochloric acid stimulation. Both wells were drilled from the same pad-site as Arcan's second horizontal well 10-27-67-8W5 ("10-27"), which came on-stream in May 2010. The 10-27 well produced approximately 11,650 BOE over the first 30 days, 36,300 BOE over the first six months and has had cumulative production of approximately 53,000 BOE on primary recovery in the first fourteen months. Arcan estimates that the 1-04 and 5-35 wells each cost $4.4 million to drill, complete, and equip. Both wells are expected to reach payout at approximately 60,000 BOE of production. (assuming $100 per barrel Edmonton Light Sweet oil price). The initial results from Arcan's new wells are very encouraging and Arcan will continue adapting and improving its operational efficiency to enhance the productive and economic capabilities of its capital program.
Operational Update
Arcan has experienced a significant turnaround and continued operational success after a challenging first half of 2011 which included the rupture of a third party natural gas pipeline and forest fires. Significant changes and additions to Arcan's technical and operational team have helped ensure the successful execution of Arcan's 2011 capital program to date. The addition of new personnel to the Arcan team has also resulted in numerous operational efficiencies including the implementation of Arcan's waterflood application, securing necessary services to execute Arcan's 2011/2012 drilling program, increased organization allowing for the fracing and completion of a new well approximately every ten days as well as further facilitation of Arcan's long term plan for future growth in the Swan Hills Beaverhill Lake light oil resource play and the development of approximately 400 incremental horizontal wells in the area.
Presently, Arcan has two drilling rigs operating and has recently spudded its 36th horizontal well. Of Arcan's 36 horizontal wells, 15 were fractured in 2010, 12 were fractured in 2011, seven are awaiting fracture completions and two are presently drilling. Arcan's 2011 drilling focus continues to be in the Ethel area (100 percent working interest for Arcan) where Arcan has applied for approval for a waterflood as well as a pipeline to connect the Ethel area wells to Arcan's existing infrastructure. Arcan has also identified numerous horizontal re-entry candidates whereby it can apply new horizontal technology to wells that were drilled prior to Arcan's ownership and the advent of multi-stage fracturing.
Recent wet weather conditions in the Swan Hills area have only marginally hampered Arcan's drilling operations but have caused significant third party oil pipeline issues. As a result, Arcan has trucked a substantial amount of its oil production to unaffected pipeline terminals which has allowed Arcan to experience only minimal curtailment of its current 4,400 BOE per day of production. These current pipeline issues are expected to be resolved in the third quarter of 2011 but will temporarily elevate Arcan's operating costs as a result of required trucking operations until the issues are resolved. Arcan is also trucking oil from its Hamburg area due to the temporary shut down of the Rainbow pipeline. Despite forest fires, weather and pipeline issues, production volumes have shown significant growth and Arcan continues to execute on its drilling and fracture program and approach its 5,000 BOE per day 2011 exit volumes guidance.