A Brutal Correction. With all the Analyst's bullish sentiments this stock plummet has got a lot of people scratching their heads.
Is it a statement against management not being able to pull it off?
I think the verdict is still out on how effective the waterflood will be. Arcan is counting on it to stabilize their Ethel & DM2 production decline profiles. Without it Arcan's production will continue to slide downwards with only 1 rig working. Their saving grace right now is the highly-prospective Virginia Hills land on which they drilled that 1000+ bbl/d well. They could easily drill another 2 -3 wells there in order to ramp-up production if required.
IMO yesterday's stock plunge was an over-reaction and I expect a bounce back will be in the cards for next week, barring any unforseen circumstances. If they can maintain 6000+ bbls/d thats not too shabby considering oil is still over $100/bbl which equates to $600,000 of daily cash flow generation. Arcan's performance metrics will improve too now that they have the required infrastructure in place.
The question is do investors believe Arcan management can pull it off? I think the answer is pretty obvious with everyone heading for the exits. But IMO that was a knee-jerk reaction.
I'm still counting on Management and have not sold any shares, but my finger is poised on the sell button should I be wrong...