Arcan Resources Ltd ARNBF

RE: RE: RE: Stifel Nicolaus Presentation

[Buy_Lo_Sell_Hi]

From the conference: They are increasing VRR from ~1.3 to ~1.5 at Deer Mountain #2. They have approval for at least 4 injection wells at Ethel for waterflood. Ethel appears to have a bit better reservoir pressure and production curves. They will be completing 5 new wells through the summer. 8 more (+/-) will be drilled through to end of year.

Independent, respected auditors familiar with the area and with waterflood operations previously confirmed their asset value and their NAV was accurately pegged at over $7 at the time. I don't see them missing their guidance of 6000-6500 boe/d. In fact, I suspect (hope) they may have learned a lesson and are now somewhat more conservative with their numbers - they need to under promise and over deliver. Although they are planning a balanced cashflow-spending budget, they clearly have additional capital if they decide they may want to deploy it. If they bring their debt down with any upcoming asset sales, that would only help them. At 6000 boe/d 98% pure oil, on desirable, high-reserve lands with 100% repeatable drilling results, the current bottom-of-the-barrel share price is simply not warranted, no matter what anyone says. Their management may not have been the best at under promising and over delivering, but I believe they are honest and trustworthy. I keep my ear close to the ground and there are no skeletons in the closet. Their debt is readily managable and they have enough cash flow and backing to ride through a further deterioration in oil prices, if that's what's in the cards. It's a solid long-term buy at the current low low price, even with these severely testy markets.