Arcan farms out up to 21 gross sections to PetroBa
Arcan farms out up to 21 gross sections to PetroBakken
2012-12-04 09:20 ET - News Release
Mr. Douglas Penner reports
ARCAN RESOURCES ANNOUNCES FARMOUT AND COMMENTS ON ACQUISITION OF SHAREHOLDING POSITION BY PETROBAKKEN ENERGY LTD.
Arcan Resources Ltd. has entered into farm-out agreements with PetroBakken Energy Ltd. whereby PetroBakken will earn up to 21.5 (11.25 net) sections of land by drilling five commitment wells and two option wells. Arcan has also been made aware that PetroBakken has acquired a total of 16,605,900 common shares of Arcan through market purchases, which represents approximately 17% of the total issued and outstanding common shares of Arcan on a non-diluted basis.
Management views the interest shown by PetroBakken in purchasing Arcan shares, together with the farm-outs and other transactions relating to the Beaverhill Lake light oil resource play announced in PetroBakken's news release issued on December 3, 2012, as providing further evidence of the significant light oil development potential in the Beaverhill Lake zone in the Swan Hills area. Arcan does not plan to make any changes to its current operation or growth plans as a result of PetroBakken's announcement.
Arcan's activities are focused on developing the large light oil resource in the Swan Hills area. Over the last 18 months Arcan has transformed more than 60 square miles of undeveloped land into a large development inventory of drill-ready locations within a proven oil reservoir. This development is now supported by an infrastructure corridor consisting of roads, pipelines, and facilities. Arcan's investment in key infrastructure has resulted in reduced development capital requirements on a recently drilled well, declining operating costs and significant response from an enhanced oil recovery program in the early stages of the field production.
In line with its strategic direction, Arcan plans to manage capital within its existing cash flow stream for the first half of 2013 and to further reduce operating costs as the benefits of completed infrastructure investments are realized. Management continues to look strategically at all of Arcan's assets, and will consider all opportunities for development and acceleration as they arise. One avenue, farm-out agreements, provide for capital-efficient development on areas of Arcan's land base that would not otherwise have been developed in the near term.
Arcan holds a multi-year inventory of low-risk drilling opportunities targeting light sweet oil plays. The Corporation is planning further drilling focused on higher impact production results and continued application of the waterflood process on core properties. Arcan will continue to implement changes that provide for a stable financial base, maximize shareholder value and provide secure growth per share.
We seek Safe Harbor.