Aroway Energy Inc ARWJF

Received this email from the company this morning. Looks promising.

[oggyswain]

Fall Drill Program, Revenue Returns to $1 MM/Month

Aroway Energy is initiating a drill program this fall which will focus on the Company’s wholly owned and operated assets in Western Saskatchewan and Central Alberta. The program is estimated to cost approximately $ 2.5 to $ 3.0 million and will be funded from internal cash flow which has returned to the $ 1.0 million a month mark, with revenue for July coming in at $ 1.2 million. In May, the Alberta Energy Regulator (“AER”), formerly the Energy Resources Conservation Board (“ERCB”), restricted production at the Company’s Kirkpatrick Lake property to 50 bbls/day resulting in a significant reduction in revenue for the Company’s fourth quarter. E?ective July 1st, Aroway received a “Maximum Rate Limitation” of 240 bbls/day from the AER which helped the Company surpass $1 million in revenue for the month of July, and has the Company on track for its best quarter (Q1 2014) since inception.
After a summer of lower production numbers, largely due to the AER’s production restriction at Kirkpatrick Lake, as well as the decrease in production at Aroway’s JV Partnership’s Peace River Arch asset, Management believes that the upcoming drill program should place Aroway in a good position to increase production going forward. Management has not given guidance in regards to year-end production numbers, however, if Aroway continues at its current production rate of around 650 bbls/day, it could potentially end its first quarter with revenues of approximately $ 3.4 MM (Aroway’s fiscal year ends June 30th). If the upcoming drill program is successful, based on the current plans, Management suggests that Aroway could end its second quarter with daily production of 1,000 bbls/day.

Quarterly Production Summary

West Hazel - Saskatchewan

Aroway’s 100% owned and operated West Hazel property is currently producing just under 300 bbls per day. Three additional wells can be turned on after simple re-completions. These wells were originally shut–in by the previous owners of the property due to the large amount of water that they produced, resulting in higher operating costs. Water removal at West Hazel costs Aroway over $ 100,000 per month in transportation fees. In order to increase margins, the Company is upgrading its facilities at West Hazel and plans to drill a disposal well which will eliminate the trucking fees and reduce operating expenditures at the Property by about $ 13 per barrel, bringing the actual operating costs to approximately $ 9 per barrel. Furthermore, the addition of the disposal well should render the three wells that were shut-in to be economic once again, allowing Aroway to tie these back in after the recompletion work. Aroway is also planning to drill two new wells which it expects will bring production at West Hazel to 550-600 barrels per day. Aroway anticipates that the upgrades will be completed by early October and that drilling will begin mid-September to early October.

Kirkpatrick Lake – Central Alberta

At Aroway’s wholly owned and operated Kirkpatrick Lake asset, 3D seismic data identified two new drill targets, one an exploration well and the other a development well. The Company expects to drill these between mid- September to early October. Production from Kirkpatrick Lake is currently 240 bbls/day, but if these wells prove successful, under the Maximum Rate Limitation, Management expects that production from the Property could increase to approximately 680 bbls.

Little Bow – Southern Alberta

Little Bow, where Aroway has a 75 % working interest, was drilled this past March with encouraging results. However, this exploration well is located on farming lands and the Company has had to wait for spring break-up to end and is now awaiting the end of the harvest season before it can recommence production testing at the target. The Company anticipates that it will revisit this area in late September to early October.

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Aroway Energy Inc.:
Judy-Ann Pottinger, Director of Communications
Toll Free: 1-855-427-6929 Mobile: [phone]
E-mail: [e-mail]