Press release from Marketwire
Arcan Provides Operational Update and Announces Record Well Results
https://www.theglobeandmail.com/globe-investor/news-sources/?date=20110720&archive=ccnm&slug=201107210714486001
Globe & Mail
July 20, 2011
CALGARY, ALBERTA--(Marketwire - July 20, 2011) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
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 inthe Swan Hills Beaverhill Lake play were drilled from the pad-site at5-34-67-08W5 and were completed using 14 separate, 100 cubic meterhydrochloric acid fracture stimulation treatments. Arcan is pleased toannounce that over its first 30 days of production, the 1-04 wellaveraged approximately 732 barrels of oil equivalent ("BOE")per day of 40° API light sweet oil with approximately five percentassociated solution gas and cumulative production of 21,946 BOE. The5-35 well averaged approximately 681 BOE per day of 40° API light sweetoil with approximately five percent associated sweet solution gas andcumulative production of 20,437 BOE in the first 30 days. Both wells arein the Ethel area and do not have the benefit of pressure support fromthe anticipated fourth quarter 2011 waterflood implementation.
Arcan's 1-04 and 5-35 wells reflect a change instimulation volume size from the previous 600 cubic meter stimulation toa heightened 1,400 cubic meter hydrochloric acid stimulation. Bothwells were drilled from the same pad-site as Arcan's second horizontalwell 10-27-67-8W5 ("10-27"), which came on-stream inMay 2010. The 10-27 well produced approximately 11,650 BOE over thefirst 30 days, 36,300 BOE over the first six months and has hadcumulative production of approximately 53,000 BOE on primary recovery inthe first fourteen months. Arcan estimates that the 1-04 and 5-35 wellseach cost $4.4 million to drill, complete, and equip. Both wells areexpected to reach payout at approximately 60,000 BOE of production.(assuming $100 per barrel Edmonton Light Sweet oil price). The initialresults from Arcan's new wells are very encouraging and Arcan willcontinue adapting and improving its operational efficiency to enhancethe productive and economic capabilities of its capital program.
Operational Update
Arcan has experienced a significant turnaround andcontinued operational success after a challenging first half of 2011which included the rupture of a third party natural gas pipeline andforest fires. Significant changes and additions to Arcan's technical andoperational team have helped ensure the successful execution of Arcan's2011 capital program to date. The addition of new personnel to theArcan team has also resulted in numerous operational efficienciesincluding the implementation of Arcan's waterflood application, securingnecessary services to execute Arcan's 2011/2012 drilling program,increased organization allowing for the fracing and completion of a newwell approximately every ten days as well as further facilitation ofArcan's long term plan for future growth in the Swan Hills BeaverhillLake light oil resource play and the development of approximately 400incremental horizontal wells in the area.
Presently, Arcan has two drilling rigs operating and has recently spudded its 36thhorizontal well. Of Arcan's 36 horizontal wells, 15 were fractured in2010, 12 were fractured in 2011, seven are awaiting fracture completionsand two are presently drilling. Arcan's 2011 drilling focus continuesto be in the Ethel area (100 percent working interest for Arcan) whereArcan has applied for approval for a waterflood as well as a pipeline toconnect the Ethel area wells to Arcan's existing infrastructure. Arcanhas also identified numerous horizontal re-entry candidates whereby itcan apply new horizontal technology to wells that were drilled prior toArcan's ownership and the advent of multi-stage fracturing.
Recent wet weather conditions in the Swan Hills areahave only marginally hampered Arcan's drilling operations but havecaused significant third party oil pipeline issues. As a result, Arcanhas trucked a substantial amount of its oil production to unaffectedpipeline terminals which has allowed Arcan to experience only minimalcurtailment of its current 4,400 BOE per day of production. Thesecurrent pipeline issues are expected to be resolved in the third quarterof 2011 but will temporarily elevate Arcan's operating costs as aresult of required trucking operations until the issues are resolved.Arcan is also trucking oil from its Hamburg area due to the temporaryshut down of the Rainbow pipeline. Despite forest fires, weather andpipeline issues, production volumes have shown significant growth andArcan continues to execute on its drilling and fracture program andapproach its 5,000 BOE per day 2011 exit volumes guidance.
About Arcan
Arcan Resources Ltd. is an Alberta, Canadacorporation that is principally engaged in the exploration, developmentand acquisition of petroleum and natural gas located in Canada's WesternSedimentary Basin. Arcan has 88,425,946 common shares, 8,623,333 stockoptions and $86,250,000 aggregate amount of 6.25% convertible unsecuredsubordinated debentures currently outstanding.
Readers should be aware that historical results are not necessarily indicative of future performance.
BOEs may be misleading, particularly if used inisolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energyequivalency conversion method primarily applicable at the burner tip anddoes not represent a value equivalency at the wellhead.
Advisory Regarding Forward-Looking Information and Statements
This press release contains certain forward-lookinginformation and statements within the meaning of applicable securitieslaws. The use of any of the words "expect", "anticipate", "continue","estimate", "may", "will", "project", "should", "believe", "plans","intends" and similar expressions are intended to identifyforward-looking information or statements. In particular, but withoutlimiting the foregoing, this press release contains forward-lookinginformation and statements pertaining to, among other things: Arcan'sfuture drilling program and execution thereof; expectations respectinginitial production and payout on the 1-04 and 5-35 wells; the potentialimplementation of a waterflood; potential re-entry candidates; expectedultimate recoveries in the Ethel area; expectations respecting Arcan'soperational efficiency and future growth; expectations respectingArcan's new Ethel wells; the resolution of third party pipeline issues;expectations and assumptions concerning success of future exploration,operational and development activities; and the performance andviability of new wells.
The forward-looking information and statementscontained in this press release reflect several material factors andexpectations and assumptions of Arcan including, without limitation:that Arcan will continue to conduct its operations in a mannerconsistent with past operations; that the production from new wells willbe comparable to the results realized from Arcan's existing horizontalwells; the general continuance of current or, where applicable, assumedindustry conditions; the accuracy of current horizontal production data,historical well production and waterflood results from Arcan's otheroperations; the continuity of reservoir conditions in waterfloodedproducing properties; availability of debt and/or equity sources to fundArcan's capital and operating requirements as needed and on termsacceptable to Arcan; the continuance of existing and, in certaincircumstances, proposed tax and royalty regimes; the accuracy of theestimates of Arcan's reserve volumes; and certain commodity price andother cost assumptions. Arcan believes the material factors,expectations and assumptions reflected in the forward-lookinginformation and statements are reasonable at this time but no assurancecan be given that these factors, expectations and assumptions will proveto be correct.
The forward-looking information and statementsincluded in this press release are not guarantees of future performanceand should not be unduly relied upon. Such information and statementsinvolve known and unknown risks, uncertainties and other factors thatmay cause actual results or events to differ materially from thoseanticipated in such forward-looking information or statements including,without limitation: changes in commodity prices; unanticipatedoperating results or production declines; changes in tax orenvironmental laws or royalty rates; increased debt levels or debtservice requirements; inaccurate estimation of Arcan's oil and gasreserves volumes; limited, unfavorable or no access to debt or equitycapital markets; increased costs and expenses; the impact ofcompetitors; reliance on industry partners; the current pipeline issuesArcan is experiencing may not be resolved in the timelines anticipatedor at all; unforeseen circumstances could arise which would requireArcan to modify or curtail its exploration, operational and drillingactivities; and certain other risks detailed from time to time inArcan's public disclosure documents including, without limitation, thoserisks identified in this press release, and in Arcan's AnnualInformation Form for the year ended December 31, 2010, a copy of whichis available under Arcan's SEDAR profile at www.sedar.com.
The forward-looking information and statementscontained in this press release speak only as of the date of this pressrelease, and Arcan does not assume any obligation to publicly update orrevise them to reflect new events or circumstances, except as may berequired pursuant to applicable laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Ed GilmetArcan Resources Ltd.Chief Executive Officer and President(403) 262-0321egilmet@arcanres.com
OR
Douglas PennerArcan Resources Ltd.Chief Financial Officer & Vice President, Finance(403) 262-0321dpenner@arcanres.com
OR
Suite 3200, 450 - 1st Street S.W.Arcan Resources Ltd.Calgary, AB T2P 5H1
Neither TSX Venture Exchange nor its RegulationServices Provider (as that term is defined in the policies of the TSXVenture Exchange) accepts responsibility for the adequacy or accuracy ofthis release.