CALGARY, ALBERTA–(Marketwired – Oct. 7, 2014) – Arcan Resources Ltd. (TSX VENTURE:ARN) (“Arcan” or the “Corporation”) has commenced its winter drilling program and intends to spud its first well by the end of this week. The Corporation plans on drilling and completing up to nine wells this season, the first two being joint interest wells with a partner in Morse River and Deer Mountain West. Arcan then expects to move the rig to Ethel and will be targeting prospects in proximity to the four successful wells from last year’s drilling program that demonstrated high deliverability performance. The Corporation is targeting to have all wells from the winter program on-stream before spring break-up.
“We estimate that third quarter production will be above 3,900 barrels of oil equivalent (“BOE”) per day, which exceeds our projections of 3,650 to 3,850 BOE per day,” said Terry McCoy, Arcan’s CEO. “This is due to a stabilization of base decline rates from waterflood operations and the contributions of the four wells from the first quarter. We’re looking to replicate these successful results again this winter by targeting similar high potential prospects. We also continue our focus on cost reductions and on executing operationally which should lead to a strong quarter for Arcan.”
Arcan estimates it has delivered third quarter production of over 3,900 BOE per day, with no new wells brought on-stream since the first quarter of 2014. This compares to second quarter 2014 production of 4,105 BOE per day and first quarter 2014 production of 3,740 BOE per day. Based on third quarter results, Arcan estimates that it has achieved average production of over 3,900 BOE per day for the first nine months of the year. Arcan previously released annual production guidance for 2014 targeting between 3,500 to 3,800 BOE per day.
Arcan weights its capital program to the winter months when field operations are underway, and during the second and third quarters uses cash flow to reduce its bank debt. This winter Arcan will be using a rig that has been modified to meet the specific requirements of the Corporation’s drilling program in the Swan Hills in an effort to further reduce drilling costs. In addition, the start-up of the Ethel oil sales pipeline in early November is expected to reduce trucking and other costs associated with the Ethel battery.
Arcan has begun the process for the semi-annual review of its bank line with its lenders and the results are expected around the end of November. As of today’s date, the Corporation has drawn $144.5 million on its $180.0 credit facility. Arcan continues to evaluate all avenues to help alleviate its debt burden and accelerate development of its light oil assets.
On September 30, 2014, Arcan amalgamated with its wholly-owned subsidiary Stimsol Canada Inc. (“Stimsol”) and has sold all related assets of Stimsol, including the acid blending facilities, to a third party.
About Arcan Resources Ltd.
Arcan Resources Ltd. is an Alberta, Canada corporation that is principally engaged in the exploration, development and acquisition of petroleum and natural gas located in the Western Canada Sedimentary Basin.
Additional information about the Corporation, including the Corporation’s financial statements, management discussion and analysis, and annual information form for the year ended December 31, 2013, is available under Arcan’s profile on SEDAR at www.sedar.com.
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words “will”, “continue”, “expect”, “plan”, “target”, “estimate”, “should”, “intend” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to, among other things, the following: Arcan’s drilling and completion program, including the timing and targets thereof; estimates of Arcan’s production; the use of a modified rig and the expected benefits thereof; start-up of the Ethel oil sales pipeline, including the timing and expected benefits thereof; Arcan’s semi-annual review of its bank line with its lenders and the timing of the results thereof; Arcan’s evaluation of all avenues related to its debt burden and asset development.
The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Arcan including, without limitation: that Arcan will continue to conduct its operations in a manner consistent with past operations; the accuracy of current horizontal production data, historical well production and waterflood recovery results; the general continuance of current or, where applicable, assumed industry conditions; continuity of reservoir conditions across Arcan’s Swan Hills land base; availability of debt and/or equity sources to fund Arcan’s capital and operating requirements as needed; the continuance of existing and, in certain circumstances, proposed tax and royalty regimes; the accuracy of the estimates of Arcan’s reserve volumes; and certain commodity price and other cost assumptions.
Arcan believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: for reasons currently unanticipated, Arcan’s production rates may not increase in the manner currently expected; the application and modification of horizontal, multi-stage fracture technologies including the application of additional fracture stimulation stages may not have the impact currently anticipated by Arcan; Arcan’s capital spending and operational plans for 2014 may not be completed in the timelines anticipated, in the manner anticipated or at all and the execution of such plans may not have the results currently anticipated by Arcan; water injection may not have the impact on production currently anticipated by Arcan; Arcan’s amalgamation with StimSol may not impact Arcan’s business and operations in the manner currently anticipated or at all; changes in commodity prices; unanticipated operating results or production declines; waterflood impacts; Arcan may be unable to solve its mechanical/operational issues in the timelines anticipated, in the manner anticipated or at all; shareholder value may not be maximized in the manner suggested by Arcan or at all; changes in tax or environmental laws or royalty rates; increased debt levels or debt service requirements; inaccurate estimation of Arcan’s oil and gas reserves volumes; limited, unfavourable or no access to debt or equity capital markets; Arcan’s objectives; and Arcan’s budget and the expected cash flows resulting therefrom; inaccuracies in Arcan’s calculation of reserve life index; for reasons currently unforeseen, the current drilling locations identified by Arcan may prove to be unsuitable or unavailable and drilling on the locations identified may not occur; increased costs and expenses; the impact of competitors; reliance on industry partners; reviews of Arcan’s credit facility and/or budget may not occur on the timelines anticipated or at all; an amendment, renewal or extension may not be considered by Arcan’s lenders on terms acceptable to Arcan or at all; and certain other risks detailed from time to time in Arcan’s public disclosure documents including, without limitation, those risks identified in this press release, and in Arcan’s annual information form, copies of which are available on Arcan’s SEDAR profile at www.sedar.com.
The forward-looking information and statements contained in this press release speak only as of the date of this press release, and Arcan does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Arcan Resources Ltd.
Chief Executive Officer
Arcan Resources Ltd.
Arcan Resources Ltd.
Suite 2200, 500 – 4th Avenue S.W.
Calgary, AB T2P 0H7