Arcan Resources Ltd.
TSX VENTURE : ARN

Arcan Resources Ltd.

June 22, 2010 09:02 ET

Arcan Resources Ltd. Announces Successful Results from Its Fourth Horizontal Multi-Stage Fractured Well

CALGARY, ALBERTA--(Marketwire - June 22, 2010) - Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan" or the "Company") is pleased to report initial test results from its fourth horizontal multi-stage fractured well at 10-29-68-8W5 (surface location) 8_30-68-8W5 (bottom hole location) in its Beaverhill Lake Swan Hills reef development program.

The Beaverhill Lake Swan Hills (10-29) 8_30-68-8W5Hz ("8_30") Horizontal Multi-Stage Fractured Well

Arcan has drilled nine and is in the process of drilling its tenth horizontal well into the Beaverhill Lake reservoir in its Swan Hills property. This is the fourth horizontal well completed and announced by Arcan and Arcan owns an 81% working interest in this well. This well was drilled to a vertical depth of 2,450 meters with a horizontal leg of approximately 1,000 meters. The horizontal section was successfully completed on May 29, 2010 using 10 separate, 60 cubic meter 28% hydrochloric acid fracture stimulation treatments. Arcan production tested this well to recover the spent acid from the formation and has tied the well into its existing infrastructure. Arcan is pleased to announce that after 9 days of continuous production testing, the 8_30 well averaged in excess of 520 barrels per day of 40 API light sweet oil plus 185 Mcf/d of sweet solution gas. Upon completing the (10-29) 5-28-68-8W5 well, which is the second well on the 10-29-68-8W5 padsite, Arcan plans to equip the well with permanent production facilities.

Arcan is currently production testing its fifth horizontal well (10-17) 6-20-68-8W5 and has fracture stimulated the sixth (10-29) 5-28-68-8W5 and seventh (15-29) 9_30-68-8W5 horizontal wells. Arcan anticipates fracture stimulating the eighth (15-29) 8-32-68-8W5 horizontal well in the upcoming week or two. Arcan has completed drilling its ninth horizontal well at (2-17) 13-17-68-8W5 for a total depth of 4,008 meters and is anticipating a 14 stage fracture in this well and Arcan is currently drilling its tenth well into the Beaverhill Lake Swan Hills reef. 

As an update to production, Arcan's first horizontal multi-stage fractured well (12-29) 9-29-68-8W5 was on-stream March 1, 2010, had a first 3 month average production rate of 414 bbls of oil per day and 130 Mcf/d of sweet solution gas. This well has produced over 35,000 bls of oil and 11,000 Mcf of solution gas over the first 3 months. Arcan's second horizontal multi-stage fractured well (5-34) 10-27-67-8W5Hz was on-stream May 2, 2010, had an average production rate of 394 bbls per day of oil and 61 Mcf per day of natural gas over the first month of production. The third well (10-17) 1-17-68-8W5 is presently shut-in awaiting installation of permanent production facilities and the completion of production testing at (10-17) 6-20-68-8W5.

Arcan estimates that for the second quarter of 2010 its average production will be approximately 1,850 boe per day, with current production estimated at 2,300 boe per day after shutting in the (10-17) 1-17-68-8W5 well.

Arcan estimates that, after completing the nine drilled wells, it will be able to fund the drilling of approximately one or two additional horizontal wells per month until the end of 2010 from its existing cash flow. Arcan will evaluate expanding its drilling activities through the potential expansion of its banking facilities leading up to the fourth quarter of 2010. Arcan's published December 31, 2009 oil and natural gas reserves, as well as the borrowing base of its credit facilities, do not reflect the results of the Corporation's horizontal multi-stage fractured wells. Arcan expects that it may be able to expand its borrowing base as a result of the success of its horizontal drilling program.

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 Canada's Western Sedimentary Basin. Arcan has 75,172,904 common shares, 248,500 warrants, and 7,313,167 stock options outstanding. 

BOE Presentation Production and reserve information is commonly reported in units of barrels of oil equivalent ("boe"). For purposes of computing such units, natural gas is converted to equivalent barrels of oil using a conversion factor of six thousand cubic feet to one barrel of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil (i.e., 6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 

Readers should be aware that historical results are not necessarily indicative of future performance.

Advisory Regarding Forward-Looking Information and Statements

This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "guidance", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" 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 the following: Arcan's future drilling program, expectations regarding drilling new wells and expanding facilities, expectations and assumptions concerning success of future exploration and development activities, the performance of existing wells, the performance of new wells and the potential expansion of Arcan's borrowing base.

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; that the production from new wells will be comparable to the results realized from Arcan's existing horizontal wells, the general continuance of current or, where applicable, assumed industry conditions; 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. However, 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: the failure to obtain necessary regulatory approvals or satisfy the conditions to closing the acquisition and the offering, changes in commodity prices; unanticipated operating results or production declines; 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, unfavorable or no access to debt or equity capital markets; increased costs and expenses; the impact of competitors; reliance on industry partners; 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 for the year ended December 31, 2009, 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.

Contact Information

  • Arcan Resources Ltd.
    Ed Gilmet
    Chief Executive Officer and President
    (403) 262-0321
    egilmet@arcanres.com
    or
    Arcan Resources Ltd.
    Douglas Penner
    Chief Financial Officer & Vice President, Finance
    (403) 262-0321
    dpenner@arcanres.com
    or
    Arcan Resources Ltd.
    Suite 3200, 450 - 1st Street S.W.
    Calgary, AB T2P 5H1