Arcan reported 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.
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