– We are revising our production forecasts essentially back one
quarter to account for field delays Arcan experienced in the latter parts of 2011,
and early 2012. A multitude of weather, infrastructure related delays as well as
downtime associated with frac timing and pump jack installation meant
4Q11/1Q12 production additions were quite lumpy. The company was
successful in so far as meeting its 6,000 boepd exit (adding credence to those
following point-in-time production data points), but field delays meant production
fell below 5,000 boepd in early 2012 and now appears to be closer to the
~6,000 boepd mark.
Arcan has secured an acid supply for its entire 2012 program (and even
excess) but because of the nature of pad drilling and third-party pipeline issues,
production additions have staggered recently. To preserve balance sheet
flexibility, Arcan has opted to run two rigs; one operating in Ethel and another
drilling the southern extension of its land base (T64 R8-9, see page 4 for map),
where offsetting industry peers have seen IP30 rates above 1,000 boepd.