Arcan Resources Ltd. (ARN) ("Arcan" or the "Company") is pleased to report initial test results from its second horizontal multi-stage fractured at 5-34-67-8W5 (surface location) 10-27-67-8W5 (bottom hole location) well in its Swan Hills reef development program.
The Swan Hills (5-34)10-27-67-8W5Hz ("10-27") Horizontal Multi-Stage Fractured Well
Arcan is pleased to announce that after an eight day production flow test, Arcan has established that the well has a productive capacity over the test period in excess of 700 barrels per day of 40 API light sweet oil plus 50 boe per day of natural gas. Arcan has a 100% working interest in the well. Arcan is currently equipping the well with permanent production facilities, anticipating that forthcoming production will be trucked to an Arcan-operated facility. Arcan will continue to evaluate the production capability of this well once on production. The new 10-27 well was drilled over five miles away from Arcan's first horizontal multi-stage fractured well at (12-29)9-29-68-8W5Hz ("9-29"), which currently produces in excess of 400 barrels per day of 40 API sweet oil with no water cut after over 10 weeks of production since the well was tied into Arcan's operated production facility on February 23, 2010.
What fascinates me is that there's still no water cut in the first well in spite of the fact that the DMU#2 has been under a waterflood for years(three years?). The only reason I can find for the lack water is that the geology of the unit is very heterogenous and the oil is compartmentalized within the unit by low porosity rock so the water can penetrate only very small areas of the unit.
The production rate of the first well has declined to 400+ barrels per day from the 600+ bbl rate. That is decline of 30% within 10 weeks. In ARN's February presentation the estimated first year production rate was 300 barrels per day. The decline rate will have slow down in order for the actual production rate to be within the estimate.
The second well has tested higher rates than the first so one would expect the normalized production and ultimate recovery to be also greater than the first one's.
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