Areas of Operation

Currently, Arcan has set its focus on 3 core regions that reside within Alberta and NE BC. Arcan’s production and drilling inventory are concentrated in Deer Mountain (Swan Hills), Hamburg (Northwest Alberta), and McLeod (West Central Alberta).

December 31, 2009 estimated net asset value of $3.08 per share includes only 22 cents in land and seismic.  It also only includes reserves from under 8 net sections of land in the Swan Hills reef out of 140 net sections.  Results of the new horizontal drilling could not be included at December 31, 2009 as the work was done after year end.

Arcan has typically elected to take a surgical approach of acquiring only the acreage that bears drilling opportunities. A large portion of the land holdings are blanketed with 3-D seismic, which has helped in identifying and develop a drilling inventory that is in excess of 2 years. Included in that inventory are Arcan’s main oil pools at Swan Hills and Hamburg, both now under waterflood, and largely delineated, providing Arcan with development infill drilling opportunities. 

Arcan\\\'s Swan Hills Deer Mountain Unit #2 property is part of the 7 billion barrel Swan Hills/Judy Creek light sweet 40º API oil pools.  This reef complex  covers over 24 townships of land.  The main portion of the reef was developed in the 1950s and 1960s, has been under waterflood and recovered over 40% of the oil in place.  The reef is now to be developed under C02 flood as announced by the Alberta Government as part of its $2 billion carbon capture and storage fund, through the Swan Hills Synfuels project. 

In December 2009, Arcan started drilling its first horizontal multi stage frac well in the Deer Mountain Unit.  The well commenced production at over 600 bbls per day.  Arcan subsequently drilled 11 more horizontal wells by the end of the third quarter of 2010.  Successful drilling could set up a very large inventory of horizontal wells on the 140 net sections of land that Arcan has interests in in the area.  To date, Arcan\\\'s Deer Mountain Unit #2 has recovered less than 10% of the 40 - 60 million barrels of oil in place.  Successful horizontal development would accellerate production and could increase recoveries by up to 40%+.  Arcan has already built the new battery and water injection facilities to maximize continued development and value on the majority of its lands. 

Arcan\\\'s Hamburg GG oil pool is also under waterflood and is currently undergoing development drilling.  This oil pool is light sweet 40º API oil, covers approximately 13 sections of land and to date has recovered less than 10% of the oil in place. 

Arcan has not focused on its natural gas McLeod area due to the relatively higher netbacks on light oil and the sizable development opportunities in our oil pools.

It is expected that the waterfloods at Deer Mountain and Hamburg will continue to add reserves and extend our production life as the majority of our assets will be covered by enhanced recovery schemes.