Press release from Marketwire
Arcan Increases Credit Facility to $200 Million
Tuesday, May 08, 2012
Arcan Increases Credit Facility to $200 Million21:53 EDT Tuesday, May 08, 2012CALGARY, ALBERTA--(Marketwire - May 8, 2012) -NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan" or the "Corporation") is pleased to announce that it has increased the limit on its existing credit facility ("Credit Facility") to $200 million from the previous total of $120 million. "While this larger credit facility exceeds our financial requirements, we welcome the vote of confidence from our lenders and the flexibility that the Credit Facility provides," said Arcan's Chief Executive Officer Ed Gilmet. "Having invested strongly in infrastructure through 2011 and the first quarter of 2012, we plan to fund our operations from our existing cash flow stream for the remainder of the year, while delivering a production increase of over 83 percent from 2011 levels." The Credit Facility, which is based on Arcan's reserves report for the period ended December 31, 2011, is comprised of a $190 million syndicated revolving term credit facility and a $10 million revolving term operating facility. The Credit Facility has a revolving period of 364 days from the closing date and may be extended annually. If not extended, the Credit Facility will automatically convert to a one year non-revolving term loan. The Credit Facility is secured by a charge on all of Arcan's assets and the assets of its subsidiary, StimSol Canada Inc. and includes customary positive and negative covenants. The Corporation plans to bring up to a total of 30 wells on-stream in 2012 and anticipates that production for 2012 will average approximately 6,000 to 6,500 barrels of oil equivalent ("BOE") per day. Operating costs to date in 2012 are down substantially from 2011 levels, as infrastructure investments in the Ethel area are nearing completion and Arcan is beginning to recognize the benefits of operating process improvement initiatives. Operationally, Arcan's waterflood strategy is on track and the Corporation has received Ethel waterflood expansion approval with an additional expansion application in progress. As well, Arcan is starting to see the expected waterflood response from its recent water injection operations in the Deer Mountain Unit #2. About Arcan Resources Ltd. Arcan Resources Ltd. is an Alberta, Canada corporation that is principally engaged in the development and acquisition of petroleum and natural gas located in Canada's Western Sedimentary Basin with a production weighting of over 90 percent light sweet oil. Legal AdvisoriesBOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil is based on an energy equivalency conversion primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ration of 6 Mcf: 1 bbl would be misleading as an indication of value. Forward-Looking Information and StatementsThis 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'', ''will'', ''plans'' 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, among other things, the following: anticipated production increases over 2011 levels; anticipated average production for 2012; the expectation that Arcan will fund its remaining 2012 operations from its existing cash flow stream; the results of Arcan's water injection activities; Arcan's expectations respecting its growth and activities throughout the remainder of 2012, including its plans to bring up to 30 wells on-stream in 2012; Arcan's ability to execute on the remainder of its 2012 business plans; future growth including development, exploration, acquisition, construction and operational activities and related expenditures. 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; the accuracy of current horizontal production data, historical well production and waterflood results; the potential impact of certain enhanced recovery techniques, including water injection; the general continuance of current or, where applicable, assumed industry conditions; continuity of reservoir conditions across Arcan's Swan Hills land base and its Ethel oil pool; 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. 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: for reasons currently unanticipated, Arcan's production rates may not increase in the manner currently expected; Arcan's operational plans for 2012 may not be completed in the timelines anticipated, in the manner anticipated or at all and the execution of such plans may not have the results currently anticipated by Arcan; changes in tax or environmental laws or royalty rates; the impact of increased debt levels and debt service requirements; inaccurate estimation of Arcan's oil and gas reserves volumes; water injection may not have the impact on production currently anticipated by Arcan; governmental and regulatory approvals, including those relating to waterflood expansion, may not be obtained on the timelines anticipated or in the manner currently anticipated by Arcan; increased costs and expenses; the impact of competitors; changes in commodity prices; and reliance on industry partners. Although the current capital spending program of the Corporation is based upon the current expectations of the management of the Corporation, there may be circumstances in which, for unforeseen reasons, a reallocation of funds may be necessary as may be determined at the discretion of the Corporation and there can be no assurance as at the date of this press release as to how those funds may be reallocated. Should any one of a number of issues arise, Arcan may find it necessary to alter its current business strategy and/or capital spending program including its intention to fund 2012 operations through cash flows. Further information about Arcan and the potential factors and risks that may impact Arcan and its business and operations are detailed from time to time in Arcan's public disclosure documents including, without limitation in Arcan's annual information form for the year ended December 31, 2011, 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.FOR FURTHER INFORMATION PLEASE CONTACT: Ed GilmetArcan Resources Ltd.Chief Executive Officer and President(403) email@example.comORDouglas PennerArcan Resources Ltd.Executive Vice President and Chief Financial Officer(403) firstname.lastname@example.orgORSuite 2500, 308 - 4th Avenue S.W.Arcan Resources Ltd.Calgary, AB T2P 0H7NEITHER THE 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.