Hamburg

The Hamburg “GG” Slave Point 42º API sweet oil pool was discovered by Arcan in February 2006 at a depth of approximately 2,500 meters.  Since the pools discovery: Arcan took control of operating the battery; applied and received approval for an enhanced recovery scheme; drilled numerous producers, source wells and injectors; and implemented a water-flood scheme commencing water injection in October 2007.  Water injection was enhanced considerably in February, 2009 with an additional injection well with one further injector planned before April 2010. All the producing wells in the pool have been pipeline connected through our battery to market infrastructure. Arcan believes that these Slave Point oil wells have resulted in a significant oil discovery and owns 50.25% interest in the pool as well as 100% interest in three offsetting sections of land. With the new roads built early in 2009 the GG pool is now accessible all year round.

The Future

Arcan plans to converting wells to water injection and drilling 2-3 additional producers as part of its development plans for the GG pool. Arcan expects to complete drilling one well before the end of January 2010 and may drill one more well in the spring. Arcan anticipates converting one well to an injector before April 2010 as increased pressure will stabilize gas/oil ratios and allow for increased production. 

In addition to ongoing development of the GG pool Arcan has numerous Slave Point natural gas prospects that it could drill, one of which is expected to be completed by the end of January 2010.  Arcan calls this exploration well its “Wildmint play” and it is targeting 30-50 BCF potential.  Arcan is paying a lower percentage of the drilling costs to keep a 50% interest in the play as it has farmed out the well to its drilling partner.  These exploration wells would complement any development drilling in the “GG” pool, and would be described as high impact exploration. Arcan is also reviewing possible development of Bluesky and Montney natural gas development in the area.

Arcan plans to continue to explore for new Slave Point reefs in the Hamburg area. Management has over 20 years of experience drilling Slave Point targets in this area, achieving a 65 percent historical success ratio.