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Arcan Provides Operations Update, 2013 Budget, and Executes

Arcan Provides Operations Update, 2013 Budget, and Executes $10.0
Million Non-Core Asset Sale 
CALGARY, ALBERTA -- (Marketwire) -- 01/14/13 -- Arcan Resources Ltd.
(TSX VENTURE:ARN) ("Arcan" or the "Corporation") has approved a $26.0
million capital expenditure budget for the first half of 2013 and
estimates its full year 2013 budget at $52.0 million. The 2013 budget
includes drilling an estimated 13 gross (9.4 net) wells. Arcan also
completed a disposition of one and three-quarters sections of
undeveloped land in 64-09W5 for proceeds of $10.0 million. The land
sold was located in the southern-most area of Arcan's Swan Hills
acreage, did not have any associated production, and was isolated
from Arcan's existing core production and infrastructure.  
Arcan announces a capital budget program of $26.0 million for the
first half of 2013, including an estimated $14.0 million towards
drilling seven (4.4 net) wells with the remainder being spent on
infrastructure, recompletions, and waterflood activities. Arcan
currently estimates 2013 production to be approximately 4,300 to
4,700 boe per day, an increase to the average production rate for the
second half of 2012, which Arcan estimates to be approximately 3,950
boe per day, net of dispositions. In line with its strategic
direction, Arcan plans to manage capital within its estimated cash
flow stream for 2013.  
The land sale is consistent with Arcan's stated intention to dispose
of non-core assets through a number of targeted dispositions. Arcan
remains focused on the excellent opportunities in its core operating
areas and the sale proceeds will be applied directly against the debt
on the balance sheet. Arcan is pleased with this sale price, as only
$0.5 million had been invested in these lands and development had not
yet begun. Arcan's strategy continues to be to maximize and extract
value in the forms of strategic sales or farm-outs, without
sacrificing the development inventory. Arcan expects to continue
reviewing all aspects of its assets, operations, and governance to
strengthen its operational capability, capital efficiencies, and to
support its base of production. Along that line, the first
PetroBakken Energy Ltd. farm-out well at 06-28-68-09W5 was on-stream
November 29, 2012. After completing its production testing 
period,
this well is now producing into a pipeline directly into Arcan's
production facilities. The second well in this five to seven well
program has already been drilled at 04-19-66-09W5 with completion
expected in the first quarter of 2013. Arcan is currently drilling
the third well of this program at 05-01-67-09W5. Arcan has also
completed and commenced production on three of the four wells on its
10-05-68-08W5 pad. The fourth well is currently in the process of
being completed. 
Arcan will focus on developing the large light oil resource in the
Swan Hills area. In addition to concluding the majority of the
development in Deer Mountain Unit #2, Arcan has transformed its Ethel
area, which is comprised of 74 sections of land, into a large
development inventory of drill-ready locations. This asset is now
supported by an infrastructure corridor consisting of all weather
roads, pipelines, and facilities. As at June 30, 2012, Arcan's
external independent reserve auditors had recognized recoverable
remaining reserves of 8.9 million boe on a total proved plus probable
reserve basis in Deer Mountain Unit #2, and 18.9 million boe on a
total proved plus probable reserve basis in Ethel. The investments
over the last 18 months in the Ethel corridor provide the ground work
for Arcan to begin to capitalize on the value of the oil assets in
Ethel. In addition to the Ethel corridor development, Arcan is
focused on development of its farm-out lands in 2013, in order for
Arcan to accelerate exploitation of its land base as management feels
that this would be an advantageous time to do so given the current
state of the capital markets. 
Arcan will continue to shift to a program of sustainable growth,
supported by a strengthened balance sheet and focused cost
reductions. Arcan continues to take a measured approach to capital
investment focused on capital efficiencies where higher capital
spending during the winter months is followed by a curtailment of
capital during times when access is only possible at an increased
cost. Arcan estimates that using a more measured approach to capital
spending will allow for wells to be drilled, completed, and tied-in
at a cost of $4.5 million to $5.0 million. The 2013 drilling program
will focus on high graded locations throughout Arcan's land base with
the balance of the capital program targeting production constraints
and the expansion of the waterflood process. To secure the capital
program and cash flow Arcan is hedged at 2,000 barrels per day for
all of 2013 and 2014 at approximately $100.00 and $93.00 West Texas
Intermediate, respectively.  
Arcan will continue its efforts to control committed capital and the
pace of its development. This is expected to ensure that the
Corporation can continue financially sustainable growth and efficient
deployment of capital. The changing capital market environment is
driving Arcan to make operational adjustments as well. The recently
announced farm-outs to PetroBakken Energy Ltd. provide for
capital-efficient development on areas stretching across Arcan's land
base that would not otherwise have been developed in the near term.
Arcan will continue to implement changes that provide for a stable
financial base, maximize shareholder value and provide secure growth
per share as Arcan transitions to a more efficient oil producer
positioned for long term success. Holding a large multi-year light
oil development inventory, Arcan's management continues to look
strategically at all of Arcan's assets and will consider all
opportunities for development and acceleration as they arise.  
Arcan recently launched its new website at www.arcanres.com. The
website has been redesigned and features improved functionality to
enhance the quality of the Corporation's disclosure. The new website
contains standard disclosure materials, including information
explaining the waterflood secondary recovery technique, news
releases, financial documents and presentations, as well as
supplemental information for the benefit of the investment community.
Information is expected to be added shortly to include a new
corporate presentation and a question and answer document that
addresses some of the questions that Arcan's management frequently
receive. 
About Arcan Resources Ltd. 
Arcan Resources Ltd. is an Alberta, Canada corporation that is
engaged in the production, development, exploration and acquisition
of petroleum and natural gas located in Canada's Western Sedimentary
Basin.  
Legal Advisories 
Barrels of oil equivalent ("boe") 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 ratio of
6 Mcf : 1 bbl would be misleading as an indication of value.  
All reserves information contained within this press release comes
from our independent reserves report prepared by GLJ Petroleum
Consultants Ltd. with an effecti
ve date of June 30, 2012. The
estimates of reserves for individual properties may not reflect the
same confidence level as estimates of reserves for all properties,
due to the effects of aggregation. 
Forward-Looking Information and Statements 
This press release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use
of any of the words "estimates", ''expects'', ''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 average production for the second half of 2012;
anticipated average production for 2013; anticipated timing of the
fracture and completion of Arcan's recent wells; the expected use of
proceeds from the disposition of the Swan Hills land; the 2013
capital expenditure program including drilling and expectations;
anticipated operating costs for 2013; Arcan's expectations respecting
its growth, activities and the deployment of capital throughout the
remainder of 2012 and 2013; Arcan's strategic direction; Arcan's
development and ability to implement and execute its 2013 business
plans and strategic direction; Arcan's review of all aspects of
assets, operations and governance; Arcan's consideration of
development opportunities; the launch and contents of the
Corporation's website; future growth including development,
exploration, acquisition, construction and operational activities and
related expenditures.  
The forward-looking information and statements contained in this
press release, including but not limited to the estimates of 2012 and
2013 annual production, 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 lack of any adverse weather
conditions; the lack of significant changes in capital markets or
commodity prices; the accuracy of current horizontal production data,
historical well production and waterflood results; 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 and estimates.  
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 reach the levels currently expected; the application
and modification of horizontal, multi-stage fracture technologies may
not have the impact currently anticipated by Arcan; the future
drilling locations identified by Arcan may prove to be unsuitable or
unavailable and drilling on the locations identified may not occur;
water injection at additional sites in the Deer Mountain Unit #2 or
in the Ethel field may not have the impact on production currently
anticipated by Arcan; Arcan's capital spending and operational plans
for 2013 may not be completed in the timelines anticipated, in the
manner anticipated or at all and the execution of such plans may be
negatively affected further; changes in tax or environmental laws or
royalty rates; increased debt levels or debt service requirements;
inaccurate estimation of Arcan's oil and gas reserves volumes;
limited, unfavourable or no access to debt or equity capital markets;
increased costs and expenses; the impact of competitors; changes in
commodity prices; reliance on industry partners; and certain other
risks detailed from time to time in Arcan's public disclosure
documents including, without limitation, those risks identified in
this press release, and 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. 
Neither 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. 
Contacts:
Arcan Resources Ltd.
Terry McCoy
Chief Executive Officer
(403) 262-0321
tmccoy@arcanres.com 
Arcan Resources Ltd.
Douglas Penner
President
(403) 262-0321
dpenner@arcanres.com 
Arcan Resources Ltd.
Suite 2200, 500 - 4th Avenue S.W.
Calgary, AB T2P 2V6
 
 
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