Well Cost | Production Rates | Forecast - Production | Capital Markets | Capital Expenditure | Drilling Program

Arsenal Energy Lowers Planned Capital Expenditure

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Arsenal Energy Inc. has released its 2015 Q2 financial and operational results.

• Capital expenditures dropped $11.4 million or 65% and capital expenditures in Canada have been limited to exploration funded by the issuance of flow through shares in 2014.
• Arsenal's 2015 capital program is now estimated at $27 million. 
• Average production of 3,846 boe/d during the second quarter was 10% lower when compared to the second quarter of 2014.
• During Q1 Arsenal participated in new drill operations on 6 gross (0.89 net) Bakken/ThreeForks horizontal wells in Lindahl, North Dakota. All of the wells were completed with multistage fracks in the 2nd quarter and are anticipated to be on production by the end of Q3. 
• Well costs in North Dakota have dropped by 20% to approximately $6.5 million US.
• Funds from operations for Q2 2015 totaled $6.2 million or $0.34 per share versus $11.6 million or $0.72 per share for Q2 2014. The decrease in cash flow is attributable to a 41% drop in the revenue per boe received from Arsenal's oil and gas sales and lower production in the quarter.
• As a result of Arsenal's aggressive cost cutting, net debt at quarter end has been reduced to $56.6 million compared to $84.4 million at Q2 quarter end in 2014.
• Average production of 3,846 boe/d during the second quarter was 10% lower when compared to the second quarter of 2014. The drop is due to normal production declines and the absence of new drilling. Arsenal's Q2 2015 production mix was 33% light oil, 43% medium and heavy oil, and 24% natural gas.
• During Q1 Arsenal participated in new drill operations on 6 gross (0.89 net) Bakken/ThreeForks horizontal wells in Lindahl, North Dakota. All of the wells were completed with multistage fracks in the 2nd quarter and are anticipated to be on production by the end of Q3. 
• Well costs in North Dakota have dropped by 20% to approximately $6.5 million US.

Outlook

• Oil prices have declined through July so it is expected that cash flow in the third quarter will be lower. Through these challenging times, Arsenal will continue to focus on reducing costs and lowering debt. A second priority is to position the Company for the future. Arsenal will concentrate on growing its opportunity base in eastern Alberta where full cycle economics are still attractive. The Company plans to accomplish this through exploration drilling funded by the flow through issue in December 2014 and by core property tuck in acquisitions.
• Volumes for 2015 are now expected to average 4,000 boe/d. Cash flow for 2015 is now estimated at $33.5 million and total debt at yearend is estimated at $54.1 million.