Exploration & Production | Quarterly / Earnings Reports | Third Quarter (3Q) Update | Drilling Activity | Drilling Program

Arsenal Energy Third Quarter Results

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Arsenal Energy Inc. has released its 2014 Q3 financial and operational results.

Cash flow for the third quarter was $15.0 million or $0.89 per common share, a 28% increase from 2013 Q3. The Board of Directors has declared a quarterly dividend of $0.07 per common share. The dividend is payable on November 28, 2014 (in cash or, if a shareholder has enrolled in Arsenal's Dividend Reinvestment Plan, in shares) to shareholders of record at the close of business on November 14, 2014. The ex-dividend date is November 12, 2014.

Operations

Average production of 4,848 boe/d during the third quarter was up 13% when compared to the second quarter of 2014. During the quarter the Company did not drill any wells. New volumes came online in North Dakota and at Princess from wells drilled in the second quarter but tied in during the third quarter.

Debottlenecking operations continue at Arsenal's Princess battery. During the quarter Arsenal added a water disposal well and completed upgrades to the oil treater and field gathering system. Work has begun in the fourth quarter on upgrading the water pump and electrical systems. Arsenal has also contracted a sales oil line to be constructed in Q1 2015. During the third quarter Arsenal received approval to waterflood the Mannville HHH pool at Princess. The Company is currently drilling the water injector well and plans to start injecting water in Q1 2015. The waterflood should lower operating costs and increase reserves for the HHH pool.

Arsenal continues to expand the opportunity base at Princess. During the third quarter the Company acquired 4,448 net acres of land and shot 15 square miles of 3D seismic.

Outlook

Arsenal has commenced its Q4 drilling program at Princess. The Company will drill one water disposal well and six oil targets. Arsenal has a 100% working interest in all seven wells. Results of the program are expected to be available for release in mid-January.

Oil prices have softened through the fall. The oil price drop has been somewhat mitigated by narrowing differentials and a drop in the Canadian dollar. Pricing for medium gravity Alberta oil, which is 60% of Arsenal's oil production, is currently approximately $75.00 Cdn/bbl. That pricing is approximately the average level experienced over the last four years and continues to deliver very robust drilling economics at Arsenal's Princess project. Payouts of successful wells are still under three months.

Arsenal plans to release its 2015 budget in early January so that the drilling results from the current Princess program can be incorporated into the production forecast and capital development plan.