May 25, 2010 / 4:25 PM / 8 years ago

UPDATE 3-Arcan Resources posts surprise Q1 loss, shares down

* Q1 loss/shr C$0.02 vs est. EPS C$0.01

* Revenue up 57 pct

* To review reserves and banking facilities in H2 of 2010

* Shares down as much as 12 pct (Recasts; adds details, updates stock movement)

By Koustav Samanta

BANGALORE, May 25 (Reuters) - Arcan Resources Ltd ARN.V posted a surprise quarterly loss, partly hurt by higher royalties, and operating and transportation expenses, sending the petroleum and natural gas company’s shares down 12 percent.

Arcan, which increased its bank credit facility to C$70 million from C$50 million in the first quarter, said it plans to review its reserves and banking facilities in the second half of 2010 and accordingly implement drilling expansions.

FirstEnergy Capital analyst Cody Kwong, who currently has an “underperform” rating on Arcan’s stock, said the expanded credit facilities give the company more room to develop its Swan Hills light oil play in Deer Mountain.

Arcan said acquisition of a property adjoining its Deer Mountain unit during the quarter added about 500 barrels of oil equivalent (boe) per day to its production and raised its undeveloped land base to over 140 net sections on the Swan Hills play.

For the first quarter, the company reported a net loss of C$804,000, or 2 Canadian cents a share, compared with a loss of C$1.3 million, or 3 Canadian cents a share, a year earlier.

Analysts on average were expecting a profit of 1 Canadian cent a share, according to Thomson Reuters I/B/E/S.

Total petroleum and natural gas revenue rose 57 percent to C$9 million, while production during the quarter increased 9 percent to 1,468 boe per day.

Funds from operations rose 44 percent to C$2.8 million or 6 Canadian cents a share, it said.

The company’s royalty payments rose 69 percent to C$17.81 per boe, while its operating and transportation expenses went up 62 percent to C$18.08 per boe.

Arcan reported cash capital expenditures of C$70.8 million for the first quarter, up from C$3.2 million, a year ago.

Shares of the Calgary, Alberta-based company were down 4 percent, or 15 Canadian cents, at C$3.70 Tuesday afternoon on the Toronto Venture Exchange. They hit a low of C$3.40 earlier in the day. (Reporting by Koustav Samanta in Bangalore; Editing by Vyas Mohan)

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