August 23, 2010 / 4:42 PM / in 7 years

UPDATE 1-Arcan Resources posts narrower quarterly loss

* Q2 loss/shr C$0.01 vs C$0.03 last year

* Production at Swan Hills below initial test results

* Shares down as much as 11 pct

Aug 23 (Reuters) - Canadian petroleum and natural gas company Arcan Resources Ltd ARN.V posted a narrower second-quarter loss on higher production, but output at its Swan Hills Beaverhill project, Alberta fell short of initial test results, sending its shares down as much as 11 percent.

“The first-month averages on the last six wells are much lower than the test rates that the company achieved for these wells,” PI Financial analyst Alistair Toward told Reuters.

The company, which has eight of the 12 wells in production at Swan Hills Beaverhill, said current production at two recently tested wells there were 440 barrels of oil equivalent per day (boe/d) and 300 boe/d, compared with initial test results of 600 boe/d and 500 boe/d.

The company, which is engaged in exploration, development and acquisition of petroleum and natural gas resources located in Canada’s western sedimentary basin, said it experienced rain delays during the second quarter and into the third.

However, with new horizontal wells tied in, it expects to receive the impact of production gains in the balance of the third and through the fourth quarter. Arcan also reaffirmed its average production outlook of over 2,500 boe/d for the year ending Dec. 31, with an expected exit production for this period of 3,500-4,000 boe/d.

For the second quarter, the company posted net loss of C$992,000, or 1 Canadian cent a share, compared with C$1.3 million, or 3 Canadian cents a share, a year ago.

Total petroleum and natural gas revenue was C$11.1 million, compared with C$7.2 million a year ago.

The company reported production of 1,943 boe/d, compared with 1,523 boe per day, last year.

Shares of the Calgary, Alberta-based company were trading down about 8 percent at C$4.72 Monday on the Toronto Venture Exchange. They touched a low of C$4.60 earlier in the day.

The stock has risen almost four-fold since August 2009. (Reporting by Arnika Thakur in Bangalore)

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