Winter in the Great White North Message Board

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Strategies & Market Trends : Winter in the Great White North

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From: teevee	4/27/2010 12:55:07 PM
	of 8273

ARN-target price moved up:-) This is from Paradigm - Haywood has kept $8 target. Arcan’s year-end operations update noted a second horizontal well at Deer Mountain is currently under test, while five of six additional wells have reached total vertical depth. ?? The swiftness with which this program has been rolled out is impressive, giving us increased visibility to a potentially very high growth rate in a full operating year. ?? As such, we have significantly increased our estimates in FY11, and are increasing our target price to $8.50 to reflect the growth potential that Deer Mountain horizontal well development presents. Upgrading Target Maintain Buy Rating We continue to be impressed not only with the Deer Mountain asset, but the operator’s ability execute an expanded drilling program. Multiple catalysts are on the horizon to further prove the potential growth proposition of this asset base, with seven wells to have test rates reported in the next two months. As such, and supportive of our expanded production forecast, we are increasing our target price to $8.50 from $5.50, which is based on 7.5x (7.1x debt-adjusted) our 2011 cash flow estimate of $1.20. Maintain Buy rating.

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