CALGARY, ALBERTA–(Marketwired – Dec. 11, 2013) –
Raging River Exploration Inc. (“Raging River” or the “Company“) (TSX:RRX) is pleased to announce that it has surpassed its exit guidance of 8,000 boe/d. As a result of our continued success, we now expect fourth quarter 2013 production to be 7,300-7,400 boe/d resulting in a further increase to our average 2013 production guidance to 5,500 boe/d from 5,400 boe/d.
2013 has been a record year for Raging River. During 2013 we more than doubled production and cash flow per share while maintaining a pristine balance sheet. We also materially expanded our drilling inventory through methodical step out drilling across our asset base. During 2013 we successfully drilled greater than 50 previously undrilled sections.
2014 is anticipated to be another defining year for the Company as we embark on a development capital program of $215 million that is expected to result in the drilling of up to 209 net horizontal Viking oil wells. The expenditures are expected to increase 2014 average daily production by 73% to 9,500 boe/d (95% oil) and exit rate by 38% to 11,000 boe/d (95% oil).
Play expansion will again be a key value driver for the Company in 2014. Approximately 24% of our drilling locations are scheduled to test undrilled sections. The Company has 200 net sections of prospective Viking acreage with 108 net sections tested. Upon completion of the 2014 program, in excess of 160 of these sections are expected to have been tested.
2014 is expected to see wells drilled throughout our prospective Viking acreage including:
| • | Dodsland | 45 net wells |
| • | Beadle | 66 net wells |
| • | Greater Lucky Hills | 42 net wells |
| • | Kerrobert | 22 net wells |
| • | Plato & Forgan | 34 net wells |
The 2014 budget includes the drilling of 209 net horizontal Viking oil wells. Total on-stream costs (drilling, completion and equipping) represent $195 million or 90% of the approved budget. $5 million has been allocated to waterflood optimization and expansion with the remaining $15 million allocated to land, seismic and maintenance capital.
2014 funds from operations are expected to be $181 million which when combined with our existing credit facilities, will provide ample funds to execute the budget while maintaining a strong balance sheet.
Based on an assumed 2014 average Edmonton Light oil price of $91/bbl, the Company expects to exit 2014 with net debt of approximately $135 million or 0.6 times debt to trailing estimated fourth quarter 2014 funds from operations.
2014 Guidance
Raging River recognizes the volatility in crude oil prices and differentials and continues to take a disciplined approach to hedging and maintenance of balance sheet strength to ensure we can continue to execute on per share production and cash flow growth.
The Company’s guidance for 2014 is as follows:
| Average daily production | ||
| Crude Oil and NGL’s (bbls/d) | 9,000 | |
| Natural gas (mcf/d) | 3,000 | |
| Barrels of oil equivalent (boe/d) | 9,500 | |
| Exit barrels of oil equivalent (boe/d) | 11,000 | |
| Financial | ||
| Operating cashflow ($000) | 207,000 | |
| G&A and interest ($000) | 11,000 | |
| Cash taxes ($000) | 15,000 | |
| Funds flow from operations ($000) | 181,000 | |
| Per Share – basic | 1.06 | |
| Annualized fourth quarter funds from operations ($000) | 216,000 | |
| 2014 exit net debt ($000) | 135,000 | |
| Pricing | ||
| Crude oil – WTI ($US/bbl) | 95.00 | |
| Exchange rate (US$/Cdn$) | 0.94 | |
| Natural gas – AECO ($/GJ) | 3.50 | |
| Differential – WTI to Edmonton Light ($Cdn/bbl) | 10.00 | |
| Netbacks ($/boe) | ||
| Oil and gas sales | 82.90 | |
| Royalties | 8.40 | |
| Operating expense | 12.80 | |
| Transportation expense | 2.00 | |
| Operating netback | 59.70 | |
| G&A and interest | 3.20 | |
| Cash taxes | 4.30 | |
| Funds from operations | 52.20 | |
| Capital Expenditures | ||
| Drilling, completion & equipping ($000) | 195,000 | |
| Land, seismic and maintenance ($000) | 15,000 | |
| Waterflood optimization ($000) | 5,000 | |
| Total ($000) | 215,000 | |
Raging River continues to be a leader in the southwest Saskatchewan Viking light oil play. Our 1,900 well drilling inventory combined with our industry leading netback positions the Company for continuous per share growth in 2014 and beyond.
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