CALGARY, ALBERTA–(Marketwired – Feb. 17, 2016) – Raging River Exploration Inc. (“Raging River” or the “Company“) (TSX:RRX) is pleased to announce that it has entered into a bought deal financing agreement with a syndicate of underwriters led by FirstEnergy Capital Corp. Raging River will issue 10,000,000 common shares (“Common Shares“) at a price of $8.65 per Common Share for gross proceeds of $86.5 million (the “Offering“). The underwriters will have an option to purchase up to an additional 15% of the Common Shares issued under the Offering at a price of $8.65 per Common Share to cover over-allotments, exercisable in whole or in part at any time until 30 days after the closing date. The maximum gross proceeds that could be raised under the Offering is approximately $99.5 million should the over-allotment option be exercised in full.
The net proceeds from the Offering will be initially used to temporarily reduce indebtedness, partially fund the Company’s 2016 capital expenditure program and for general corporate purposes.
The Offering will be completed by way of short form prospectus in certain provinces of Canada (excluding Quebec), and on a private placement basis in the United States pursuant to exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended. The Offering is subject to normal regulatory approvals and is expected to close on or about March 9, 2016.
As outlined in the Company’s press release dated February 3, 2016, Raging River is re-affirming its full year capital program of $150-$160 million, which consists of 180-185 net wells and is expected to generate 2016 average daily production of 16,500 boe/d and 2016 exit production of 17,000 boe/d. Based upon field estimates, Raging River’s production has averaged 16,600 boe/d to date in Q1 2016, which is anticipated to be equivalent to the average for the first quarter of 2016.
Raging River is in the midst of an active first quarter. The Company has finished drilling 51 horizontal Viking wells including eight wells in Alberta which were drilled on acreage acquired pursuant to the recently closed acquisition of Anegada Energy Corp. Remaining capital activities for the quarter include the drilling of approximately four net wells, as well as the completion of 12-15 net wells. We anticipate that all capital activities will be completed by the end of February. On-stream capital costs have continued to trend lower. When budgeting late in 2015, we anticipated an on-stream well cost of $725,000 per well while our year to date actual costs have been approximately $680,000, or 6% below budget.
Raging River expects to maintain its strong balance sheet. Including the net proceeds from the Offering, Raging River expects to exit 2016 with net debt of approximately $88 million ($76 million assuming exercise of the over-allotment option in full), which equates to a trailing net debt to funds flow ratio of approximately 0.7:1 (0.6:1 assuming exercise of the over-allotment option in full).
The business approach taken by the Company since our inception four years ago has been to prudently manage our balance sheet while maintaining meaningful per share growth in addition to developing an enviable drilling inventory. Our established drilling inventory of approximately 3,800 locations has set the Company up to endure in these times of continued depressed commodity prices.
The increased financial flexibility achieved with the Offering will continue to allow us to be opportunistic on incremental acquisitions and drilling opportunities throughout the upcoming year. Year to date, we have already added 17 net sections of land through a series of swaps and crown and freehold land purchases. On a risked basis, the acquired lands have already replaced 100% of the 180-185 drilling locations that we anticipate drilling in 2016.
The acquisition market for both large and small deals continues to be active and Raging River will continue to pursue those deals that provide long term per share value accretion for our shareholders.