CALGARY, ALBERTA–(Marketwired – May 9, 2016) – Raging River Exploration Inc. (the “Company” or “Raging River”) (TSX:RRX) announces its operating and financial results for the three months ended March 31, 2016. Selected financial and operational information is outlined below and should be read in conjunction with the unaudited interim financial statements and the related management, discussion and analysis (“MD&A”). These filings will be available at www.sedar.com and the Company’s website at www.rrexploration.com.
Financial and Operating Highlights
|Three months ended
|Financial (thousands of dollars except share data)|
|Petroleum and natural gas revenue||50,382||55,006||(8||)|
|Funds from operations (1)||29,904||33,480||(11||)|
|Net earnings (loss)||(7,852||)||760||(1,133||)|
|Development capital expenditures||37,380||48,377||(23||)|
|Total capital expenditures||37,380||84,106||(56||)|
|Weighted average shares (thousands)|
|Shares outstanding, end of period (thousands)|
|Operating (6:1 boe conversion)|
|Average daily production|
|Crude oil and NGLs (bbls/d)||15,188||12,870||18|
|Natural gas (mcf/d)||7,900||2,641||199|
|Barrels of oil equivalent (2)(boe/d)||16,505||13,310||24|
|Oil and gas sales(3)||33.54||45.92||(27||)|
|Realized gain on commodity contracts||0.14||1.59||(91||)|
|General and administrative expense||(1.26||)||(1.37||)||(8||)|
|Asset retirement expenditures||(0.03||)||(0.02||)||50|
|Current taxes recovery||1.93||–||100|
|Funds flow netback(1)||19.91||27.95||(29||)|
|Net earnings (loss) per boe||(5.23||)||0.64||(917||)|
|(1)||See “Non-IFRS Measures”|
|(2)||Boe conversion ratio for natural gas of 1 Boe: 6 Mcf has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.|
|(3)||Excludes unrealized risk management contracts.|
FIRST QUARTER 2016 HIGHLIGHTS
- Achieved another quarterly production record with average production of 16,505 boe/d (92% oil) representing an increase of 24% over the comparable period in 2015. This represents a 9% production per share increase from the comparable period of 2015 and a 5% increase from the fourth quarter of 2015.
- The Company’s capital expenditures were $37.4 million. Capital expenditures during the quarter consisted of $27.6 million on drilling and completions, $6 million on equipping and $3.8 million on waterflood expansion and land purchases.
- A total of 56.5 net Viking horizontal wells were drilled at a 100% success rate. Average on-stream capital costs during the quarter achieved a new record low for Raging River of $650,000 per well with average drilling and completion costs of $530,000 per well.
- On an unhedged basis, the Company generated industry leading operating netbacks of $19.95/boe and funds flow netbacks of $19.77/boe.
- Completed a bought deal financing for gross proceeds of $108.1 million, issuing 12.5 million common shares at a price of $8.65 per share.
- Maintained balance sheet strength with first quarter exit net debt of $44.6 million representing 0.4 times debt to the first quarter annualized cash flow.
- Subsequent to quarter end, Raging River has reaffirmed its existing $300 million credit facilities.
Raging River’s borrowing base was reviewed and we are pleased to announce that the syndicate of lenders underwriting the Company’s credit facilities have unanimously reaffirmed the borrowing base at $300 million. The next borrowing base redetermination is scheduled for October 2016. In these challenging times, Raging River is especially pleased with the support of our lending syndicate which reflects the high quality and growth of our asset base.
INCREASED 2016 BUDGET AND GUIDANCE
Since our last guidance update in January 2016, oil prices both current and futures, have strengthened. Utilizing updated average strip pricing of US$45.37/bbl WTI for the last three quarters of 2016 versus our prior forecast of US$34.15/bbl WTI for the same period results in an approximate $40 million increase to our expected 2016 funds flow from operations.
As a result of the improved outlook, the board of directors has approved a $20 million increase to our capital budget to $175 million from $155 million. Approximately $16 million of the increase will be allocated towards additional drilling opportunities with the balance being added to waterflood initiatives. With the expanded budget and lower current per well costs, we now anticipate drilling approximately 215 to 220 wells versus prior expectations of 180 to185 wells.
The increased capital is expected to increase 2016 average production from 16,500 boe/d to 16,750 boe/d. More importantly, the Company is positioned for strong growth into 2017 with an increase in the exit guidance to 18,000 boe/d from the previous exit guidance of 17,000 boe/d.
2016 Increased Guidance
|Average daily production|
|Crude oil and NGLs (bbls/d)||15,500|
|Natural gas (mcf/d)||7,500|
|Barrels of oil equivalent (boe/d)||16,750|
|Crude oil – WTI||42.40|
|Exchange rate ($Cdn/$US)||1.29|
|Natural gas – AECO ($/mcf)||1.76|
|Cdn Light Sweet ($Cdn/bbl)||49.80|
|Operating cashflow ($000)||169,500|
|Financial charges ($000)||2,900|
|Cash taxes recovery ($000)||(2,900)|
|Funds flow from operations ($000)||161,100|
|Per share – basic||0.72|
|2016 exit net debt ($000)||50,000|
|2016 exit net debt to funds flow from operations||0.3:1|
|Oil and gas sales||42.50|
|Cash taxes recovery||(0.45)|
|Funds flow netback||26.40|
|Drilling, completion & equipping ($000)||162,000|
|Land, seismic and maintenance ($000)||6,000|
OUTLOOK AND OPERATIONS UPDATE
With first quarter commodity prices averaging levels not seen since 2003, Raging River elected to shut- in approximately 600 mcf/d of uneconomic non-associated gas production in addition to leaving approximately 30 wells drilled and uncompleted. With oil prices strengthening and favorable weather conditions we were able to re-start completion activities in mid-April. To date, 28 wells have been completed in the second quarter. The wells are in various stages of equipping with the first new oil production now on-stream. If weather conditions remain favorable, drilling operations are expected to commence in early June with up to three drilling rigs. Capital expenditures in the second quarter are expected to be approximately $30 to $40 million.
The consensus view is that oil prices will continue to modestly strengthen into 2017. Although we cannot accurately predict what the future may bring for oil prices, we can and have set up the Company to succeed in the current commodity price environment. Assuming oil prices continue to be range bound between US$45/bbl to US$50/bbl WTI for the next four years we expect to generate production and cashflow per share growth of 10 to 15% per year.
Additional corporate information can be found in our corporate presentation on our website at www.rrexploration.com.