HOUSTON–(BUSINESS WIRE)–WildHorse Resource Development Corporation (NYSE: WRD) announced today that it has closed the sale of its previously announced divestiture of its North Louisiana assets. WRD received net proceeds of approximately $217 million, subject to post-closing adjustments. Subsequent to the closing of the divestiture, 100% of WRD’s assets are located in the Eagle Ford Shale and Austin Chalk of East Texas.
In addition, WRD completed the regularly scheduled semi-annual redetermination of the borrowing base under its revolving credit facility. The redetermination, which includes the impact of the closed North Louisiana divestiture, resulted in an increased borrowing base of $1.05 billion from $875 million. The next regularly scheduled borrowing base redetermination is expected to occur in October 2018.
“The sale of our North Louisiana assets completes the transition of WRD to a pure-play in the Eagle Ford and Austin Chalk,” said Jay Graham, Chairman and Chief Executive Officer of WRD. “As a pure play, we will be able to focus entirely on our high-return Eagle Ford and Austin Chalk assets and projects such as the construction of our in-field sand mine. Furthermore, the proceeds from the North Louisiana sale and our increased borrowing base will help to fund our Eagle Ford program and bridge the gap to becoming free cash flow positive in the near future. In our 2018 program, we will extensively test various aspects of our completion design and will bring online 60% of our wells on four-well pads testing a variety of spacing assumptions. With a 404,000 net acre position, this year is about setting the groundwork on our completion and pad design in order to methodically develop this tremendous asset with over 30 years of inventory.”
2018 Development Plan
As previously announced, WRD projects 2018 average daily production between 46 – 49 Mboe/d consisting of 31 – 35 Mbbls/d of oil, 45 – 55 MMcf/d of natural gas, and 5 – 7 Mbbls/d of NGLs. At the mid-point of guidance, this represents a total company production growth rate of 54% and an Eagle Ford production growth rate of 90% over 2017’s average daily production. This guidance remains unchanged from the February 12, 2018 press release which presented a case for the successful closing of the North Louisiana divestiture.
WRD estimates a fiscal year 2018 D&C capex budget of approximately $700 – $800 million. Drilling and completion activity will be weighted toward the first half of 2018 as WRD transitions from 7.0 rigs at the beginning of the year to 4.0 rigs at mid-year for an average of 4.8 rigs in the Eagle Ford and Austin Chalk during 2018. WRD has no commitments on its drilling rig fleet. In addition, WRD expects to transition from 4.0 completion crews in the first half of the year to 3.0 completion crews in the second half of 2018.
The budget also allocates between $65 – $75 million of non-D&C capital expenditure for the acquisition and construction of WRD’s recently announced sand mine which is expected to produce savings of $400,000 to $600,000 per well upon completion by the first quarter of 2019. WRD expects its capital budget to be funded by cash on hand, the proceeds of the North Louisiana divestiture, and borrowings under its revolving credit facility.
For the full year 2018, WRD expects to spud 100 to 110 gross wells and to bring online 100 to 110 gross wells which include 90 – 100 Eagle Ford wells and 8 Austin Chalk wells. For wells brought online in 2018, WRD estimates an average working interest of approximately 93% in the Eagle Ford and 96% in the Austin Chalk.
The table below shows WRD’s fiscal year 2018 guidance updated for the North Louisiana divestiture. Because the North Louisiana divestiture closed on March 29, 2018, the earnings results for the first quarter of 2018 will include between 65 – 75 MMcfe/d of production from the North Louisiana asset. The effective date of the divestiture is January 1, 2018.
|FY 2018 Guidance|
|Net Average Daily Production (Mboe/d)||46 – 49|
|Oil (Mbbls/d)||31 – 35|
|Natural Gas (MMcf/d)||45 – 55|
|NGLs (Mbbls/d)||5 – 7|
|Average Costs (per Boe)|
|Lease Operating Expense||($2.90) – ($3.40)|
|Gathering, Processing, and Transportation||($1.10) – ($1.40)|
|Cash General and Administrative(1)||($2.00) – ($2.50)|
|Taxes Other than Income (% of oil & gas revenue)||5.0% – 6.0%|
|Commodity Price Realizations (Unhedged)(2)|
|Crude Oil Realized Price (% of WTI NYMEX)||98% – 102%|
|Natural Gas Realized Price (% of NYMEX to Henry Hub)||90% – 94%|
|NGL Realized Price (% of WTI NYMEX)||33% – 37%|
|Wells Spud (Gross)||100 – 110|
|Wells Completed (Gross)||100 – 110|
|D&C Capital Expenditure ($MM)||$700 – $800|
|Sand Mine Capital Expenditure ($MM)||$65 – $75|
|Note: Guidance as of February 12, 2018|
Excludes non-cash compensation charges associated with grants under our LTIP and incentive units issued to certain of our officers and employees. WRD does not guide to anticipated average non-cash general and administrative costs. Please see cautionary language in the appendix for additional disclosures. See “Cautionary Statements and Additional Disclosures” in the Appendix section of this press release for more information.
Based on strip pricing as of February 9, 2018.
First Quarter 2018 Earnings Conference Call
WRD will report its first quarter 2018 financial and operating results after the market closes for trading on May 9, 2018. On the morning of May 10, 2018, management will host a first quarter 2018 earnings conference call at 8 a.m. Central (9 a.m. Eastern). Interested parties are invited to participate on the call by dialing (877) 883-0383 (Conference ID: 7787856), or (412) 902-6506 for international calls, (Conference ID: 7787856) at least 15 minutes prior to the start of the call or via the internet at www.wildhorserd.com. A replay of the call will be available on WRD’s website or by phone at (877) 344-7529 (Conference ID: 10118478) for a seven-day period following the call.
WRD also announced that members of WRD’s management team intend to participate in the Tudor Pickering Holt’s Hotter ‘N Hell Conference in Houston, Texas on May 14 – 16, 2018. Presentation materials for the conference will be available on WRD’s website at www.wildhorserd.com under the Investor Relations tab.
About WildHorse Resource Development Corporation
WildHorse Resource Development Corporation is an independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and NGL properties primarily in the Eagle Ford Shale and Austin Chalk in East Texas. For more information, please visit our website at www.wildhorserd.com.