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RSP Permian to Complete Remaining Backlog by Q3

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RSP Permian, Inc. has reported financial and operating results for the quarter ended June 30, 2015.

Second Quarter 2015 Highlights 

• Production increased by 86% to 19.9 MBoe/d as compared to 2Q14, and increased 25% as compared to 1Q15
• Exit production rate was approximately 24.0 MBoe/d, a 21% increase over 2Q15 average, and a 36% increase over 1Q15 exit rate
• Cash operating expenses decreased 30% to $13.58 per Boe as compared to 2Q14, and decreased 7% as compared to 1Q15
• Accelerated completion activity from prior quarter, completing 18 operated horizontal wells and 11 operated vertical wells during 2Q15 compared to 8 operated horizontal wells and 3 operated vertical wells completed in 1Q15
• At Johnson Ranch, completed remaining 8 horizontal wells in full development test of 10 upper Wolfcamp wells (5 Wolfcamp A / 5 Wolfcamp B) across a section. Despite early facility limitations, wells are outperforming type curve expectations and providing early confirmation of our spacing pattern
• Continued strong performance from Wolfcamp A wells with 9 completions to date and average 30-day IPs of 1,104 Boe/d
• Strongest well to date placed on production in the Spanish Trail area with the Spanish Trail 4827 Wolfcamp A well (6,900' lateral) achieving a 30-day IP of 1,720 Boe/d (84% oil) or 249 Boe/d per lateral foot
• Began horizontal drilling program in Glasscock County, currently drilling upper Wolfcamp B and lower Wolfcamp B zones on Calverley lease
• Increasing 2015 outlook - primarily due to strong well performance, additional completions and a small impact from acquired production
• Increasing mid-point production guidance by 10%, expected to average 19,500 to 20,000 Boe/d or a total production growth target of 64% to 69%
• Increasing expected oil production mix to 75%, resulting in a 14% increase to expected oil volumes at the mid-point of range
• Increasing well completions range to 50 – 55 operated horizontal wells as a result of maintaining a fourth horizontal drilling rig and reduced drilling and completion times
• Maintaining capital expenditure guidance range of $400 million - $450 million

Operational Update

• strong>The Company operated four horizontal drilling rigs during the second quarter and drilled thirteen operated horizontal wells. In addition, RSP drilled one vertical well before dropping its last vertical rig. During the course of the quarter, RSP employed two horizontal completion crews and one vertical completion crew to complete newly drilled wells as well as work off the backlog of wells that were carried over from the prior quarter. In total, RSP completed eighteen operated horizontal wells and eleven operated vertical wells, up from eight operated horizontal wells and three operated vertical wells in the prior quarter. RSP completed four horizontal wells targeting the Lower Spraberry, eight horizontal wells targeting the Wolfcamp A and six horizontal wells targeting the Wolfcamp B.
• At the end of the second quarter, RSP had eleven operated horizontal wells and five operated vertical wells awaiting completion activities down from sixteen operated horizontal wells and fifteen operated vertical wells at the end of last quarter. RSP expects to complete its remaining backlog of horizontal and vertical wells by the end of the third quarter.
• For the second half of 2015, RSP anticipates operating four horizontal rigs with three of the drilling rigs under contract and one horizontal rig operating on well by well arrangement enabling the Company flexibility to drop the fourth rig.
• The Company finished drilling and completion activity on its Johnson Ranch pilot program, where RSP drilled and completed a staggered upper Wolfcamp pattern to test the spacing design of ten horizontal wells across a section, five in the Wolfcamp A and five in the Wolfcamp B. The Company placed on production the remaining eight wells completed during the quarter and all ten wells of the pilot program are currently producing.

Zane Arrott, Chief Operating Officer stated: "We are pleased with the strong early production rates of our upper Wolfcamp wells in our Johnson Ranch pilot program. In particular, we are very encouraged by our Wolfcamp A wells, which from early results, have been some of our highest rate of return wells. This density test will help us better understand our lateral spacing assumptions and how we can optimize our future spacing to ensure we recover the maximum value of our resources under a full development scenario. We plan to monitor the operational performance of these wells over a longer time period before making any changes to our current spacing or ultimate recovery assumptions. These wells were choked back in early production due to facility limitations but are currently tracking on or above our type curves and are on pace to generate cumulative production volumes above our expectations. Importantly, the wells drilled the closest together are not showing any interference and performing as well as, or better than, the average of all the wells in the pilot."