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Raging River Lowers Well Costs 22% Over Year

Share Print Bookmark    |    Wednesday,August 12,2015

Raging River Exploration Inc. has announced its operating and financial results for the three and six months ended June 30, 2015. 

Q2 2015 Highlights

• Achieved another quarterly production record with average production of 13,347 boe/d (97% oil) representing an increase of 34% over the comparable period in 2014 and a 21% production per share increase from the comparable period of 2014.
• The Company's capital expenditures were $33.4 million including $32.3 million on development activities in addition to $1.1 million on land. A total of 36 net Viking horizontal wells were drilled and a total of 48 net wells were completed and placed on stream inclusive of the 19.4 net wells drilled and not completed in the first quarter. 
• Average on stream costs during the quarter were $700,000 per well representing a 22% cost reduction from the average costs seen in 2014.
• Achieved our eighth consecutive quarterly decrease in operating and transportation costs to $12.08/boe, a 14% reduction from the comparable quarter of 2014 and a 5% reduction quarter over quarter.
• Maintained balance sheet strength with second quarter exit net debt of $99.1 million representing 0.5 times debt to the second quarter annualized cash flow.

2015 Guidance

• We are maintaining our capital budget of $235 million inclusive of $40 million of acquisitions, $20 million of waterflood capital in addition to $175 million of exploration and development expenditures. Annual average 2015 production guidance of 13,500 boe/d and exit production guidance of 15,000 boe/d remains unchanged. Based on current strip pricing of approximately US$46.50/bbl WTI for the remainder of 2015 we expect to exit the year with an exceptionally strong balance sheet with an estimated debt to trailing cashflow of approximately 0.75 times.

Operations Update

• Focusing on the cost structure of the business has enabled us to materially decrease our sustaining capital requirements. Through increased efficiencies and reduced service provider costs, our average on-stream capital cost per well has been reduced from our historical average of $900-$925 thousand to the current level of $700-$750 thousand per well. To maintain a flat production profile in 2016 would require Raging River to spend approximately 85% of its cashflow at the current 2016 strip price of US$50/bbl WTI.

Waterflood Initiatives

• Facilities construction and injector conversions for our previously mentioned waterflood expansions and new initiatives are in progress with first water injection occurring in July 2015 on three of our six project areas. Success with the waterflood expansions is anticipated to setup further full scale waterflood initiations in 2016 and beyond which will assist in mitigating longer term decline rates within our asset base.
• Raging River continues to be encouraged by the results seen with our horizontal drilling in the Gleneath unit which has been under active waterflood since the mid 1960's. The results seen within this waterflooded area provide significant support for our continued waterflood development plan. 

A summary of the well results are:

• The first two wells drilled by Raging River in the unit in late 2014 have been on production at average rates of 85 bbls/d for in excess of 9 months with no decline; both wells are top performers and on trend to produce 100,000 bbls of cumulative production per well.
• The average initial rate's for four recent drills is similar to the first two quoted above at 75-100 bbls/d of oil which is approximately double the rate of our average wells in non waterflooded areas.

Downspacing Initiatives

• During the fourth quarter of 2014, a total of 11 wells were drilled in the Plato and Dodsland areas effectively increasing average well spacing from the defined convention of 16 wells per section to an average of 20-22 wells per section. These wells have been on production for in excess of 200 days with the infill wells seeing very similar results to the initial offsetting wells. The infill wells have shown very little interference with the existing producers. This continues to support the reasoning that well spacing will ultimately be much greater than 16 wells per section within the Saskatchewan Viking play.

New Land Acquisition

• Subsequent to the end of the second quarter, Raging River acquired an additional 8.5 gross (4.5 net) sections of undeveloped land in our Beadle core operating area with in excess of 30 net high quality Viking drilling locations for consideration of $4.2 million.
• Based on the current on-stream cost structure of approximately $725,000 per well and the success achieved with our initial downspaced wells, the Company's current economic drilling locations are in excess of 2,400 net wells at US$50/bbl WTI. The current economic inventory represents sufficient wells to keep production flat for in excess of 15 years at US$50/bbl WTI.
• Although commodity prices are currently weak, it is expected that over the longer term WTI will return to a more sustainable US$70/bbl WTI level. At this level, our economic drilling inventory increases to in excess of 3,500 locations