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Resolute Tags 2014 CapEx; Will Ramp Up Permian, Powder River Activity

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   |    Monday,March 10,2014

Resolute Energy Corp. has detailed its 2014 capital budget and guidance.

The company has established a 2014 Base Operating and Financial Plan that purposely limits the its activities to those that we expect will generate the highest overall improvements in operating and financial metrics, meet operational constraints and considerations, such as lease terms, and limit cash expenditures to a  maximum of available cash flow.

The Base Plan allocates more capital to drilling horizontal wells in the Permian and Powder River basins, which have higher expected rates of return, and less capital to development projects in Aneth Field.

The Base Plan is designed to hold debt to current levels while still allowing the Company to continue with its horizontal drilling at a moderate pace. However, management is actively evaluating financial options that would allow the Company to accelerate its high value horizontal drilling activities.  The data set forth below are based on the Base Plan.

(Slides from the company's latest investor presentation are featured below)

Capital Budget & Production

Resolute expects to invest between $136 million and $153 million in 2014 for its base development activities, including drilling and completions, facilities construction and upgrades, leasing and other corporate capital.  The Company intends to fund 2014 capital expenditures substantially from internally generated cash flow. 

Resolute will evaluate its capital expenditures in relation to its cash flow and may adjust its activity and capital spending levels based on changes in commodity prices, the cost of goods and services, production results and other considerations.

Production

The Company estimates that full-year production for 2014 will be between 4.5 million Boe and 4.9 MMBoe.  The midpoint of 2014 production guidance represents a five percent increase from full-year 2013 production of 4.47 MMBoe.  On a revenue-weighted basis, approximately 93 percent of Resolute's production is expected to come from sales of oil and natural gas liquids, while on a volume-weighted basis approximately 82 percent is expected to be attributed to oil and NGL.

Lease Operating Expense

Resolute projects annual cash LOE for 2014 to be between $98 million and $113 million.  This results in a slight reduction in per-unit LOE in 2014 when compared to 2013.  Production taxes are expected to be twelve to twelve and one half percent of 2014 production revenue. 

General & Administrative Expense

Resolute anticipates that annual net general and administrative expense for 2014 will be between $25 million and $30 million, excluding non-cash stock-based compensation expense.  The increase in general and administrative expense relative to 2013 is substantially related to increased staffing necessary to support our expanded operations in the Permian Basin as well as the full-year effect of the personnel additions which occurred during the course of 2013.

Depletion, Depreciation and Amortization

Resolute anticipates that its depletion, depreciation and amortization rate for full year 2014 will be between $29.00 and $31.00 per Boe of production. 

The following table summarizes Resolute's current financial and operational estimates for the full year 2014.

Properties

Resolute has outlined its primary projects, most notably the Permian and Powder River Basin assets.

Permian Basin

Resolute boasts multiple targets across its Permian Basin position (which spans both the Midland and Delaware basins). It's two primary targets are its Gardendale, Reeves County and OTB/Big Spring prospects.

Gardendale Prospect

Resolute's Gardendale prospect boasts multiple intervals, including the Clearfork, Spraberry, Wolfcamp and Cline plays.

The company will primarily focus on the Wolfcamp B formation, followed by the Wolfcamp A and Spraberry trends.

OTB/Big Spring Prospect

Resolute's OTB/Big Spring asset is also prospective for multiple plays, including the Wolfcamp, Wolfberry, Spraberry, Cline and Strawn. 

Reeves County Prospect

Wyoming Powder River Basin

Resolute's other big project is located in Wyoming's Powder River Basin.