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Resolute Touts +45% Jump in Output in Q3 at 34.7 MBOEPD; Talks Latest Wells

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Resolute Energy reported preliminary third quarter 2018 production results and an operations update.

Aggregate third quarter 2018 production averaged approximately 34,750 BOEPD, an increase of 45% from the second quarter. 

• Third quarter 2018 oil production averaged approximately 15,740 BOPD, an increase of approximately 47% over second quarter 2018. 

• YOY Q3 Boe production increased 54% and oil production increased approximately 40%, both pro forma for the divestiture of the Aneth Field assets. 

Growth in production is being driven by the Company’s successful ongoing development program.  During the quarter, the Company spud six wells, reached total depth on thirteen wells and placed eighteen wells on production.

Borrowing Base Upped ~50%

Based on the strong results from our drilling program, the borrowing base under the Company’s revolving credit facility was increased nearly 50% from $210 million to $310 million.  This $100 million increase ensures that we will continue to have sufficient liquidity to prosecute our business plan.  At September 30, 2018, the Company had approximately $200 million of availability under the revolving credit facility.

Credits 'Pad-Focused' Drilling for Output Increase

The Company’s pad-focused drilling and completion activity has resulted in significant growth in both production and cash flow in the third quarter, with oil production increasing 47% from the second quarter of 2018 and Adjusted EBITDA anticipated to grow by nearly 100%.  

Appaloosa Results - Underformed Expectations

The expectation that oil would represent a higher proportion of third quarter production was partially based on anticipated performance from the Ranger nine pack that was placed on production late in the first quarter of 2018.  Located in Appaloosa, these wells generally have higher oil cuts, in the range of 58-60% for the Wolfcamp A, than other areas of the field, materially influencing both the aggregate level of oil production and the oil component of total production.  The three UWCA wells and the WCC well in this well pack have shown performance consistent with our expectations from a total production as well as an oil cut perspective.  However, while oil cut from the three LWCA and two UWCB wells is consistent with our expectations, total production from these wells has underperformed our expectations, leading to lower aggregate oil production for the quarter.  The table below presents production rates for this well pack.

Based on the extensive data gathering and analytics, including microseismic analysis of the completions, tracer analysis during flowback, real time rock property data gathered during drilling and downhole pressure measurement, we have identified modifications which we are implementing in our drilling elsewhere in the field and which we believe should improve future well performance, particularly in the LWCA and the UWCB zones.  The most significant change has been to widen the vertical spacing between the wells by adjusting landing zones for the lower wells to increase the stimulated rock volume within the well pack.  As noted below we are testing this modified spacing in both the South Mitre well pack in Appaloosa and the second Sandlot nine pack in Mustang. We will evaluate any impact these changes may have on our overall inventory as we gather more data.

Sandlot Drilling

Third quarter production volumes and composition were also influenced by the Company’s second nine-well pack in the Sandlot unit in Mustang, which was brought on production in mid-July.  Along with strong oil production, Mustang wells typically produce at higher gas and NGL rates than wells drilled in Appaloosa.  The Sandlot nine-well group consists of three UWCA wells, three LWCA wells and three UWCB wells, with average completed lateral lengths of approximately 6,200 feet.  The table below presents initial production rates for this well pack.

The Sandlot well pack was drilled using the same vertical spacing as the Ranger well pack.  Overall these wells are performing close to expectations, and the well pack has exhibited a lesser degree of the relative performance differences between the UWCA and the LWCA and UWCB wells experienced in the Ranger wells.