Raging River Exploration Inc. (the "Company" or "Raging River") (TSX:RRX)
announces its operating and financial results for the three month and year ended
December 31, 2013. Selected financial and operational information is outlined
below and should be read in conjunction with the audited financial statements
and the related management, discussion and analysis ("MD&A"). Also, the Company
today announces the filing of its Annual Information Form ("AIF") for the year
ended December 31, 2013. The AIF contains the Company's reserves data and other
oil and natural gas information, as required under National Instrument 51-101.
These filings will be available at www.sedar.com and the Company's website at
www.rrexploration.com.
Raging River commenced active operations and became a reporting issuer on March
16, 2012 following the completion of the Plan of Arrangement among Wild Stream
Exploration Inc., Crescent Point Energy Corp. and the Company. Accordingly the
comparative operations below reflect only a 290 day period for the year ended
December 31, 2012.
Financial and Operating Highlights
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Three months
ended Percent Year ended Percent
December 31, Change December 31, Change
------------------ ------------------
2013 2012 2013 2012
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Financial (thousands of
dollars except share
data)
Petroleum and natural
gas revenue 56,106 21,764 158 175,808 49,964 252
Funds flow from
operations (1) 35,882 15,089 138 116,967 33,797 246
Per share - basic 0.22 0.12 83 0.74 0.28 164
- diluted 0.20 0.12 67 0.69 0.28 146
Net earnings (loss) 16,622 4,943 236 43,412 11,337 283
Per share - basic 0.10 0.04 150 0.27 0.10 170
- diluted 0.09 0.03 200 0.26 0.09 189
Development capital
expenditures 60,698 26,135 132 168,125 55,241 204
Property and corporate
acquisitions 103,423 41,285 151 104,370 71,097 47
Total capital
expenditures 164,121 67,420 143 272,495 126,338 116
Net debt(3) 96,322 15,157 535 96,322 15,157 535
Shareholders' equity 379,403 257,371 47 379,403 257,371 47
Weighted average shares
(thousands)
Basic 164,121 127,149 29 158,613 118,999 33
Diluted 178,729 129,380 38 170,236 121,094 41
Shares outstanding, end
of period (thousands)
Basic 170,914 156,757 9 170,914 156,757 9
Diluted 195,214 177,372 10 195,214 177,372 10
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Operating (6:1 boe
conversion)
Average daily
production
Crude oil and NGLs
(bbls/d) 7,458 3,027 146 5,457 2,211 147
Natural gas (mcf/d) 1,912 618 209 1,252 396 216
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Barrels of oil
equivalent
(2)(boe/d) 7,777 3,130 148 5,665 2,277 149
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Netbacks
Operating
Oil and gas
sales(3) 78.42 75.59 4 85.02 75.67 12
Royalties (7.02) (6.69) 5 (7.56) (7.26) 4
Operating expenses (12.42) (12.44) - (12.57) (12.82) (2)
Transportation
expenses (2.10) (1.75) 20 (2.13) (1.73) 23
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Field netback ($/boe) 56.88 54.71 4 62.76 53.86 17
Realized gain
(loss) on
derivatives (1.99) 0.83 (340) (2.69) 0.90 (399)
Operating netback
($/boe) 54.89 55.54 (1) 60.07 54.76 10
----------------------------------------------------------------------------
Funds flow
netback(4)($/boe) 50.15 52.41 (4) 56.56 51.18 11
----------------------------------------------------------------------------
Wells drilled
Gross 66 28 136 209 69 203
Net 60.2 23.9 152 172.5 52.5 229
Success 100% 100% - 100% 100% -
----------------------------------------------------------------------------
(1) See "Non-IFRS Measures"
(2) Boe conversion ratio for natural gas of 1 Boe: 6 Mcf has been used,
which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent a value
equivalency at the wellhead.As the value ratio between natural gas and
crude oil based on the current prices of natural gas and crude oil is
significantly different from the energy equivalency of 6:1, utilizing a
conversion on a 6:1 basis may be misleading as an indication of value.
(3) Excludes unrealized risk management contracts.
(4) Corporate netbacks are calculated as the operating netback less general
and administrative expenses, financial charges, asset retirement
obligations, transaction costs and current taxes.
FOURTH QUARTER 2013 HIGHLIGHTS
-- Achieved another quarterly production record with average production of
7,777 boe/d (96% oil) representing a 31% production per share increase
from the third quarter.
-- Executed a $60.7 million capital program to drill 66 (60.2 net) Viking
horizontal oil wells at a 100% success rate.
-- Closed the $103.4 million property acquisition in November that added
approximately 900 boe/d (85% light oil) of production and 40.3 net
sections of prospective Viking lands.
-- Generated a $54.89/boe operating netback and a funds flow netback of
$50.15/boe.
-- Achieved record quarterly cash flow of $35.9 million ($0.22 per share -
basic).
-- Maintained balance sheet strength with fourth quarter exit net debt of
$96.3 million, representing 0.7 times debt to fourth quarter annualized
cash flow.
-- Raised $78.4 million by issuing 14 million common shares at a price of
$5.60 per common share.
2013 HIGHLIGHTS
-- Grew exit production to approximately 9,000 boe/d, an increase of 125%
from 2012 exit production of 4,000 boe/d.
-- Fourth quarter production increase to 7,777 boe/d a 137% production per
share increase over the comparable period in 2012.
-- Spent $272.5 million, including $168.1 million on development activities
and $104.4 million on property acquisitions. Raging River drilled 209
(172.5 net) horizontal Viking wells at a 100% success rate.
-- Net asset value per fully diluted share increased 135% to $6.45 per
share (PVBT 10%) from $2.75 per share at December 31, 2012.
-- Proved plus probable reserves increased 148% to 42.7 mmboe (96% oil) and
proven reserves increased 171% to 31.4 mmboe (96% oil). On a per share
basis, proved plus probable reserves per share increased by 137% and
proven reserves per share increased by 159%.
-- Finding, development and acquisition ("FD&A") costs were $19.28 per boe
on a proven plus probable basis, including a $260 million change in
future development capital.
-- The recycle ratio was 3 times based on our 2013 funds flow netback of
$56.56 per boe.
-- Total net land holdings increased 50% to 164,000 acres in the Dodsland
area.
VIKING FARM-IN
Raging River has entered into a Farm-In Agreement ("Agreement") effective
January 21, 2014 with an industry partner to access 100 (95 net) sections of
Viking lands in the greater Dodsland area. The Company has committed to drill a
minimum of 12 wells by December 31, 2014 and during the option term Raging River
has the option to drill 6 additional earning wells in 2015 to extend the
Agreement to March 31, 2016. Under the Agreement, Raging River will earn 70-85%
of the farmor's working interest in 1/2 sections of land for each earning well
drilled, completed and placed on stream.
Key benefits of the Agreement:
-- Expands our risked drilling inventory to in excess of 2,200 net
locations.
-- Increase's our net prospective Viking acreage to in excess of 235 net
sections.
To date in 2014, Raging River has successfully drilled and placed on-stream, the
first two Agreement earning wells in the Forgan area. Early flow back production
results from these wells were at rates in excess of 60 bbls/d of oil.
2014 OPERATIONS UPDATE
After a strong fourth quarter in 2013 that saw 66 (60.2 net) successful Viking
horizontal oil wells drilled, we expanded the first quarter of 2014 program. A
total of 75 (65.7 net) horizontal Viking oil wells have been drilled prior to
break-up.
The statistical consistency of Raging River's results has resulted in reliable
per share production and funds from operations growth. This consistency has been
validated by our first quarter initial production results. Of the 75 wells
drilled to date, a total of 40 wells have been on-stream for at least 30 days
with average oil rates of approximately 55 bbls/d. This is equivalent to the
average results of the 252 wells drilled by the Company from March 2012 to
December 2013.
The first quarter resulted in considerable de-risking of our land base with 28
(26 net) wells testing previously undrilled sections. As at December 31, 2013,
we had successfully tested 106 of 215 net sections of prospective land. As of
March 15, that has expanded to 132 net tested sections with the intention to
test at least another 35 sections by year end.
Highlights of the first quarter drilling program are as follows:
-- The Company drilled 75 (65.7 net) wells resulting in 72 (62.7 net)
successful Viking horizontal oil wells. 28 (26 net) undrilled sections
were tested.
-- Forgan: The Company drilled 6 (5.4 net) wells testing 5 undrilled
sections. These wells were all recently placed on production with the
first 10 days of production averaging 50 bbls/d of oil per well.
-- Kerrobert: The Company drilled 10 (8.2 net) wells testing six undrilled
sections. The six new sections tested have all confirmed successful
extensions to the previous play boundaries.
-- Beadle: The Company drilled 39 net wells testing 18 undrilled sections.
Raging River has placed 22 of the wells on production at average rates
of 45-50 bbls/d of oil consistent with the 30 wells drilled in 2013. The
18 new sections tested resulted in 15 successful oil wells.
Although it is still early to predict the severity of spring rains on breakup,
the Company is encouraged that snowpack levels have been below historical
averages. We remain cautiously optimistic that breakup will be less severe than
in 2013. Pre-planning is critical to managing breakup production volumes and we
have taken measured steps to mitigate production losses during the quarter
including:
-- Construction of two oil batteries resulting in approximately 35% of our
production now being tied in.
-- Construction of extra storage at key higher rate wells allowing for 20-
30 days of storage at each location.
-- Drilling of 15 (14.5 net) wells to be completed post break-up which will
allow new production additions to begin immediately after field
operations recommence.
OUTLOOK AND INCREASED 2014 GUIDANCE
Average production guidance for 2014 of 9,500 boe/d was exceeded in February,
setting the stage for outperformance of the Company's budget. Based on field
receipts to March 15, first quarter production is anticipated to be in excess of
9,500 boe/d.
As a result of continued strong production results and the additional 12 well
commitment associated with the Viking Farm-In, the board of directors has
increased our capital budget to $235 million from $215 million. This results in
increased 2014 average production guidance to 9,800 boe/d from 9,500 boe/d and
an increase to our exit guidance rate to 11,700 boe/d from 11,000 boe/d.
EXECUTIVE CHANGES
The board of directors is pleased to announce the expansion of Mr. Jason
Jaskela's role to include the role of Chief Operating Officer. Mr. Jaskela has
been in the role of Vice President Production since Raging River's inception in
March 2012. His dedication to operational excellence and foresight in
technological improvements in the Viking play have been instrumental in enabling
Raging River to exceed its goals.
The Company also announces as of March 17th, 2014, that Mr. David Burton, Vice
President Engineering, has resigned to pursue other personal and professional
opportunities. Raging River thanks Mr. Burton for his dedication and efforts
over the last two years and wishes him success in his future endeavors.
Additional corporate information can be found in our corporate presentation on
our website at www.rrexploration.com.
FORWARD LOOKING STATEMENTS: This press release contains forward-looking
statements. More particularly, this press release contains statements concerning
increased average production guidance for 2014, anticipated exit production for
2014, Raging River's drilling plans, the Company's 2014 capital budget, Raging
River's intention to test at least another 35 sections of land by year end, the
number of wells to be drilled under the Agreement, the termination date of the
Agreement, the working interest expected to be earned under the Agreement, the
benefits to be realized pursuant to the Agreement, Raging River's expectations
regarding break-up, the Company's plans to maintain production levels during
break-up, plans for drilling and completions during and following break-up,
Raging River growth strategy and anticipated growth plans for 2014. In addition,
the use of any of the words "guidance", "initial, "scheduled", "can", "will",
"prior to", "estimate", "anticipate", "believe", "potential", "should",
"unaudited", "forecast", "future", "continue", "may", "expect", "project", and
similar expressions are intended to identify forward-looking statements.
The forward-looking statements contained herein are based on certain key
expectations and assumptions made by the Company, including but not limited to
expectations and assumptions concerning the success of optimization and
efficiency improvement projects, the availability of capital, current
legislation, receipt of required regulatory approval, the success of future
drilling and development activities, the performance of existing wells, the
performance of new wells, Raging River's growth strategy, general economic
conditions, availability of required equipment and services and prevailing
commodity prices. Although the Company believes that the expectations and
assumptions on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking statements because
the Company can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors
and risks. These include, but are not limited to, risks associated with the oil
and gas industry in general (e.g., operational risks in development, exploration
and production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; as the uncertainty of reserve
estimates; the uncertainty of estimates and projections relating to production,
costs and expenses, and health, safety and environmental risks), commodity price
and exchange rate fluctuations, changes in legislation affecting the oil and gas
industry and uncertainties resulting from potential delays or changes in plans
with respect to exploration or development projects or capital expenditures.
Refer to Raging River's most recent Annual Information Form dated March 17,
2014, on Sedar at www.sedar.com, and the risk factors contained therein.
The forward-looking statements contained in this press release are made as of
the date hereof and the Company undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
ADVISORY ON RESERVES AND PRODUCTION INFORMATION: All information in respect of
the crude oil and natural gas reserves in this press release is based upon an
independent reserves report prepared by Sproule Associates Ltd. ("Sproule") as
of December 31, 2013. The report was prepared in accordance with the
definitions, standards and procedures contained in the Canadian Oil and Gas
Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for
Oil and Gas Activities ("NI 51-101"). Certain values in the Sproule Report are
derived using Sproule's forecast prices for the year ended December 31, 2013
which are publicly available. Unless otherwise indicated herein, all reserves
and production information presented herein has presented on a gross basis,
which is the Company's working interest prior to deduction of royalties and
without including any royalty interests.
FINDING, DEVELOPMENT and ACQUISITION COSTS: The Company has disclosed herein its
2014 FD&A, including the change in future development capital, based on proven
plus probable basis. FD&A including the change in future development capital of
$298 million was $26.29 per boe on a total proven basis for 2014. FD&A presented
herein includes the effects of acquisitions and dispositions. While NI 51-101
requires that the effects of acquisitions and dispositions be excluded, FD&A
costs have been presented because acquisitions and dispositions can have a
significant impact on the Company's ongoing reserve replacement costs and
excluding these amounts could result in an inaccurate portrayal of the Company's
cost structure. The Company's finding and development costs, excluding the
effects of acquisitions and dispositions, for 2013 were $25.41/boe on a proved
basis and $18.70/boe on a proved plus probable basis. The Company's finding and
development costs, excluding the effects of acquisitions and dispositions, for
2012 were $31.06/boe on a proved basis and $26.39/boe on a proved plus probable
basis (the additions to reserves used for the 2012 finding and development costs
represent a comparison to the opening reserves balance which were the reserves
acquired from Wild Stream Exploration Inc. by Raging River on March 16, 2012).
The average finding and development costs over the last three years have not
been presented herein because the Company only began active operations in March
2012. The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated future
development costs generally will not reflect total finding and development costs
related to reserves additions for that year.
NET ASSET VALUE PER SHARE: Net asset value per share as presented herein is
based on the before tax net present value (discounted at 10%) of proven plus
probable reserves as at December 31, 2013 of $1,192 million, an internal
estimate of Raging River's undeveloped land value of $108 million, estimated
2013 year end net debt of $96.3 million, dilutive securities proceeds of $55
million for total net asset value of $1,259 million and with 195.2 million
shares outstanding on a fully diluted basis a net asset value per share of
$6.45/share
FUTURE ORIENTED FINANCIAL INFORMATION: Any financial outl.ook or future oriented
financial information in this press release, as defined by applicable securities
legislation, has been approved by management of Raging River. Such financial
outlook or future oriented financial information is provided for the purpose of
providing information about management's reasonable expectations as to the
anticipated results of its proposed business activities for the year of 2014.
NON-IFRS MEASURES: This document contains the terms "funds from operations" (or
"cash flow"), "net debt", "field netback", "operating netback" and "funds flow
netback", which do not have a standardized meaning prescribed by International
Financial Reporting Standards ("IFRS") and therefore may not be comparable with
the calculation of similar measures by other companies. Management uses funds
from operations to analyze operating performance and leverage. Management
believes "net debt" is a useful supplemental measure of the total amount of
current and long-term debt of the Company. Mark-to-market risk management
contracts are excluded from the net debt calculation. Management believes "field
netback", "operating netback" and "funds flow netback" are useful supplemental
measures of firstly, the amount of revenues received after royalties and
operating and transportation costs, secondly, the amount of revenues received
after royalties, operating, transportation costs and realized gain (loss) on
derivatives, and thirdly, the amount of revenues received after royalties,
operating, transportation costs, realized gain (loss) on derivatives, general
and administrative costs, financial charges and asset retirement obligations.
Additional information relating to certain of these non-IFRS measures, including
the reconciliation between funds from operations and cash flow from operating
activities, can be found in the MD&A.
BARRELS OF OIL EQUIVALENT: The term "boe" or barrels of oil equivalent may be
misleading, particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1
bbl) is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.
Additionally, given that the value ratio based on the current price of crude
oil, as compared to natural gas, is significantly different from the energy
equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an
indication of value.
INITIAL PRODUCTION RATES: Any references in this press release to initial
production rates or flow back production results are useful in confirming the
presence of hydrocarbons, however, such rates are not determinative of the rates
at which such wells will continue production and decline thereafter.
Additionally, such rates may also include recovered "load oil" fluids used in
well completion stimulation. While encouraging, readers are cautioned not to
place reliance on such rates in calculating the aggregate production for the
Company.
FOR FURTHER INFORMATION PLEASE CONTACT:
RAGING RIVER EXPLORATION INC.
Mr. Neil Roszell
President and Chief Executive Officer
403-767-1250
403-387-2951 (FAX)
RAGING RIVER EXPLORATION INC.
Mr. Jerry Sapieha, CA
Vice President, Finance and Chief Financial Officer
403-767-1265
403-387-2951 (FAX)
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