Raging River Exploration Inc. Announces First Quarter Operating and Financial Results, Increased 2014 Guidance and Expanded Credit Facilities

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CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Raging River Exploration Inc. (the "Company" or "Raging River") (RRX.TO) announces its operating and financial results for the three months ended March 31, 2014. Selected financial and operational information is outlined below and should be read in conjunction with the unaudited interim financial statements and the related management, discussion and analysis ("MD&A"). These filings will be available at www.sedar.com and the Company's website at www.rrexploration.com

Financial and Operating Highlights

  Three months ended
March 31,
     
  2014   2013   Percent Change  
Financial (thousands of dollars except share data)            
Petroleum and natural gas revenue 80,707   33,151   143  
Funds flow from operations (1) 49,813   23,383   113  
  Per share - basic 0.28   0.15   87  
      - diluted 0.27   0.14   93  
Net earnings 24,360   6,241   290  
  Per share - basic 0.14   0.04   250  
      - diluted 0.13   0.04   225  
Capital expenditures 72,017   37,608   91  
Net debt(3) 117,907   29,381   301  
Shareholders' equity 405,258   264,027   53  
Weighted average shares (thousands)            
  Basic 175,461   156,757   12  
  Diluted 183,417   164,775   11  
Shares outstanding, end of period (thousands)            
  Basic 179,213   156,757   14  
  Diluted 192,372   177,672   8  
Operating (6:1 boe conversion)            
             
Average daily production            
  Crude oil and NGLs (bbls/d) 9,427   4,454   112  
  Natural gas (mcf/d) 2,269   580   291  
Barrels of oil equivalent (2)(boe/d) 9,805   4,550   115  
             
Netbacks ($/boe)            
  Operating            
    Oil and gas sales(3) 91.46   80.95   13  
    Royalties (8.27 ) (6.94 ) 19  
    Operating expenses (12.50 ) (12.66 ) (1 )
    Transportation expenses (2.01 ) (2.20 ) (9 )
             
  Field netback 68.68   59.15   16  
    Realized gain (loss) on derivatives (1.86 ) 0.15   (1,340 )
  Operating netback 66.82   59.30   13  
             
    General and administrative expense (1.47 ) (1.88 ) (22 )
    Financial charges (1.03 ) (0.32 ) 222  
    Current taxes (7.88 ) -   100  
Funds flow netback 56.44   57.10   (1 )
Wells drilled            
  Gross 75   45   67  
  Net 65.7   38.2   72  
  Success(4) 95 % 100 % (5 )
(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) 100% of wells drilled in the first quarter of 2014 were cased and completed however 3 (3.0 net) wells have been deemed to be below the current internally calculated economic threshold.  

FIRST QUARTER 2014 HIGHLIGHTS

  • Achieved record average production of 9,805 boe/d (96% oil), an increase of 26% from the fourth quarter of 2013 volumes of 7,777 boe/d and an increase of 115% over the comparable period in 2013.
  • Increased average production guidance to 9,800 boe/d from 9,500 boe/d and increased exit guidance to 11,700 boe/d from 11,000 boe/d.
  • Attained record corporate funds flow from operations of $49.8 million ($0.28/share basic), an increase of 39% from a fourth quarter 2013 funds flow from operations of $35.9 million.
  • Achieved record operating netbacks of $66.82/boe and strong funds flow netbacks of $56.44/boe.
  • Achieved record earnings of $24.4 million ($0.14/share basic) or $27.60/boe.
  • Improved overall general and administrative costs to $1.47/boe representing a 17% decrease in costs per boe from the fourth quarter of 2013.
  • The Company spent $72 million on capital expenditures including $70.6 million on development activities in addition to $1.4 million on land. A total of 75 (65.7 net) horizontal Viking oil wells were drilled and completed testing 28 (27 net) new sections.
  • Maintained balance sheet strength with first quarter exit net debt of $117.9 million representing 0.6 times debt to the first quarter annualized cash flow.

HIGHLIGHTS SUBSEQUENT TO MARCH 31, 2014

  • Raging River increased its credit facility to $300 million from $225 million. 

INCREASED 2014 GUIDANCE

Production volumes to date in the second quarter have been nominally impacted by break-up with less than 5% of production having to be shut in. With break-up conditions being better than expected, we now anticipate the second quarter volumes will be approximately equivalent to our first quarter volumes of 9,805 boe/d.

As a result of production and commodity price strength, the board of directors has increased our capital budget to $245 million, an increase of $10 million. The increased capital and continued compelling consistent well results have resulted in our second guidance increase of 2014, as follows:

  • Average production increasing 5% to 10,300 boe/d from 9,800 boe/d.
  • Exit production guidance increasing 3% to 12,100 boe/d from 11,700 boe/d.

Balance sheet strength is expected to be maintained with the increased capital budget. Net debt to annualized fourth quarter cashflow is now expected to be less than 0.6 times.

EXPANDED CREDIT FACILITY

With the Company's continued operational success, the syndicate led by National Bank has approved a borrowing base increase to $300 million from $225 million. The credit facilities of $300 million is comprised of a $20 million non-syndicated operating facility and a $280 million syndicated extendible credit facility.

OUTLOOK AND OPERATIONS UPDATE

There have been no capital operations since mid-March due to spring break-up. Break-up drying conditions are proceeding as expected with drilling and completion operations anticipated to recommence in late May.

The statistical consistency of Raging River's asset base has resulted in predictable production and cashflow per share growth. This consistency continues to be validated by our first quarter drilling and production results. Of the 75 wells drilled, 70 wells have been on-stream for at least 60 days with average oil rates of 51 bbls/d. The averages include 25 wells that were drilled on previously untested sections. This is equivalent to the average results of all prior 250 wells drilled by the Company from March 2012 to December 2013.

At Forgan, the Company drilled 6 (5.4 net) wells testing five undrilled sections. These wells have now all been on production for 60 days averaging 45 bbls/d of oil per well. We are encouraged by the results and have allocated additional capital to this area and it is expected that 18 additional new wells, testing 10 new sections, are planned for the second and third quarters of 2014.

At Beadle, Raging River confirmed another successful extension on its eastern lands with the drilling of 8 wells testing six new sections. These tests have helped solidify Raging River's continued play extension plans in the area and we now plan to test another 10 currently undrilled sections in the third quarter of 2014.