Calgary鈥� Raging River Exploration has been on a tear with drilling, and it shows in their first quarter 2017 results, released May 8.
The company achieved another quarterly production record with average production of 22,755 boepd (92 per cent oil), an increase of 38 per cent over the comparable period in 2016. This represents a 29 per cent production per share increase from the comparable period of 2016.
The company鈥檚 capital expenditures were $112.7 million inclusive of $25 million on waterflood initiatives, $6 million on land and $81.7 million of development capital resulting in the drilling of 94.5 net Viking horizontal wells at a 99 per cent success rate.
The board of directors have approved an updated capital budget of $340 million, an increase of 10 per cent from the previously approved $310 million budget. The strengthened balance sheet has given the company the flexibility to increase the budget to fund several key initiatives including a $10 million of incremental capital to fund water handling facilities in the Gleneath and Eureka areas. The result of these expenditures are expected to reduce corporate operating costs in 2018 and beyond by an estimated $0.40/boe.
It will also allocate $10 million of incremental capital for new play development. These funds will be primarily allocated towards incremental undeveloped land acquisitions.
Finally, there will be $10 million of incremental developmental capital resulting in increased 2017 average production guidance to 22,750 boepd from 22,500 boepd.
Operations update
Break-up conditions to early May have been normal. Three of 31 drilled but uncompleted wells were completed in mid-April and are currently on-stream. Raging River anticipates that completion activities on the remaining drilled but uncompleted wells will begin around May 15th. Raging River鈥檚 four operated drilling rigs are expected to commence operations prior to June 1.
With limited new production additions not expected until late in the second quarter of 2017, Raging Rivers estimates that the second quarter production levels will be approximately three per cent lower than first quarter production levels with significant growth in the second half of 2017.
Extended reach horizontal (ERH) well results continue to be strong. To date, the company has placed 73.3 net ERH wells on production with 50 per cent of the wells on stream for six months. Average per well results show a 1.8 to 2.0 times improvement over the comparable offsetting short lateral wells. As a result of the ERH success, the company continues to optimize its drilling program and expects that 50 per cent of the remaining wells drilled in 2017 will now be ERH wells.
