RAGING RIVER EXPLORATION INC February 7, 2017
RAGING RIVER EXPLORATION INC. ANNOUNCES 2016 YEAR END RESERVES, PRELIMINARY 2016 RESULTS AND OPERATIONS UPDATE CALGARY, ALBERTA (February 7, 2017) Raging River Exploration Inc. ("Raging River" or the "Company") (TSX:RRX) is pleased to present the results of the independent reserves report (the "Sproule Report") prepared by Sproule Associates Ltd. ("Sproule") as of December 31, 2016.During 2016, the Company invested $403.5 million (unaudited) consisting of $192 million of acquisition capital and $211.5 million of development capital into the expansion and development of the Viking play. This invested capital resulted in estimated average annual production of 17,900 boe/d (92% oil) representing year over year production per debt adjusted share growth of 20%. 2016 Proved plus Probable Finding Development and Acquisition ("FD&A") costs including changes in Future Development Capital ("FDC") were $19.43 per boe resulting in a Proved plus Probable ("P+P") recycle ratio of 1.5.
2016 Reserves Highlights:Proven Developed Producing ("PDP") reserves
Increased by 35% (24% per debt adjusted share) from 24.5 mmboe to 33 mmboe (92% oil).
Replaced production by 229%.
FD&A costs including the change in FDC of $26.88 per boe resulting in a recycle ratio of 1.1 times
Total Proven ("TP") reserves
Increased 25% (15% per debt adjusted share) from 57.4 mmboe to 71.6 mmboe (94% oil).
Replaced production by 317%.
FD&A costs including the change in FDC of $23.55 per boe resulting in a recycle ratio of 1.3 times
Proven plus Probable ("P+P") reserves
Increased 23% (13% per debt adjusted share) from 76.4 mmboe to 94 mmboe (94% oil).
Replaced production by 369%.
FD&A costs including the change in FDC of $19.43 per boe resulting in a recycle ratio of 1.5 times
Using the independent reserves evaluation effective December 31, 2016, the net present value of future net revenues discounted at 10% ("PV10") before taxes of our P+P reserves, inclusive of our internally estimated undeveloped land of $171 million and net of estimated net debt of $212 million equates to $8.34 per common share, an increase from $6.83 per common share at December 31, 2015.
A total of 1,166 Viking horizontal wells are included in our PDP reserves.
An additional 1,171 undeveloped locations have been booked leaving approximately 67% of our prospective locations as currently unbooked.
Fourth quarter 2016 production averaged approximately 20,400 boe/d (92% oil), bringing average 2016 annual production to 17,900 boe/d (92% oil) representing year over year production per debt adjusted share growth of 20%.
The $211.5 million of development capital resulted in 281 net wells drilled during 2016.
For 2017, quarter to date we have drilled approximately 48 net wells (51%) of the 93.5 net wells budgeted for the first quarter of 2017. Field conditions and access to services have been supportive and as a result, we anticipate completing all drilling and completion operations by early March. Total capital expenditures within the first quarter are expected to be $100 million.
Average on-stream costs quarter to date have averaged approximately 5 - 7% higher than the low's witnessed in 2016. This cost inflation was anticipated within our budget and we remain on track to execute our 2017 budget at previously released levels for the year 2017 of $310 million.
Waterflood execution continues to be a priority in the first quarter with an estimated $20 million being spent on facilities. First waterflood reserves were recorded in 2016 from Sproule with approximately 700 mstb of oil being booked attributable to our ongoing waterfloods.
Extended Reach Horizontal (ERH) UpdateWe are strongly encouraged by the results of our initial phase of extended reach horizontal ("ERH") wells drilled in the third and fourth quarters of 2016. To date, we have drilled over 41.5 net ERH wells across our asset base in Saskatchewan and an additional 17 net ERH wells in Alberta. Initial production rates of the ERH wells have exceeded management's expectations, with the average ERH well seeing approximately two times the initial productivity of the comparable offsetting standard (approximately 600m) laterals. We look forward to providing further updates and quantifying the economic improvements we are achieving as we gain more performance history on the ERH wells.
Within the December 31, 2016 Sproule Report, 143 net ERH wells have been assigned undeveloped reserves, representing approximately 8% of Raging River's current defined economic ERH inventory.
2016 Independent Reserves Evaluation:The following summarizes certain information contained in the Sproule Report. The Sproule Report was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by the end of March 2017.
Corporate Reserves Information:December 31, 2016 | |||||||
Oil | BTAX PV | Future Development | Net Undeveloped | ||||
Reserves Category | Oil(1) | Gas | Equivalent | 10% | Capital | Wells | |
Mbbl | MMcf | MBOE | ($000's) | ($000's) | Booked | ||
Proved developed producing | 30,495 | 14,979 | 32,991 | 838,592 | 664 | - | |
Proved developed non-producing | 170 | 265 | 214 | 4,667 | 658 | - | |
Proven undeveloped | 36,402 | 11,817 | 38,372 | 526,858 | 760,417 | 1,100 | |
Total proven | 67,067 | 27,061 | 71,577 | 1,370,118 | 761,739 | 1,100 | |
Probable developed producing | 8,009 | 4,037 | 8,682 | 203,687 | - | - | |
Probable developed non-producing | 638 | 149 | 663 | 13,048 | 140 | - | |
Probable undeveloped | 12,341 | 4,358 | 13,068 | 375,624 | 51,161 | 71 | |
Total probable | 20,988 | 8,545 | 22,412 | 592,359 | 51,301 | 71 | |
Total proven plus probable | 88,055 | 35,606 | 93,989 | 1,962,477 | 813,040 | 1,171 | |
Notes:
"Oil" values include all light & heavy oil volumes, and natural gas liquids volumes.
Reserves have been presented on gross basis which are the Company's total working interest share before the deduction of any royalties and without including any royalty interests of the Company.
Based on Sproule's December 31, 2016 escalated price forecast.
It should not be assumed that the present worth of estimated future net revenue presented in the tables above represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserves estimates of Raging River's crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.
All future net revenues are stated prior to provision for interest, general and administrative expenses and after deduction of royalties, operating costs, estimated well and facility abandonment and reclamation costs and estimated future capital expenditures. Future net revenues have been presented on a before tax basis.
Totals may not add due to rounding.
Pursuant to section 5.4.3 "Levels of Certainty for Reported Reserves" of the COGE Handbook, reported reserves should target at least a 90 percent probability that the quantities actually recovered will be equal to or exceed the estimated proved reserves and that at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.
December 31, 2016
BTAX NPV 5% BTAX NPV 10%
($000's) $/share(6) ($000's) $/share(6)
P+P NPV (1,2) | 2,548,372 | 10.64 | 1,962,477 | 8.20 |
Undeveloped acreage (3) | 171,240 | 0.72 | 171,240 | 0.72 |
Net debt (4) | (212,000) | (0.89) | (212,000) | (0.89) |
Proceeds from stock options (5) | 75,522 | 0.32 | 75,522 | 0.32 |
Net Asset Value (fully-diluted) | 2,583,134 | 10.79 | 1,997,239 | 8.34 |
Notes:
Evaluated by Sproule as at December 31, 2016. Net present value of future net revenue does not represent fair market value of the reserves.
Net present values ("NPV") equals net present value of future net revenue before taxes based on Sproule's forecast prices and costs as of December 31, 2016.
Internally evaluated with an average value of $400 per acre for 428,100 undeveloped net acres.
Net debt as at December 31, 2016, including working capital deficit (unaudited).
Fully-diluted shares at December 31, 2016 total: including outstanding common shares of 231.1 million and 8.3 million stock options that are in-the-money as at December 31, 2016.
Per share figures based on fully-diluted shares outstanding as at December 31, 2016 - see note 5.
The following is a summary of the estimated FDC required to bring P+P undeveloped reserves on production.
Future Development Capital Costs ($000s) | ||
Total Proved | Total Proved + Probable | |
2017 | 242,726 | 254,063 |
2018 | 183,107 | 187,586 |
2019 | 191,646 | 202,290 |
2020 | 144,174 | 169,016 |
Total undiscounted FDC | 761,739 | 813,040 |
Total discounted FDC at 10% per year | 645,758 | 686,770 |
2016 | 2015 | 2014 | 2013 | |
Average crude oil price WTI US$/bbl | 43.32 | 48.80 | 93.00 | 97.98 |
Capital ($000) | 403,500 | 339,191 | 278,594 | 272,495 |
Production boe/d | 17,900 | 13,715 | 10,755 | 5,665 |
Operating netback $/boe | 29.76 | 35.51 | 64.51 | 60.07 |
Proved Producing | ||||
Total Reserves mboe | 32,991 | 24,530 | 19,103 | 12,004 |
Reserves additions mboe | 15,013 | 10,433 | 11,024 | 9,599 |
FD&A $/boe(2) | 26.88 | 32.51 | 25.27 | 28.39 |
Recycle Ratio(3) | 1.1 | 1.09 | 2.55 | 2.12 |
Reserves Replacement(4) | 229% | 208% | 281% | 464% |
RLI (years)(5) | 5.1 | 4.9 | 4.9 | 5.8 |
Proved Plus Probable Producing | ||||
Total Reserves mboe | 41,673 | 30,952 | 23,873 | 16,908 |
Reserves additions mboe | 17,273 | 12,085 | 10,890 | 12,717 |
FD&A $/boe(2) | 23.36 | 28.07 | 25.58 | 21.43 |
Recycle Ratio(3) | 1.27 | 1.27 | 2.52 | 2.80 |
Reserves Replacement(4) | 264% | 241% | 277% | 615% |
RLI (years)(5) | 6.4 | 6.2 | 6.1 | 8.2 |
Total Proven | ||||
Total Reserves mboe | 71,577 | 57,391 | 49,928 | 31,376 |
Reserves additions mboe | 20,738 | 12,467 | 22,466 | 21,851 |
Change in FDC ($000) | 84,939 | (67,100) | 262,071 | 298,429 |
FD&A $/boe(2) | 23.55 | 21.82 | 24.07 | 26.13 |
Recycle Ratio(3) | 1.26 | 1.63 | 2.68 | 2.30 |
Reserves Replacement(4) | 317% | 249% | 572% | 1057% |
RLI (years)(5) | 11.0 | 11.5 | 12.7 | 15.2 |
Raging River Exploration Inc. published this content on 07 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 08 February 2017 15:51:09 UTC.
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