Raging River Exploration Inc. ("Raging River" or the "Company") (TSX:RRX) is
pleased to report that estimated daily production reached a record of 9,000
boe/d (96% oil) during the second half of December 2013. Further, based on field
estimates the Company's fourth quarter 2013 average production increased 37%
from the third quarter average to 7,700 boe/d (96% oil) which is 5% ahead of our
previous fourth quarter guidance of 7,300-7,400 boe/d.
Raging River exited 2013 with 16 net wells awaiting completion and is off to a
solid start in the first quarter with 17 gross (15.5 net) wells drilled since
January 1, 2014. With production averaging above 9,000 boe/d in the first two
weeks of January, we anticipate achieving our 2014 average production level of
9,500 boe/d in early February. Production is expected to be strong through the
first quarter followed by a modest reduction in the second quarter due to
breakup and we are reaffirming our average 2014 production guidance of 9,500
boe/d.
The Company is also pleased to report its 2013 year-end oil and gas reserves.
2013 proven plus probable reserves of 42.7 mmboe represent a 148% increase from
2012. Finding, development and acquisition costs were reduced by 26% from 2012
to $19.40/boe demonstrating the quality of the Company's continuously expanding
drilling inventory.
Reserve Report Highlights:
-- Increased proved plus probable reserves by 148% to 42.7 mmboe (96.2%
oil) and proven reserves by 171% to 31.3 mmboe (96.2% oil).
-- Net asset value per fully diluted share calculated on a present value
before tax of 10% ("PVBT10") increased 133% to an estimated $6.42 per
share at December 31, 2013 inclusive of an internal land value of $108
million.
-- Finding, development and acquisition costs, including the change in
future development capital of $260 million are $19.40 per boe on a
proven plus probable basis.
-- Finding, development and acquisition costs, including the change in
future development capital of $298 million are $26.29 per boe on a total
proven basis.
-- Total proven reserves represent 73.4% of proven plus probable reserves
as at December 31, 2013.
-- The FD&A recycle ratio was 3.0 times based on our estimated 2013
corporate netback of $57.25 per boe.
-- The reserves life index increased to 13.0 years based on current
production of 9,000 boe/d.
-- Reserve additions replaced 2013 production by greater than 9 times on a
proved basis and 12 times on a proved plus probable basis.
-- Reserves per fully diluted share increased by 125% to 218 boe per 1,000
shares from 97 boe per 1,000 shares.
-- Raging River's development drilling inventory has increased to 2,000+
risked locations as at January 1, 2014 of which approximately 75% are
currently unbooked.
-- Average estimated ultimate recovery ("EUR") per horizontal well drilled
in 2013 increased by 27% to 47.5 mstb per well from an average of 37.5
mstb per well for those drilled to the end 2012.
The following tables summarize certain information contained in the independent
reserves report prepared by Sproule Associates Ltd. ("Sproule") as of December
31, 2013. The report was prepared in accordance with definition, standards and
procedures contained in the Canadian Oil and Gas Evaluation Handbook and
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities
("NI 51-101"). Additional reserve information as required under NI 51-101 will
be included in the Company's Annual Information Form which will be filed on
SEDAR by March 31, 2014.
December 31, 2013
Future Net
Reserves Category Oil BTAX PV Development Undeveloped
Gross Working Oil Gas Equivalent 10% Capital Wells
Interest Mbbl MMcf mBOE M$'s M$'s Booked
----------------------------------------------------------------------------
Proved Developed
Producing 11,450 3,244 12,004 440,021 - -
Proven Undeveloped 18,653 3,948 19,372 403,879 481,851 525.8
----------------------------------------------------------
Total Proven 30,103 7,192 31,376 843,900 481,851 525.8
Probable Developed
Producing 4,673 1,336 4,904 138,715 - -
Probable
Undeveloped 6,216 1,282 6,450 209,169 3,640 4.5
----------------------------------------------------------
Total Proven Plus
Probable 40,993 9,810 42,729 1,191,785 485,491 530.3
----------------------------------------------------------
----------------------------------------------------------
Notes:
1. Gross Company reserves are the Company's total working interest share
before the deduction of any royalties and without including any royalty
interests of the Company.
2. Based on Sproule's December 31, 2013 escalated price forecast.
3. 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.
4. All future net revenues are stated prior to provision for interest,
general and administrative expenses and after deduction of royalties,
operating costs, estimated abandonment costs and estimated future
capital expenditures. Future net revenues have been presented on a
before tax basis. Estimated values of future net revenue disclosed
herein do not represent fair market value.
5. Finding and development costs both including and excluding acquisitions
and dispositions have been presented below. 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.
6. 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.
7. Figures are subject to audit.
8. The capital expenditures include the announced purchase price of
corporate acquisitions rather than the amounts allocated to property,
plant and equipment for accounting purposes. The capital expenditures
also exclude capitalized administration costs.
2013 FD&A Costs ($000's) Proved Proved plus Probable
Development 172,000 172,000
Net Acquisitions 104,000 104,000
Change in FDC 298,429 259,940
Total Capital 574,429 535,940
2013 Reserve Additions Mboe
Acquisitions 3,492 4,726
Additions/Revisions 18,359 22,893
Total 21,851 27,619
2013 FD&A ($/boe) 26.29 19.40
Operations Update
Raging River is in the midst of another active quarter in which we anticipate
drilling 60 net horizontal wells. We currently have two drilling rigs
operational and have drilled 17 gross (15.5 net) wells this quarter at a 100%
success rate. With completion operations well under way a new well is being
placed on production every day and it is expected that trend will continue
throughout the quarter.
To date this quarter we have successfully tested four previously undrilled
sections at Beadle with expectations that an additional 12-15 previously
undrilled sections will be tested this quarter.
In the recently acquired Forgan area, the operations team has been actively
working towards obtaining our first drilling licenses in the area and it is now
expected that we will be able to drill up to four wells testing previously
undrilled sections in this area during the first quarter.
Raging River continues to be active on adding additional lands in the Viking
light oil fairway. Since early December 2013, 15 additional sections of land
have been added in the greater Beadle area. Our total prospective Viking light
oil land holdings are now in excess of 215 net sections.
Raging River's team remains dauntless in its pursuit of operational and
executional excellence to continue delivering per share production, reserves and
value growth to our shareholders while maintaining a pristine balance sheet.
Additional corporate information can be found on our website at
www.rrexploration.com or on www.sedar.com.
FORWARD LOOKING STATEMENTS: This press release contains forward-looking
statements. More particularly, this press release contains forward looking
statements relating to: expectations as to drilling and completion activity in
the first quarter of 2014, including the timing thereof, expectations of
achieving certain production levels in the first quarter of 2014, expectations
as to Raging River's drilling inventory, estimates of future development capital
associated with the Company's reserves, expectations about drilling and testing
plans in the Beadle and Forgan areas, and, Raging River's intent to deliver per
share production, reserves and value growth to its shareholders while
maintaining a pristine balance sheet . Statements relating to "reserves" are
deemed to be forward-looking statements as they involve the implied assessment,
based on certain estimates and assumptions that the resources and reserves
described can be profitably produced in the future. 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
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, the ability of the
Company to effectively manage price differentials, 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 20, 2013 on SEDAR at www.sedar.com and risks 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.
Finding, Development and Acquisition ("FD&A") Costs: Finding and development
costs including acquisitions and dispositions have been presented herein. 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 $25.62/boe on a
proved basis and $18.87/boe on a proved plus probable basis. The Company's
finding and development costs, excluding the effects of acquisitions and
dispositions, for 2012 were $31.02/boe on a proved basis and $26.36/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 PVBT10 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 $101 million, dilutive
securities proceeds of $55 million for total net asset value of $1,254 million
and with 195.2 million shares outstanding on a fully diluted basis a net asset
value per share of $6.42/share
Meaning of Boe: When used in this press release, Boe means a barrel of oil
equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe
per day means a barrel of oil equivalent per day. Boe's may be misleading,
particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6
thousand cubic feet of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not 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.
Non-IFRS Measures: The Company uses terms in this press release that are not
measures recognized by International Financial Reporting Standards ("IFRS") and
do not have standardized meanings prescribed by IFRS, including "net debt" and
"operating netback". Therefore, they may not be comparable to performance
measures presented by others. For additional information relating to these
measures and how the Company calculates these measures, see management's
discussion and analysis for the period ended September 30, 2013, which is
available on the SEDAR website at www.sedar.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Raging River Exploration Inc.
Mr. Neil Roszell
President and CEO
(403) 767-1250
(403) 387-2951 (FAX)
Raging River Exploration Inc.
Mr. Jerry Sapieha, CA
Vice President, Finance and CFO
(403) 767-1265
(403) 387-2951 (FAX)
www.rrexploration.com
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