CALGARY, ALBERTA–(Marketwired – Oct 14, 2015) – RMP Energy Inc. (“RMP” or the “Company“) (RMP.TO) is pleased to provide a production and operations update.
Third Quarter 2015 Production
For the third quarter of 2015, RMP’s average daily production was approximately 11,000 boe/d (weighted 47% light oil and NGLs). As previously disclosed, the Company’s third quarter production was impacted by: i) a shutdown of the Alliance pipeline system on August 7, 2015, resulting in the shut-in of substantially all of RMP’s production for approximately one week; ii) a mechanical disruption at the Company’s Waskahigan oil battery for a seven day period in early-July; iii) and ongoing third-party gas transportation restrictions causing material, uneconomic gas pricing which resulted in RMP deliberately shutting-in its Kaybob Montney field for the better part of the third quarter. The Kaybob field is expected to resume production upon improved realized gas prices resulting from increased pipeline capacity on the TCPL gas system. The Company is reaffirming its previously-announced fiscal 2015 production guidance, with expectations to produce on average for the year, approximately 12,000 boe/d (weighted 45% oil and NGLs).
Third Quarter 2015 Drilling Results
In the third quarter, the Company successfully drilled and completed six horizontal Montney wells: three (3.0 net) at Ante Creek (section 34-66-24W5) and three (3.0 net) at Waskahigan. The first two Waskahigan wells (7-15-64-23W5 and 13-11-64-23W5) were drilled offsetting the previously-drilled 2-15-64-23W5 horizontal well and were fracture stimulated with hybrid slick water. The 2-15 well was one of RMP’s initial hybrid slick water fractured wells and has produced approximately 75,000 barrels of light oil in six months of production time. Both the 7-15 and 13-11 wells were recently wellsite equipped and brought on-stream in early-October, with recent production rates of approximately 600 bbls/d of light oil per well (based on field estimates). The third Waskahigan horizontal well (4-7-64-23W5) drilled and completed in the third quarter was drilled to delineate RMP’s north-west land holdings. This well was completed with hybrid slick water and is expected to be tied-in and brought on-production in early-November 2015. Additionally, at the end of September, the Company rig released a Waskahigan offset well (13-29-63-23W5), which will be completed later this week with hybrid slick water.
Production from three of the Company’s initial Waskahigan hybrid slick water completed wells, including the 2-15 well, continues to significantly trend above the production performance from wells which were previously-stimulated with oil-based completion designs in the Waskahigan area. Thereby significantly increasing the estimated ultimate recoverable reserves and improving well economics. RMP has a substantial inventory of approximately 200 locations with which this completion design can be applied (inventory includes just 18 proved undeveloped locations and 44 probable undeveloped locations booked in the year-end 2014 reserves report).
The three Ante Creek wells drilled and completed in the third quarter were located in the north-west corner of the Company’s legacy six section land block and were brought on-stream late-August to early-September 2015. Initial well production performance has been quite favorable, with output tracking RMP’s expected oil rates from wells drilled into that areal part of the Montney reservoir.
Third quarter 2015 drilling and completion costs for the aforementioned Ante Creek and Waskahigan horizontal wells averaged approximately $2.7 million and $4.1 million, respectively. These costs reflect a reduction in average per-well drilling and completion costs of approximately 30% year-over-year, reflecting both service cost reductions and improved efficiencies resulting in shorter drill times.
Ante Creek Secondary Recovery Update
At Ante Creek, engineering, design and simulation work continues on the Company’s planned secondary recovery water flood project. Completed core work analysis and initial simulation modeling indicate that the reservoir is very amenable to a water flood. Implementation of the secondary recovery project is modeled to significantly increase the ultimate recovery of RMP’s large oil-in-place reservoir at Ante Creek from the primary recovery factor of 8.2% utilized in the light oil reserves evaluation at year-end 2014. A pilot project is anticipated to be implemented in the summer of 2016, pending requisite regulatory approval.
New Core Area
Outside of RMP’s main light oil fairway, the Company accumulated an additional ten net sections of undeveloped land with Montney potential during the third quarter. As a result, a total of 46 net sections have now been acquired for an average cost of less than $300 per hectare. RMP anticipates drilling a horizontal well in 2016 to evaluate the hydrocarbon potential of this significant acreage position. This land position provides the Company with an exploration area with which to apply its extensive geologic and engineering understanding and forms the basis for a new core area augmenting the Company’s current portfolio of Montney assets.
Financial Position Update
RMP’s balance sheet remains strong in the current low crude oil price environment. The Company is presently drawn approximately $129 million on its bank credit facility, which has a borrowing limit of $175 million. RMP’s year-end 2015 net debt position is presently estimated to approximate $119 million, slightly lower than its year-end 2014 net debt, representing approximately 1.3 times forecasted fiscal 2015 funds from operations.
RMP’s interim condensed consolidated financial statements and associated Management’s Discussion and Analysis for the three and nine months ended September 30, 2015 is scheduled to be released at the end of business on Thursday, November 12, 2015.
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Any references in this news release to initial and/or final raw test or production rates and/or “flush” production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter. These test results are not necessarily indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.