Viking formation’s shallow light oil keeps well costs low

There are several world-class oil and gas plays in Canada. The Montney has excellent stacked play potential, and the Cardium field has been known for years. When it comes to light oil, though, one play stands above the rest, the Viking formation in Alberta and Saskatchewan.

This field has very high-quality light crude at shallow depths, which keeps costs low. This shallow depth and quality product makes the Viking a very attractive play, economically speaking.

One company that is active in the Viking field is Raging River Exploration (ticker: RRX), which owns some 460 sections in the field. The company released fourth quarter results and reserves Tuesday, showing significant growth in both reserves and production.

Raging River Finds Success in Canadian Light Oil

Source: Raging River Q4 2016 Presentation

26% production growth in 2017

Total proven reserves grew to 71.6 MMBOE, up 25% from 57.4 MMBOE last year. 94% of these reserves are comprised of oil and the remaining 6% is natural gas. Proven plus probable (P2) reserves also increased to 94 MMBOE from 76.4 MMBOE last year, growth of23%.

Production has grown just as quickly, with average annual production of 17.9 MBOEPD up 20% from last year. The company expects to continue this growth rate in the future also. “2017, for us, looks like 26% production growth per share year-over-year” Raging River Executive Vice President Bruce Beynon told Oil & Gas 360.

Raging River Finds Success in Canadian Light Oil

Source: Raging River Q4 2016 Presentation

Ranging River expects to drill a total of 93.5 net wells in Q1 2017 to help drive this growth, and has drilled 48 net wells so far. Total 2017 CapEx is expected to be $310 million, down from $403 million last year.

Extended horizontals test a success

Raging River’s waterflood project has been a success, adding 700 MBOE of reserves in 2016. The results of the company’s Extended Reach Horizontal (ERH) project have also been encouraging. While previous wells had lateral lengths around 600 meters, ERH wells have tested laterals of 1,200 meters, about 4,000 feet. These longer laterals deliver twice the production at less than twice the cost, making them very attractive.

With costs of about $800,000 per ERH, well payout can be seen in one year, Beynon said. With some 3,500 remaining economic drilling locations, Raging River has many opportunities to use this new well design.

“It’s a fairly low royalty cost part of Western Canada, and low well cost, so we get to a pretty high margin on every barrel,” Beynon explained. “We’re pretty much self-funded, and we have a pristine balance sheet. We’re actually generating some free cash flow, even in this environment. This is about as cash flow efficient as light oil is in Western Canada.”

Raging River presenting at EnerCom Dallas

Raging River will be presenting its story at the Tower Club Downtown Dallas on Wednesday, March 1, as part of EnerCom Dallas, an investor conference which is modeled after EnerCom’s The Oil & Gas Conference® in Denver.

The Dallas conference is designed to offer investment professionals a unique opportunity to listen to a wide variety of oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading independent energy companies are building value in 2017.

The event also provides energy industry professionals a venue to learn about important energy topics affecting the global oil and gas industry. The forum offers healthy dialogue and informal networking opportunities for attendees.

To sign up for EnerCom Dallas and hear Raging River present, or to find out more information about presenting companies at EnerCom Dallas, click here to visit the conference website.

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