Current REN Stock Info

Resolute Energy Corporation (ticker: REN) reported year-end 2016 reserves and production:

— Fourth quarter exit rate in excess of 20,800 Boe per day —
— Reserves increase 82% to 60.3 million Boe —
— Closed new bank facility; $150 million initial borrowing base —
— Earnings conference call scheduled for March 14, 2017 —

Rick Betz, Resolute’s Chief Executive Officer, said: “During 2016, Resolute produced an average of nearly 14,200 Boe per day, above the high end of guidance. More importantly, the 2016 exit rate was more than 20,800 Boe per day, with more than 14,700 Boe per day, or 71 percent, coming from the Permian Basin. In addition to exceeding our production guidance, Resolute also met or beat the midpoint of guidance for lease operating expense and production taxes, and was within the guidance range on general and administrative expense.

“On February 17, 2017, we closed a new revolving credit facility with an initial borrowing base of $150 million. Coupled with our projected cash flow, we expect that this credit facility and borrowing base will provide ample liquidity to undertake and complete our two rig 2017 Delaware Basin drilling program. Also, effective today, Moody’s Investors Service upgraded Resolute’s Corporate Family Rating to B3 from Caa2, with a stable outlook.

“Proved reserves increased by 82 percent from year-end 2015 largely due to our successful 2016 Delaware Basin drilling program and despite using lower SEC commodity prices in 2016. Year-end 2016 proved reserves were 60.3 MMBoe, of which 86 percent was crude oil and natural gas liquids. Year-end reserves reflect the addition of 37.2 MMBoe of proved reserves. The pre-tax SEC PV10 of our proved reserves at year-end 2016 was $344.2 million (a non-GAAP financial measure), and the after-tax value was $343.6 million. Both metrics are up 73 percent from year-end 2015.”

New Bank Facility

On February 17, 2017, the company closed on its amended and restated revolving credit facility, with an initial borrowing base of $150 million, an increase from the previous level of $105 million. In addition, the maturity date of the facility was extended to February 2021, and certain other terms and conditions were modified, including those to reflect the fact that the company extinguished its second lien term loan facility in January 2017. Bank of Montreal is the Administrative Agent under the new revolving credit facility. As of the date of this release we have no borrowings outstanding on the revolving credit facility.

Operations Update

In December, we brought on line the Harrison C20 1402H, a mid-length Wolfcamp A lateral in Mustang. In mid-January, as planned, we added a second drilling rig in the Delaware Basin. One rig is drilling in Mustang and the other is drilling in Appaloosa. Since the first of the year, we have drilled the South Elephant U04H, a long lateral Wolfcamp A in Appaloosa and the Harpoon L05H, a mid-length lateral Wolfcamp A in Mustang; both of these wells are waiting on completion. Also, we completed the Renegade L02H and Renegade U03H wells, both mid-length Wolfcamp A laterals in Mustang, both of which are flowing back. The Renegade wells are our first upper and lower Wolfcamp A downspacing test.

Year-End 2016 Proved Reserves

At December 31, 2016, Resolute’s estimated proved reserves were 60.3 MMBoe, compared to year-end 2015 proved reserves of 33.1 MMBoe. Approximately 73 percent of the company’s 2016 year-end proved reserves was crude oil, 14 percent was gas and 13 percent was natural gas liquids. Undeveloped reserves comprised 38 percent of total proved reserves.

The present value of the company’s estimated future net revenues from proved reserves was estimated to be $344.2 million pre-tax, a non-GAAP financial measure, and $343.6 million after-tax as of December 31, 2016, using SEC pricing guidelines for year-end 2016, discounted at ten percent. Pricing used in calculating the year-end 2016 present value of our reserves was $42.75 per barrel of oil and $2.48 per MMBtu of gas. For the prior year-end report, pricing was $50.28 per barrel of oil and $2.59 per MMBtu of gas. All prices were adjusted for differentials and NGL content, and the analysis excluded the impact of hedges.

The increase in proved reserves from year-end 2015 to year-end 2016 was largely driven by successful drilling of previously non-proved Delaware Basin locations, both operated and non-operated. New well completions and acquisitions of additional interests in Mustang yielded additions of 14.8 MMBoe of net proved developed producing reserves and 17.9 MMBoe of net proved undeveloped reserves in twenty immediate offset Delaware Basin locations. Also, 4.5 MMBoe of net proved developed non-producing and proved undeveloped reserves were added to Aneth Field in connection with newly identified compression and deepening projects.

Closed sale of New Mexico properties

On February 22, Resolute closed the sale of our New Mexico properties that we announced on January 17, 2017. The properties were purchased by a private buyer for $15 million, subject to customary purchase price adjustments. The sale is effective as of October 1, 2016. The proceeds of the sale will be used for general corporate purposes.

Lantana Energy Advisors, a division of SunTrust Robinson Humphrey, Inc., acted as financial advisor to Resolute on the New Mexico sale.

Earnings Call

Resolute will host an investor call on March 14, 2017, at 4:30 PM ET. To participate in the call please dial (888) 349-0084 from the United States, or (855) 669-9657 from Canada or (412) 902-4284 from outside the U.S. and Canada. Participants should dial in five to ten minutes before the scheduled time and must be on a touchtone telephone to ask questions. A replay of the call will be available through March 21, 2017, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from outside the U.S. The conference call replay number is 10102048.


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