Current RSPP Stock Info

RSP Permian Inc. (ticker: RSPP) posted a Q1 2018 net income of $89.6 million, or $0.57 per diluted common share. Production for the quarter increased 39% to 62.8 MBOEPD (72% oil, 87% liquids) compared to Q1 2017.

Drilling

The company operated seven horizontal rigs and three full-time completion crews during the first quarter of 2018 (third crew added in late January).

RSP Permian Earns $90 Million, Production Up 39%

Courtesy of RSP Permian

RSP drilled 22 gross operated horizontal wells and completed 31 gross operated horizontal wells, including:

  • Midland – seven Lower Spraberry, seven Wolfcamp A, five Wolfcamp B and one Middle Spraberry
  • Delaware – five Wolfcamp A, four Wolfcamp XY, one Second Bone Spring and one Third Bone Spring

RSP said it began the quarter with 36 gross operated horizontal DUCs and exited the quarter with a total of 27 operated horizontal DUCs.

CEO Steve Gray said Q1 had the most wells completed during any quarter to date and that “compelling well results” from the company’s assets has RSP positioned to meet its production guidance for the year.

Delaware

The Brunson D three-well pad (1203H Wolfcamp A, 1201H Wolfcamp B and 1204H Third Bone Spring) in the Delaware Basin is back online after being shut-in for offset operator completion activities. The Brunson D pad had a cumulative production of over 390 MBOE in less than 90 days.

Midland

The Spanish Trail 4825, RSP’s first horizontal Jo Mill completion, established a peak 15-day average rate of 1,048 BOEPD, or 150 BOEPD per 1,000′ (74% oil). RSP said that this well is still cleaning up and increasing in rate.

RSP’s first Lower Spraberry well on the Woody lease in Glasscock County, the Woody 3-46 6H, established a peak 30-day average rate of 1,786 BOEPD, or 236 BOEPD per 1,000′ (86% oil).

CapEx

RSP’s development capital expenditures for the quarter totaled $241.8 million – $194.5 million went towards drilling and completion, $47.3 million towards infrastructure and other expenditures. The company spent $31.5 million, or 13% of development capital, on non-operated properties.

Additionally, during the first quarter of 2018, the company acquired $8.7 million of oil and natural gas properties.

More news to come: Permian’s biggest deal awaiting closing

RSP said that due to the pending merger with Concho Resources Inc. (ticker: CXO), the company does not plan to provide or update guidance/long-term outlook for operations.

Concho Resources (ticker: CXO) announced the biggest deal ever seen in the Permian Basin in March 2018, when it said it would acquire RSP Permian in an all stock deal valued at $9.5 billion, inclusive of debt.

According to Concho, this will make the company the largest unconventional shale producer in the Permian, and give it the largest drilling program in the basin.

The resultant company will hold 642,000 net acres in the basin, with production of 267 MBOEPD, making Concho the highest-producing Permian shale company.

Concho will get RSP’s highly consolidated Delaware basin acreage, consisting of 45,000 net acres in Loving and Winkler Counties, and the more diverse 47,000-acre Midland position, which stretches over five counties. The acquired Midland acreage is contiguous with Concho’s existing Midland properties, while the Delaware acreage is a self-contained unit, separate from Concho’s properties but nearly one single block.

Concho CEO Tim Leach talked about the RSP Permian acquisition in a conference call following the merger announcement: “I think that this set of assets really gives the company a strong runway for better capital allocation. So, I think that these new assets will go right to the top of our development inventory and we really look forward to the future and 2019 and beyond on how this capital allocation strength will really enhance our returns and capital efficiency.”

“We talked in the past about how high the bar has been set for us in terms of acquisitions and our relationship with Steve and with RSP goes way back and we’ve admired what they were doing for a long time. So, we all recognize that corporate transactions are more complicated and time consuming. But Steve mentioned the hand in glove kind of fit that this thing is, so I don’t – don’t read that this means anything relative to private transactions versus public. This is a bit of an acquisition, it’s been a long time coming and it’s a perfect fit for us.”

The Concho-RSP acquisition is expected to close in Q3 2018, according to the companies.

See Concho’s Q1 2018 results here.


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