Company Spotlight: Raging River Exploration – A Viking Player

Raging River Exploration Inc. (RRX) is a TSX listed, Calgary-based company that was formed in March 2012 as part of the deal which saw Crescent Point Energy Corp. (CPG) acquire Wild Stream Exploration Inc. in an all-share transaction valued at Cdn$624 million. Wild Stream’s Dodsland Viking assets were spun off into the new company to be led by the Wild Stream management team. A new analysis using the CanOils database shows that since their formation, the company has continued to go from strength to strength and is now one of the largest companies operating in the Dodsland Viking play situated in southwest Saskatchewan.

Focused exclusively in this play, the company’s production is 95% weighted towards light oil and averaged 4,620 boe/d in Q2. They recently revised their full year guidance upwards to an average of 5,150 boe/d and expects to exit the year producing 6,300 boe/d. Low operating and transportation costs ($15/boe in Q2 2013) has resulted in consistently high netbacks (Cdn$63/boe in Q2 2013), which the company has realised and seen normalised net income increase quarter-by-quarter since their formation. Raging River has also one of the highest return on capital employed (ROCE) ratios within the TSX peer group, that has almost doubled from 6% a year ago, to nearly 12% in Q2 2013.

Raging River is reaping these rewards and it is little surprise that the company is reinvesting these returns and carrying out an aggressive drilling programme this year – they drilled 42.2 net wells to the end of Q2, and planned to drill a further 77.8 by the end of the year. As of August 12^th, they had already drilled 32.7 of these. This compares to the 55.5 net wells drilled in 2012, at an average cost of roughly $1 million per well. The company has complemented their drilling program by completing two acquisitions in the Dodsland Viking in 2012, which added 875 boe/d of production, alongside 160 net potential drilling locations.

Another company focused in the Dodsland Viking play is Novus Energy Inc. (NVS).Trading of their shares has been halted since last week when it was reported that Yanchang Petroleum International Limited – the fourth largest oil & gas company in China – had tabled a takeover bid for the company. The companies announced yesterday that Yanchang will acquire Novus for cash consideration of Cdn$232 million – the deal is valued at Cdn$320 million when you include Novus’ net debt. This values the company at $1.18 per share, a premium of 40% over the $0.84 a share when trading was halted.

Source: CanOils

This report was created using the CanOils database which provides clients with 10+ years of historical financial and operating data for all TSX and TSX-V listed oil & gas companies as well as guidance, forecasts and a comprehensive M&A and financings database. CanOils also offers an extensive Oil Sands product.

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