Raging River Exploration (RRX-T) producer in the Saskatchewan Viking, release its second quarter financials. Production came to 13,347 barrels of oil equivalent a day, well ahead of analysts' predictions of 12,900 barrels a day.
Raging River's output has advanced considerably since it was created in March, 2012, with production of just 1,400 barrels a day. Its ambitions are reflected in its tendency to use its quarterly reports as an opportunity to boost its guidance.
In 13 reports for the quarters from March 31, 2012, to March 31, 2015, guidance was boosted in 10 of them. Today's update took an intriguingly different tone. The guidance was not increased (although that has happened twice this year already), and Raging River instead emphasized how steady its operations are. Even if WTI stays at $50 (U.S.), Raging River says it can keep its production flat next year while spending just 85 per cent of cash flow, and flat for the next 15 years using only its current assets.
One analyst is taking these remarks as a clue that Raging River wants to start a dividend. RBC's Shailender Randhawa, who started covering Raging River a month ago and made a dividend prediction at the time, wrote today that the company "continues to signal a shift to a sustainable income model." Even if that is Raging River's plan, it is likely not a near-term one.
Challenges include low oil prices (of course) as well as Raging River's high decline rate of around 40 per cent. The company is trying to improve its declines through waterflooding. It says these could lower declines by 15 per cent, but it will take five years. |
