Successful Duvernay East Shale Basin discovery well and spending plan highlight Raging River’s strengths: GMP FirstEnergy

Raging River CEO Neil Roszell. Image: Raging River Exploration

Raging River Exploration’s first well in the Duvernay East Shale Basin is producing at some of the highest initial rates seen to date in the emerging play, according to analysts with Peters & Co.

The company, which established a position in Saskatchewan’s Viking play after launching in 2012, now expects the cash flow from its Viking drilling to fund its Duvernay work in 2018.

The first well achieved initial rates of 185 bbls/d and has recently produced in excess of 225 bbls/d.

“We believe today’s announcement should provide some confidence in the management team’s execution. It is difficult to extrapolate/conclude economics on a short test period in a new area; however, the company has proven light oil productivity and it has significant optionality having accumulated 380 net sections in the play at an attractive cost,” Peters & Co. analysts wrote in a research note on Thursday.

“This is exactly the team’s strength and the right approach in the current environment. Given the team’s track record in the Viking, and the scale of this new asset, we believe Raging River will be able to continue to optimize costs and results, driving a potential new scalable light oil development.”

Raging River plans a capital program of $335 million with production averaging 24,500 boe/d, up from 22,750 boe/d expected in 2017.

The majority of the spend, $254 million, will go to drilling 296 wells in the shallow Viking play. In the East Shale Basin, Raging River will spend $44 million to drill six horizontal wells that will test multiple areas as well designs.

There were 45 active horizontal Duvernay wells producing close to 5,000 bbls/d of light oil as of the end of October, which is the highest total production to date for the play, analysts noted.