By a News Reporter-Staff News Editor at Energy Weekly News -- Resolute Energy Corporation ("Resolute" or the "Company") (NYSE: REN) reported financial and operating results for the quarter ended March 31, 2014.
Nicholas J. Sutton, Chief Executive Officer, said: "We are pleased to report that our operating results for the quarter show an eight percent increase in production and a 35 percent increase in Adjusted EBITDA (a non-GAAP measure, reconciled to net income below) as compared to the quarter ended March 31, 2013. Production, lease operating expense and general and administrative expense are all on track with our guidance, despite the fact that during the first quarter we experienced some weather-related operational challenges.
"Operationally, in the Powder River Basin our first horizontal well, the Castle 3-21TH, produced approximately 95,000 Boe in its first 160 days of production. We have secured drilling permits and a walking rig to drill two delineation wells, back to back from a common location. We spud our second Turner well on April 29 and we have an additional ten permits in various stages of processing. These could provide a full year of drilling starting as early as autumn 2014.
"Our first Delaware Basin well, the LH Meeker C21 1501H, continues to show strong production, averaging more than 970 Boe per day over its first 100 days of production. Our drilling and completion activities in the Delaware Basin continue with three wells in process. The Harrison State C20 1401H is waiting on a frac date, currently estimated to be late-May. Unfortunately the James 02 1401H was sidetracked due to downhole complications and we anticipate fracing it in early-June. On this schedule, both wells could add to Resolute's late second quarter production. The third well, the Renegade 03 02BH is currently drilling. We plan to drill three to four additional wells in Reeves County under our current base-level budget, as discussed in our guidance. As funds become available, we anticipate that by year-end we will to have two rigs drilling full time in the Permian Basin, and we further anticipate that we will stand-up additional rigs in 2015.
"Aneth Field production operations continue to receive internal attention. Field personnel are concentrating on enhancing production from existing wells and optimizing field operations. Because Aneth is a giant field, incremental improvements can add significantly to production at very attractive economics.
"Perhaps more important than any single quarter's results, Resolute has captured an extensive inventory of horizontal drilling opportunities in the Permian and Powder River basins. We have approximately 250 potential gross locations which, with multiple prospective zones per location, means that we have more than 650 horizontal drilling targets. We anticipate that these numbers could grow significantly as Resolute works to expand its acreage position and as the industry continues to advance its knowledge as to the best ways to drill, complete and produce horizontal wells.
"As previously discussed in our year end press release and earnings call, we have been evaluating a wide range of financing alternatives that would enable us to reduce our outstanding debt and gain access to the capital required to allow the Company to meaningfully accelerate its horizontal drilling activities in the Permian and Powder River basins. Fortunately, our portfolio of assets provides significant flexibility in addressing these opportunities. While not limiting the potential structures that any such financing could ultimately take, our Board of Directors has approved our pursuing a financing transaction in which we would monetize approximately half of our economic interest in Greater Aneth Field in a yield-oriented tax-advantaged vehicle, while retaining operating control over the field, continued access to a significant portion of the cash flow generated by this asset and a meaningful stake in the reserves and production upside embedded in the field.
"Once we have strengthened our financial position we plan to significantly increase our activity level in the Permian and the Powder River basins. The pieces are in place - personnel, prospects, gas gathering, gas processing, SWD wells and drilling permits - to set up for an exciting, multiple-year growth path that will significantly change the Resolute story, resulting in a better public understanding of the value of our assets."
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