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 June 30, 2014.
Nicholas J. Sutton, Chief Executive Officer, said: "Resolute is building momentum in its horizontal drilling activity in the Permian and Powder River basins. We have six gross operated horizontal wells (5.3 net) that are either flowing back or have frac dates scheduled in August. These wells will position the Company for a strong exit from the third quarter, as we expect that they will add meaningfully to production. Our Permian Basin drilling activities continue, with current operations involving our second 7,500 foot horizontal lateral in the Delaware Basin in Reeves County, Texas. We expect to drill additional Delaware Basin horizontal Wolfcamp wells in the third and fourth quarters.
"Focusing on our Permian Basin operations, in Reeves County the Harrison State C20 1401H well was completed in the Wolfcamp B on June 27 with a 21-stage frac. To date, the Harrison State has established a 24 hour peak IP rate of 1,312 barrels of oil equivalent ("Boe") per day based on a calculation of three stream production. In light of the high pressures observed in this area of the Delaware Basin we have adopted a conservative strategy for this early-stage production. We have restricted flowback rates for the Harrison State with tighter choke settings, and believe that doing so will enhance its long-term productivity and economics. The well is flowing back on a 24/64 inch choke with flowing casing pressures of more than 2,800 pounds after 43 days of flowback. Normalized for flowing pressure, we think this has the potential to be one of the best wells in the area. Also, in our Appaloosa area of Reeves County, the James 02 1401H is scheduled for completion in late August. In our Mustang area, the LH Meeker C21 1501H continues to outperform our type curve and has produced approximately 139,000 Boe over its first 161 days of production. After drilling a total of six approximately 5,000 foot laterals in the Permian Basin, we have focused on drilling 7,500 foot laterals in the Delaware Basin. Our first, the Renegade 0302BH, was completed on August 6 with a 31-stage frac and is flowing back. Our second, the Steamworks 0301BH, is drilling ahead in the lateral portion of the wellbore. We expect to continue drilling such wells in the Delaware Basin into the fourth quarter. In the Gardendale project area of the Midland Basin, we were active with horizontal drilling in the fourth quarter of 2013 and we anticipate restarting drilling in 2015. Finally, in our Big Spring project area in Howard County, offset operators continue to achieve impressive results with their horizontal drilling and we anticipate commencing horizontal drilling on our acreage in the near future.
"In the Powder River Basin of Wyoming, beginning in the second quarter we drilled two horizontal wells in Hilight Field targeting the Turner formation. We expect to complete both wells in August. These wells are located approximately three miles from our successful first Turner well, the Castle 3-21TH, which has had cumulative production of 123,000 Boe in about eight months and is still producing approximately 300 Boe per day. We have approximately 45 Turner locations and anticipate continuing our drilling activities there later in 2014 and into 2015, subject to capital availability. Throughout the basin, industry players have been active in testing several other formations, and preliminary evaluation of the sidewall cores and logs taken from our recent wells indicate opportunities in the Parkman and Sussex formations on our Hilight Field acreage. We believe we may have as many as 30 potential Parkman horizontal locations to complement our inventory of Turner locations.
"As a final operational comment, Aneth Field continues to provide substantial production and cash flow on plan with relatively little investment in capital projects. Our operating team continues to make great progress in enhancing this terrific giant oil field, as during the quarter it successfully undertook projects to increase our recycle capacity and improve the field's electrical infrastructure. These improvements will position Aneth Field for future growth as we take advantage of our deep inventory of highly economic projects in the field.
"We continue to evaluate opportunities to improve our financial position and provide additional capital to increase our drilling activity in the Permian and Powder River basins. Since we last reported to you, we have made significant progress on a financing transaction in which we would monetize approximately half of our economic interest in Aneth Field in a yield-oriented tax-advantaged vehicle, while remaining as operator of the field and retaining a meaningful stake in the reserves and production upside. Simultaneously, we also have continued to evaluate other potential financing alternatives that would enable us to reduce outstanding debt and appropriately capitalize the Company to pursue those same goals. We look forward to providing more information as these activities progress.
"While some second quarter production growth was deferred due to completion delays associated with the Harrison State and James horizontal wells, we expect that our annual production will be within our guidance range. We anticipate that the additional production from the six horizontal wells to be completed by the end of August will add significantly to third and fourth quarter production.
"The next several quarters will be very exciting as we complete new horizontal wells, drill additional Permian and Powder River basin horizontal wells and address our financial structure. Resolute is committed to improving the value recognition of our assets and allowing the understanding of our diverse assets to be fully realized in the market."
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