Raging River stock crests on positive report
Shares in Raging River Exploration Inc. surged to a 52-week high Wednesday after it raised its production guidance in a second-quarter update.
The Calgary-based junior traded as high as $4.50, up seven per cent from its Tuesday close and a penny higher than the previous mark set last week. Its stock has climbed steadily since posting an alltime low close of $1.48 in June 2012. It closed at $4.41.
In its report issued late Tuesday, Raging River beat analyst expectations by matching first-quarter production of 4,600 barrels of oil equivalent per day (95 per cent oil), despite the traditional slowdown in the period due to wet conditions from the spring melt.
“The majority, 85 per cent of our production, has to be moved by truck to get to the pipeline,” explained president and chief executive Neil Roszell.
“Typically in April and May you end up shut in due to breakup conditions. In the Dodsland area, we had severe snowpack this year ... our guys did a great job of plowing roads, putting extra storage on wells.”
Raging River reported drilling four successful Viking oil wells in the three months ended June 30 and completing eight wells that had been drilled in the previous quarter.
Since July 1, it said it has drilled 12 gross (10.3 net) wells, adding that production has recently reached 4,800 boe/d.
That’s just shy of its revised annual average production target of 4,850 boe/d and exit rate of 5,700 boe/d (both up 100 boe/d from targets moved higher in March).
The company also reported it had lowered its average on-stream cost per well to $875,000 — it was about $950,000 a year ago, said Roszell.
It has plans to drill 75 horizontal wells in the second half of the year and he said the company might have to raise guidance again.
“RRX has once again upwardly revised its production guidance based on strong results and astute pre-planning,” praised Brian Kristjansen, an analyst for Dundee Capital Markets, in a morning note to investors.
“Raging River’s consistent execution and strong capital efficiencies continue to provide the company with production momentum, and has allowed the company to increase production guidance once again this year,” chimed in analysts at Peter & Co. in a separate note.
Both financial institutions said they would increase their 12-month stock price targets, to $5.95 and $5.25, respectively, based on higher production.
Raging River was created in March 2012 from assets not included when Wild Stream Exploration Inc. was sold to Crescent Point Energy Corp.
It is focused on growing production from the Viking formation in the greater Kindersley and Dodsland areas of Saskatchewan.