Smaller oil company makes big investment in Saskatchewan

Raging River Exploration Inc. is investing $175 million in Saskatchewan oil this year, with the plan to get up to 220 new wells online. And that’s just the start.

Most of that money will be found in the Kindersley area, where already the company has wells operating.

Over the next 10 years, the company plans to invest about $3 billion on drilling and enhanced oil recovery on top of another billion for its ongoing operations.

In 2015, the company was producing about 12,188 barrels of oil each day using a couple of hundred wells. According to the Ministry of Economy, it was the seventh-most productive oil company in the province.

As a junior-to-intermediate-sized company, the investment marks a slight departure from the regular business model.

Typically companies of such size are apt to build a company up, from zero to 5,000 barrels or so.

Then, they sell out to a larger company. Neil Roszell, president and CEO of Raging River, has been involved with such companies before, creating them before selling them to a larger oil company better suited to run a long-term operation. Some in Raging River management have done this five times.

Roszell said the long-term approach this time around is “just a change in the business evolution that we’ve seen in the oil and gas industry.”

Those looking at the price of oil still hovering around $50 a barrel might think a long-term strategy is optimistic, but Roszell doesn’t think that is the case.

“I don’t think it’s ambitious at all, but really realistic,” he said, adding the company and its predecessors had a history of keeping the books balanced and operating within their means.

Saskatchewan’s Minister of Energy and Resources Bill Boyd said companies like Raging River and others of similar size are “becoming very important players here in Saskatchewan.”

“Raging River is a good example of a company that has significant holdings in Saskatchewan now, (and) they’re continuing to invest significant amounts of money,” he said.

There are fewer smaller-scale oil companies since the price of a barrel has gone down. It now costs more to start a company and, based on the money available for such work, there are fewer startup financing options.

That’s prompted some of those companies — like Raging River — to change course.

Roszell said the company looked at technological advancements, the oil available in the Kindersley area, as well as the long-term enhanced oil recovery options before making a decision.

“We really made the conscious decision, as oil prices kind of collapsed, to build this to something materially bigger and have a real vision for the next 10 to 15 years,” said Roszell, who cited Saskatchewan’s political stability as a big selling point for spending money here.

Boyd said the public can “have great confidence” that the company will invest as much as it says it will.

And while the big investment might cause some to think the Calgary-based company is considering a move of its head office east, Roszell said that isn’t the case.

“I would be remiss if Premier (Brad) Wall didn’t ask me that same question about 15 minutes ago, and he did,” said Roszell when asked by reporters if that was the plan.

He said it wasn’t, but there will be hundreds of more employees working in Saskatchewan because of the investment.