It has been a rather volatile month of August for Raging River Exploration, Inc. (TSX-V: RRX) as the oil and gas exploration company has seen shares bounce between a low of 2.05 and a high of 2.47 and after hitting a low of 2.11 on Thursday the company has climbed as high as 2.30 on Friday and is currently moving around the 2.24 level. Trading activity in RRX.V is also picking up with more than 1.6 million shares moving hands yesterday and over 500,000 by noon on Friday.
What’s triggering the activity in RRX.V is anyone’s guess at the moment as the company hasn’t distributed a press release since August 20, 2012, that being their operating and financial results for the three and six months ended June 30, 2012, and before that their last release was on June 27, 2012 in which they simply reaffirmed production guidance with reduced capital expenditures.
Despite some significant setbacks that restricted drilling operations during the second quarter RRX.V managed to deliver impressive results for the three-month period ended June 30, 2012. An important note to recognize is that those setbacks really weren’t the fault of RRX.V, but rather related to an above average rainfall during much of the second quarter.
Hit particularly hard by this rainfall was the company’s recently acquired Dodsland area of southwest Saskatchewan. That rainfall severely limited RRX.V’s ability to operate as they only participated in the drilling of 5 gross (2.3 net) wells of which only 2 gross (0.9 net) were brought on production during the most recently completed frame. On a positive note, even with the reduced drilling activities RRX.V’s production exceeded expectations for the quarter.
Activity at Dodsland has increased measurably since the end of the second quarter as rainfall has returned to what the company calls normal levels. At the time of their August 20, 2012 press release the company had drilled 12 gross (8.8 net) wells in the third quarter and were on track to drill a total of 27 gross (21.5 net) wells by the end of September.
Among the other highlights of RRX.V’s second quarter; they drilled 5 (2.3 net) oil wells with a 100% success rate in the Lucky Hills area, completed four minor acquisitions/swaps that doubled their net acreage at Plato to 8,100 acres and increased their net acreage at Lucky Hills by 1,150 acres, achieved record production of 1,711 boe/d (97% oil) an increase of 23% from the first quarter volumes and over 70% from their January 2012 production volumes.
With more favorable conditions in place for the third quarter RRX.V is averaging greater than 1,850 boe/d (97% oil) and with their optimized drilling and completion techniques implemented they are seeing results that are above expectations for all wells that have been brought on year to date.
These positive result led RRX.V to increase their guidance, with average daily production for the period of April through December 2012 now expected to be 1,950 boe/d (97% oil), a further 9% increase from their prior guidance of 1,800 boe/d. This production increase comes while RRX.V maintains their capital guidance at $67 million.
Obviously a key element in RRX.V’s success will be the price of oil and while those prices have fluctuated they are currently standing at a favorable level for the company. At the moment there are still a number of risks that come with RRX.V but it would be hard not to be impressed with how the company has been able to handle the difficult climate that existed in the second quarter. If they manage to catch a couple breaks in the third quarter and maintain the production increases they could be in a very good position for further growth.