Before he took the helm of Raging River Exploration, Neil Roszell had never managed to bring a junior producer beyond the 10,000-barrel-per-day milestone. It wasn’t for a lack of trying, mind you, and it wasn’t like they ended badly. Wild Stream Exploration, where he served as CEO, and Prairie Schooner Petroleum, where he was the COO, were both bought out before reaching that pivotal marker. “Historically, in the companies our team has run, it has been challenging getting beyond 5,000 [barrels] … and in fact the companies I’ve run have never got through 10,000,” Roszell says.
Not so with Raging River. The company shot past 5,000 barrels per day in mid-2013, and by the end of the first quarter of 2015 it had ramped it up to over 13,000. Not surprisingly, then, the company was one of the fastest-growing companies on The 200, as it more than doubled its production on a year-over-year basis and increased its revenue by $158.2 million. And while one might think such rapid growth would come at the expense of a well-maintained balance sheet, the company managed to achieve it without taking on much in the way of new debt or issuing a bunch of new equity. The company expects to exit 2015 with a debt-to-funds from operations ratio
of 0.6 to 1.
Raging River is currently focused solely on the southwest region of the Viking Formation, where Roszell says the team has an intimate understanding of the geology. After the first wells were drilled in 2012, the company was able to achieve its growth by finding a successful drilling method and repeating it. “We were able to set the stage where all of a sudden we understood where the economic edge of the play was, where the oil was, and then really get into a manufacturing process as we went from 5,000 through 13,000,” he says.
That manufacturing process, as Roszell describes it, allowed the company to grow through the drill bit without the need for any major mergers or acquisitions, and of the 12,000 bpd that was added to the company’s production profile since 2012, only around 1,500 were added through deals. That growth was possible, Roszell says, because the company managed to reduce its drilling costs by a third compared to 2012 levels. The team achieved this reduction by shortening the horizontal section of wells from 1,200 meters to 600, then using a fracturing method that allowed them to use double the volume of sand without raising costs – largely due to improved completions technologies at the time. Drill times (from well spud to rig release) were reduced from nine days in 2012 to as few as two. Overall, costs dropped from $1.5 million per well down to $1 million between 2012 and 2015.
The company isn’t done growing. It hopes to hit 30,000 barrels per day by 2019, and if it’s going to do that it might need to expand its focus outside of the Viking. That presents a new set of challenges, Roszell says. “This first stage of growth was not easy, but it really was just more of the same. Growing from 15,000 through 20,000 can actually be harder, as you run out of acreage or deplete inventories.” Roszell isn’t ruling out an acquisition in any region of the WCSB, and he says the company is open to a variety of possibilities in terms of size (anywhere between 2,000 and 20,000 barrels per day). But at this point, the company is keeping an open mind – even if that means simply doing more of the same. “You could absolutely grow this [Viking] asset base through 30,000 barrels per day.” Given Raging River’s recent track record, it’s probably not wise to bet against that happening.
|80||ON THE 200|
|110,170,000||2014 NET INCOME|
|103.6%||Year-Over-Year Revenue Growth|
|KEY INDICATOR:||PRODUCTION GROWTH (PER SHARE) OF 68.4 per cent|