RAM Energy Resources Announces Borrowing Base Reaffirmed; Updates Operational Activity
08 Avril 2010 - 10:05PM
Business Wire
RAM Energy Resources, Inc. (Nasdaq: RAME) today announced the
company’s borrowing base reaffirmation and updated operational
activity.
2009 Borrowing Base Reaffirmed
As a result of the semi-annual borrowing base redetermination,
RAM’s commercial lenders on April 1, 2010 reaffirmed the company’s
existing borrowing base of $175.0 million under RAM’s revolving
facility based on the company’s proved reserves at year-end 2009.
At March 31, 2010 the outstanding balance under the revolving
facility was $135.0 million, with remaining availability of $40.0
million. Funds advanced under the revolver may be paid down and
re-borrowed during the term of the revolver which matures November
2011. The company also has borrowings under a term loan facility
which had an outstanding balance of $111.8 million at March 31,
2010 and a maturity of November 2012. The weighted average
LIBOR-based interest rate on total outstanding borrowings under
both the revolver and term loan is estimated to be 8.1 percent in
the first quarter 2010. “The reaffirmation of our borrowing base
and the availability remaining under our revolving credit facility
provide an important degree of liquidity and flexibility to both
support our capital program and take advantage of other
opportunities that may be presented during the current year,” said
Larry Lee, President and CEO.
First Quarter 2010 Drilling Activity
During the first quarter ended March 31, 2010 the company
drilled 21 gross wells. Of the wells drilled, 11 were completed
successfully and 10 were drilling or awaiting completion at the end
of the quarter. By comparison the company drilled 14 wells in the
first quarter of 2009 and a total of 45 wells for the full year
under the conservative capital allocation program in effect for
2009.
The company has a price advantaged revenue stream compared to
many of its industry peers as a result of the premium price of oil
relative to natural gas prevailing in the market and its above
average weighting of oil and natural gas liquids (NGL) in its
hydrocarbon mix. Sixty-one percent of RAM’s production is derived
from oil and NGLs, the price of which is influenced by the price of
oil. RAM’s average price of oil during the first quarter of 2010 of
approximately $76/Bbl is nearly double that of the average in the
year-ago quarter. With oil and NGLs accounting for an estimated 79%
of first quarter total sales, RAM expects its EBITDA for the
quarter to meet or exceed its planned expectations. In addition,
given the current NYMEX strip of the future price of oil which
averages $87/Bbl for the remaining nine months of the year, the
company continues to expect that it will meet its target of $65 –
$68 million in EBITDA for the year and fully fund its 2010
non-acquisition capital budget from cash flow. Planned
non-acquisition capital spending for the 2010 year also remains at
its previously disclosed level of $50 million, approximately 68
percent above that of the previous year.
Planned Drilling Activity
For the balance of 2010, RAM plans increased drilling activity
drawn from the company’s inventory of over 300 identified proved
projects in mature, lower risk areas of Electra/Burkburnett and N.
E. Fitts, where the principal production is oil. The capital budget
also calls for $22 million to be allocated to drill 9 wells during
the year on RAM’s South Texas acreage, however, the recent limited
availability of fracture stimulation and other completion services
in the near term is likely to cause most of the wells planned for
the first half to be drilled but experience a delay in being hooked
up to pipelines.
In addition the company is preparing to spud the first of five
planned wells in its 80 square mile concession area Osage
exploratory venture in northeastern Oklahoma. The 2010 budget
related to this venture of $6.0 million includes plans for three
vertical wells and two horizontal wells, the first of which is
anticipated to spud early in the second quarter. Initial vertical
wells are expected to cost $350,000 - $400,000 including the cost
of additional scientific testing with subsequent vertical wells
anticipated to be drilled for approximately $250,000 - $300,000
each. Exploration on the Osage concession is predominantly an oil
play targeting the Mississippi Chat formation as the primary
objective and the Arbuckle formation as a secondary objective.
Based on the history of wells in the area and the company’s seismic
interpretation, RAM estimates an ultimate potential recovery of
40,000 Bbl of oil per well if successful. Due to the large
concession size of 80 square miles, there may be ample opportunity
for future drilling if the project can be commercialized. No
contribution from the Osage project has been factored into current
company production guidance.
First Quarter 2010 Production Impact
Production in the first quarter was interrupted by the impact of
winter weather, particularly in RAM's mature fields where the
company relies on an efficient cycling of drilling and workover
activity to maintain production levels. As previously disclosed,
severe winter weather impacted production in our North Texas and
Oklahoma fields, reducing production by an estimated 45,000 to
50,000 barrels of oil equivalent (BOE). As a result, production was
limited in the first quarter to an estimated range of 560,000 to
575,000 BOE. More recently, the timing of the company’s ability to
recoup the production lost to weather interruptions in the first
quarter through potentially accelerating drilling activity was made
more uncertain. Heightened drilling activity in the Eagle Ford
shale by competitors operating in South Texas has made it difficult
to secure, on a timely basis, service companies for completion work
on RAM’s existing inventory of two wells which have been drilled
and are awaiting completion and for a third well recently spud. At
the current time both the Garza Hitchcock #21 and the Heard # 4
wells are waiting on completion in order to bring their oil,
natural gas and NGL products on stream. The delayed access to
service companies has increased the uncertainty related to the
timing of bringing on anticipated volumes and ultimately the
confidence to meet the company’s prior annual production growth
target of 2.6 – 2.65 million BOE for 2010. As a result, RAM is
trimming its production guidance for the current year to 2.5 – 2.6
million BOE.
Forward-Looking Statements
This release includes certain statements that may be deemed to
be “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts that address
estimates of drilling activities and costs, production levels,
timing of well hook-ups, oil prices, capital spending, projected
ultimate well recovery, annual guidance targets, EBITDA and events
or other developments that the company expects or believes are
forward-looking statements. Although the company believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance, and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include oil and gas prices, exploitation
and exploration successes, actions taken and to be taken by the
government as a result of political and economic conditions,
continued availability of capital and financing, and general
economic, market or business conditions as well as other risk
factors described from time to time in the company’s filings with
the SEC. The company assumes no obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise.
About RAM Energy
RAM Energy Resources, Inc. is an independent energy company
engaged in the acquisition, exploitation, exploration, and
development of oil and gas properties and the marketing of crude
oil and natural gas. Company headquarters are in Tulsa, Oklahoma,
and its common shares are traded on the Nasdaq under the symbol
RAME. For additional information, visit the company website at
www.ramenergy.com.
Ram Energy Resources, Inc. (MM) (NASDAQ:RAME)
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