RSP Permian (RSPP) earnings were released Monday matching EPS estimates. RSPP is seen as a ‘pure Permian play’ with ‘Silver Hill’ in the oil-weighted area of the Delaware Basin portion of the Permian. Production for Q317 was comprised of 71% crude oil, 13% natural gas and 16% NGLs.
RSP Permian (RSPP) earnings were released Monday matching EPS estimates. RSPP is seen as a ‘pure Permian play’ after they agreed last year to pay $2.4 billion for drilling rights to ‘Silver Hill’ 41,000 net acres in the oil-weighted area of the Delaware Basin portion of the Permian. Production for the third quarter of 2017 was comprised of 71% crude oil, 13% natural gas and 16% NGLs.
The Permian has been the epicenter of low-cost production during the crude price fall.
Earnings: Q3 EPS of $0.18 in-line with expectations on revenue of $199.1 million up +112.7% Y/Y but misses by $2.96 million.
Reaction: RSP Permian NYSE: $RSPP After-hours 36.40▲ 0.0044 (0.01%) (After being up 3.32% on the day)
Third Quarter 2017 Highlights
- Production increased 98% to 58.9 MBoe/d (71% oil, 87% liquids), compared to 3Q16 and increased 8% compared to 2Q17
- Net income of $21.3 million, or $0.14 per diluted share. Adjusted net income, which does not include certain items, was $28.2 million, or $0.18 per diluted share
- Adjusted EBITDAX of $144.7 million, a 120% increase compared to 3Q16 and a 7% increase compared to 2Q17
- Borrowing base increased to $1.5 billion from $1.1 billion(1) and Company negotiated reduced interest rate on outstanding borrowings’ pricing grid
- Closed bolt-on acquisitions of leasehold acreage and mineral interests located primarily in the heart of the Company’s Delaware Basin position for an aggregate purchase price of $234.4 million acquiring approximately 5,800 net leasehold acres, 5,800 net royalty acres(2) and 500 Boe/d of production
- The Keystone 1007 Wolfcamp A well (9,800′) established a peak 30-day average rate of 2,220 Boe/d or 227 Boe/d per 1,000′ (90% oil)
- The Spanish Trail 347 02 Wolfcamp A well (6,500′) established a peak 30-day average rate of 1,850 Boe/d or 285 Boe/d per 1,000′ (82% oil)
- The Rudd Draw 29 03 01H Third Bone Spring well (4,440′) is currently producing 1,822 Boe/d while still cleaning up at over 2,500 psi and established a seven day rate of 1,428 Boe/d or 322 Boe/d per 1,000′ (79% oil)
- The Ludeman A 603 Wolfcamp B well (4,830′) established a peak 30-day average rate of 935 Boe/d or 194 Boe/d per 1,000′ (77% oil)
- The Ludeman D 2105H Delaware Basin Lower Wolfcamp A well (4,750′) has produced 200 MBoe in 170 days (72% oil)
- The Rudd Draw 26-21 01H Delaware Basin Wolfcamp XY well (6,700′) has produced 450 MBoe in 275 days (73% oil)
As of September 30, 2017, the Company had $46.5 million of cash and $345 million of borrowings outstanding on its revolving credit facility, which had a $1.1 billion borrowing base and a $900 million Company-elected commitment. Effective October 19, 2017, the Company increased the borrowing base under its revolving credit facility to $1.5 billion, from $1.1 billion and reduced the interest rate on outstanding borrowings’ pricing grid. The Company maintained its elected commitment amount of $900 million.
About RSP Permian
RSP Permian, Inc. is an independent oil and natural gas company, focuses on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of west Texas. RSP Permian acquired Silver Hill Energy Partners, LLC (“SHEP I”) and Silver Hill E&P II, LLC (“SHEP II,” and together with SHEP I, “Silver Hill”) for $1.25 billion of cash and 31.0 million shares of RSP common stock in aggregate, implying a total purchase price of approximately $2.4 billion.
Silver Hill is comprised of two privately held entities controlled by affiliates of Kayne Anderson Capital Advisors and Ridgemont Equity Partners that collectively own approximately 68,000 gross /41,000 net acres in northeast Loving and northwest Winkler Counties, Texas with roughly 15 MBOEPD of current net production from 58 producing wells (49 horizontals) and about 3,200 gross /1,950 net total undeveloped locations.
RSP Permian acquisition map of Silver Hill
Prior to Silver Hill
Delaware ‘Silver Hill’ 41,000 net acres Transaction highlights
The acquisition created substantial scale with combined current production of approximately 50 MBOEPD, over 100,000 net surface acres, over 500,000 net effective horizontal acres and over 3,600 net drilling locations with substantial additional upside from tighter spacing assumptions.
- – Unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin that has approximately 68,000 gross / 41,000 net surface acres located in Loving and Winkler counties
- – Acreage located in the thickest, deepest part of the Delaware Basin, which is significantly over-pressured
- – Blocked up acreage configuration conducive for longer laterals and efficient development ~250,000 net effective horizontal acres across 7 horizontal pay zones
- – Significant operational control with over 80% of acreage operated – Average working interest in operated properties of approximately 83%
- – One operated rig holds acreage position – Offset operators include EOG, Anadarko, Shell, Matador and Devon
- – Meaningful and growing production base with current net production of approximately 15.0 MBOEPD (69% oil, 86% liquids) and two operated horizontal rigs currently drilling on acreage position
- – Deep inventory of attractive horizontal drilling locations across multiple horizontal stacked pay zones, including the Wolfcamp B, upper and lower Wolfcamp A, 3rd Bone Spring, 2nd Bone Spring, Avalon, and Brushy Canyon EURs of ~1.0 MMBOE common across acreage position based on management’s estimates ~3,200 gross / ~1,950 net locations with average lateral length of approximately 6,300′
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