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Resolute Targeting Strong Growth in 2017 from Permian's Delaware

Onshore independent Resolute Energy Corp. expects to more than double its 2017 production year/year, lifted by solid results in the Permian Basin's Delaware formation.

Annual production is forecast to be 8.7-10.2 million boe, about 85% higher at the mid-point of guidance for 2016, the Denver-based operator said. Capital spending is set at $210-240 million, with 84% focused on Permian development, specifically Wolfcamp wells within the Delaware sub-basin of West Texas. Another 9% of spending is to be directed for maintenance and development tests in the Aneth field in Utah's Paradox Basin.

Resolute's 2017 exit rate is forecast to be more than 30,000 boe/d, 82% weighted to oil and liquids, with more than 24,000 boe/d from the Permian.

"Resolute's 2017 operating plan focuses on following our successful 2016 performance in the Delaware Basin with a two rig drilling program spudding 22 gross wells," said CEO Nicholas J. Sutton.

One rig is running today in the Delaware with a second scheduled to be raised in mid-January, he said. Resolute plans to drill 20.8 net wells in the Permian during 2017, "all mid- and long-length Wolfcamp laterals." Plans are to drill 18 gross Wolfcamp A laterals and four gross Wolfcamp B laterals.

"We expect that the 2017 drilling program will be more than 65% funded internally, with the balance funded through borrowings under our revolving credit facility," Sutton said. "The 2017 program will accomplish a number of important initiatives for the company. We will further delineate our development inventory as we drill wells across our acreage block, conduct multiple spacing tests and complete wells in multiple landing zones in the Wolfcamp A as well as in the Wolfcamp B.

"The success of this program will help confirm the more than 300 Wolfcamp A and B development locations we believe exist in our Mustang and Appaloosa project areas. We expect that substantially all of our acreage will be held by production by the end of 2017."

COO Richard F. Betz, who is taking over as CEO on Jan. 1, hinted that acquisitions could be in the works. Resolute, he said, plans to remain "intensely focused on delivering the same superior level of execution and cost control demonstrated in 2016, we will also look for opportunities to expand our position in the core of the Delaware Basin through targeted acquisitions."

Capital expenditures in the Aneth field are set at $18 million, with $12 million for maintenance, including carbon dioxide purchases of 28 MMcf/d. Another $6 million would be used to derisk development.

Total lease operating expenses (LOE) next year are set at $90-105 million, which at the mid-point is a 51% increase from 2016, reflecting more wells and "substantially higher production levels," management said. "However, on a per-unit basis, mid-point LOE is expected to be $10.32/boe in 2017 compared to $12.59 in 2016, as we add production from wells drilled in our two rig drilling program in Reeves County."

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