Permian pure play Ring Energy Inc. said it drilled seven horizontal wells during the first quarter, including six in the Central Basin Platform (CBP), where it recently completed a $300 million acquisition the CEO called a "game changer."
In an operations update Monday, the Midland, TX-based independent reported net production of 569,130 boe up 12.3% from the year-ago quarter. It deployed one rig in 1Q2019.
All six CBP wells drilled in 1Q2019 targeted the San Andres formation. Five were drilled with one-mile laterals and one was a 1.5-mile lateral. During the quarter, Ring drilled a single horizontal well with a one-mile lateral targeting the Brushy Canyon formation in the Delaware sub-basin. The company also said it drilled four saltwater disposal wells.
Seven wells were completed. Initial production from four wells averaged 575 boe/d, or 132 boe/1,000 feet of lateral.
The average estimated price received for production in the first quarter was $47.40/boe.
Ring paid Wishbone Energy Partners LLC $300 million last February for 37,206 net acres that straddle the Permian in Yoakum County, TX, and Lea County, NM. CEO Kelly Hoffman said Ring already has one rig deployed.
"In our opinion, this transaction is a 'game changer,'" Hoffman said, noting it doubled estimated production and proved reserves.
In conjunction with the CBP acquisition, Ring has costless collar hedges in place on 5,500 b/d of crude for the remainder of 2019, with an average floor price of $50/bbl and an average ceiling price of $68.19/bbl. Ring has also added costless collar hedges on 2,000 b/d for 2020, with an average floor price of $50/bbl and an average ceiling price of $65.61/bbl.
COO Danny Wilson said company was in the process of laying a saltwater disposal (SWD) line in northern Gaines County, TX, to connect two wells completed last year, which should “allow us to do more testing and development at a much lower cost due to a reduction in our SWD costs from approximately $2/bbl to less than 20 cents/bbl.”
"We are in the process of finalizing our capital expenditure budget for 2019 and will release it shortly," Hoffman said. The 1Q2019 earnings call has not been scheduled.