Oklahoma City-based Roan Resources Inc., which is focused exclusively on the stacked plays within the Anadarko Basin, dropped one rig in the second quarter, bringing the count to three*, and is considering potentially dropping another this year, executives said on a 2Q2019 earnings call.

“Our long-term rig contracts are really running out,” said Executive Chairman Joe Mills. “So we have a lot of flexibility to determine what is the optimal that we stay at three or go down to two. At two, I think it’s fair to say that we essentially hold production flat year-over-year,” referencing the production outlook for 2020.

Mills stressed that no final decision on the rig count had been reached, but a decision to drop to two rigs would translate to a maintenance production strategy. The rig count evaluation coincides with both a reduction to capital expenditures (capex) for 2019, as well as a reduction in the production forecast.

The independent produced 50.8 million boe/d in the quarter, up by 41% from 2Q2018 production. However, production is expected to average lower for the year after it revised down by 3% at the midpoint its production forecast for 2019 to average 50.5-53.5 million boe/d. The decline stems from the company moving to ethane rejection in the second half of the year.

Roan also has cut its 2019 capex by 5% from the previous guidance to $495-525 million.

Mills said an announcement regarding the company’s strategic options was in the near future, enumerating multiple potentials that included mergers, remaining a stand-alone company or a sale.

Roan management in May said it had formed a board committee to evaluate a potential sale or merger after receiving multiple unsolicited offers.

"We believe consolidation in the core of the basin through a sale or merger combination could be value enhancing on many levels and could provide a more expeditious path to maximizing long term shareholder value," Mills said at the time.

The company has also set up a search committee to find a permanent CEO, and during the call Mills said the search continues.

“Our CEO search continues and is well underway, and the search committee has interviewed a number of highly qualified candidates, and we hope to be in a position to announce a new CEO sometime in the very near future,” he said.

Net income was $27.2 million (18 cents/share) for the quarter, up from a net loss of $22.8 million (minus 15 cents) for 2Q2018. 

*Correction: In the original article, NGI mistakenly stated that Roan Resources Inc. was currently operating two rigs, when it should have stated that Roan Resources Inc. was currently operating three rigs. NGI regrets the error.