|HighPoint Resources Announces 2018 Financial and Operating Guidance, Provides Initial 2019 Outlook and Operations Update|
Chief Executive Officer and President,
We are focused on integrating Hereford this year and excited about the transformational impact this asset will have on our corporate growth trajectory, capital efficiency metrics and inventory quality. The three most recent wells brought online in December achieved average initial thirty-day production rates of over 1,000 Boe/d (86% oil) and are consistent with previous well performance. We expect to resume drilling and completion activity at Hereford in April that will drive significant volume growth in the back half of the year and into 2019. In NE Wattenberg, we are pleased to announce that our optimized completion program in 2017 resulted in twelve-month cumulative oil production 47% higher than the 2015 program. This low-cost, high-quality asset provides significant cash flow to support the development of the Hereford asset.
The enhancement to our inventory depth and quality, combined with our demonstrated technical execution will allow us to deliver robust production growth in 2018 and 2019, while becoming free cash flow positive in the second half of 2019. Lastly, the anticipated step change in production, cash flow and EBITDAX generation materially improves leverage metrics and provides an optimal capital structure to drive substantial returns to shareholders in the coming years."
2018 PRODUCTION AND CAPITAL BUDGET GUIDANCE
The Company possesses a high rate-of-return asset portfolio in NE Wattenberg and Hereford that will deliver strong growth and peer-leading operating margins. 2018 pro forma guidance is outlined in the table below:
Pro forma production sales volumes for 2018 are expected to be 11.0-11.5 MMBoe and weighted approximately 60-62% oil. NE Wattenberg is expected to deliver year-over-year production growth in excess of 40% compared to 2017 production sales volumes of 6.2 MMBoe. Hereford will contribute the remainder of 2018 production volumes. Included in the 2018 production guidance is approximately 0.3 MMBoe associated with Hereford for the first quarter of 2018.
The production profile will be weighted more to the second half of 2018 since there was no new drilling or completion activity in Hereford during the first quarter of 2018. Starting in April, completion operations will commence on eight previously drilled, but not completed, extended reach lateral ("XRL") wells in Hereford with initial flowback anticipated in late second quarter. Drilling is also expected to begin in April with initial production from new wells forecast to impact the fourth quarter of 2018.
The 2018 capital budget range of
As previously reported, first quarter of 2018 production is expected to total 1.8-2.0 MMBoe for the legacy NE Wattenberg properties (excluding the 0.3 MMBoe associated with Hereford). During the first quarter of 2018, the Company operated two drilling rigs in NE Wattenberg and there was no new drilling and completion activity in Hereford. Capital expenditures are expected to total
Initial plans for 2019 include maintaining three drilling rigs and drilling approximately 150 XRL wells. It is anticipated that two rigs will operate in Hereford and one rig will operate in NE Wattenberg. Capital expenditures are expected to total
Drilling activity is expected to commence in April with a focus on full drilling and spacing unit development with XRLs. There was no new drilling or completion activity during the first quarter of 2018 following the conclusion of the 2017 capital program. The most recent Hereford activity included three wells that were placed on production in
The 2017 program in NE Wattenberg focused on optimizing completions to include higher sand concentrations, tighter frac stage spacing, and enhanced flowback methods. The Company continues to realize the benefits of these completion techniques as the average twelve month cumulative oil production of these wells is 47% greater than wells completed in 2015.
Two drilling rigs continue to operate in NE Wattenberg with activity focused on the southern portion of the acreage position. During the first quarter of 2018, the Company anticipates drilling 20 XRL wells and placing 22 XRL wells on initial flowback.
COMMODITY HEDGES UPDATE
It is the Company's strategy to hedge approximately 50%-70% of production on a forward 12-month to 18-month basis to reduce the risks associated with unpredictable future commodity prices, to provide certainty for a portion of its cash flow and to support its capital expenditure program. As part of this strategy, the Company continues to opportunistically add hedges and, as of
Members of management are scheduled to participate in the
All statements in this press release, other than statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as expects, forecast, guidance, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein; however, these are not the exclusive means of identifying forward-looking statements. Forward-looking statements in this release relate to, among other things, anticipated 2018 and 2019 production, costs, cash flows, differentials, capital expenditures and projects and other future results and our future financial condition and balance sheet attributes.
These and other forward-looking statements in this press release are based on management's judgment as of the date of this release and are subject to numerous risks and uncertainties. Please refer to the Company's Annual Report on Form 10-K for the year ended
ABOUT HIGHPOINT RESOURCES CORPORATION
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Larry C. Busnardo, Vice President, Investor Relations, 303-312-8514
Vice President, Investor Relations