Resolute is focused on maintaining a strong team
Resolute Energy (ticker: REN) presented at EnerCom’s The OilServices Conference 14 in San Francisco on March 9, 2016. Resolute Energy is engaged in the acquisition, development and production of onshore domestic hydrocarbons, principally crude oil. Resolute’s producing assets are Aneth Field in the Paradox Basin of Utah and in the Permian Basin of West Texas.
Theodore Gazulis, CFO of Resolute, began his presentation by making mention of a unique aspect that he believe sets Resolute apart from some other companies. He said that despite the downturn in commodity prices, Resolute has managed to keep their team together and stay focused on positioning the company for inevitable upswing in prices when it does come around. One other factor he noted was the ability of the company to keep the most valuable assets in place to maintain production levels.
The company has divested assets through the course of 2015, but the majority of the assets that were sold were proved undeveloped properties. Leaving Resolute with what the company believes to be “a high quality asset base of long lived oil producing properties.”
A focal point of Resolute has been improving cost metrics related to all aspects of production. As you can see in the chart above, staying below the company’s guidance in most aspects of their business allowed them to spend more in the way of capex.
Repeatable efficiencies
The improvement in cost metrics is not a one-time deal, it is a sustainable platform for the company. Gazulis said that Resolute can build from these improvements when the price improves, the efficiencies gained are repeatable, and not a one-time thing, “The way you save dollars is by being efficient.”
The asset sales through 2015 and the efficiencies gained by the company have afforded them the ability to pay down a good portion of the outstanding debt in order to deleverage the company through the course of 2015. Paying down the bank revolver entirely, and reducing the amount of bonds outstanding by 35% since Q3 2015.
Another focal point that Gazulis touched on was the focus on an efficient hedge strategy. Resolute’s guidance for 2016 prognosticates the production range as 3,730 to 4,350 MBOE. The company currently has hedges in place to cover 2,386 MBOE through the course of 2016 at $80.23/Bbl, or roughly 60% of guided production.
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