Mississippian Operations Report Price Target: $1.44/sh Investment Case: Development pace is picking up significantly at RFE’s Mississippi Lime asset. 10 new wells are expected to come on stream this Q, doubling the producing well inventory. This should be reflected in material increases to production and cashflow. Growing reserves and production will in-turn increase RFE’s funding capacity. Beyond which, upside to the RFE story lies with improved resource recovery through development spacing and Woodford oil shale development. Buy.
Key Points: Current rate of ~1300boepd should continue to pick-up particularly for February and March with 6 wells currently testing/completing and 4 more ready for completion.
Assoc. increases to production will drive material reserve increases in the short term, improving RFE’s access to debt funding.
Gross production of 1,000boepd av. for Jan was down on Dec (~1300boepd).
The production drop was as a function of only the Warburton well being brought on-line and several wells being taken off-line to optimise surface gathering infrastructure performance.
Improving spud to rig-release times av. 26 days (vs +40 prev.) will have a positive downward impact on gross well capex going fwd.
RFE Price at posting:
68.7¢ Sentiment: None Disclosure: Held
