In an April 15 research note, Stifel analyst Derrick Whitfield reported that Roan Resources Inc. (ROAN:NYSE) updated its previous report on Q4/18 well results, "highlighting the low decline rates associated with its pressure management techniques."
During Q4/18, 15 Roan wells achieved an IP120 of 1,036 barrels of oil production per day (1,036 boe/d) at 48% oil, compared to an IP90 of 1,089 boe/d at 49% oil from the same group of wells.
The continuing payback resulting from refined methods, aimed at improving oil recovery, is one of two current catalysts, Whitfield indicated. The success of Roan's efforts was demonstrated in the company's cumulative Q4/18 production, which was 15% greater than the average production during the three prior quarters. The outperformance, the analyst indicated, should continue over time.
The second catalyst is the ongoing rewards from continued cost reduction, noted Whitfield. "Management announced efficiency gains, coupled with declining service cost, equate to a cost savings of approximately $1 million per well in 2019," he added.
Whitfield also reported a change in Roan's executive leadership. Joseph Mills, a Roan board of directors member, will act as interim CEO and conduct the search for someone to permanently assume the role following the resignation, effective April 12, 2019, of Tony Maranto, board chairman and company CEO and president. Maranto purchased 20,000 Roan shares on March 26, 2019.
Management commented Maranto did not leave due to disagreements with the board but for personal reasons, and that Roan Resources will keep moving in the same direction. "While the departure of Mr. Maranto was unexpected, we do not believe his departure is a precursor to a larger operational or strategic misstep," Whitfield wrote.
Stifel has a Buy rating and a $14 per share, 12-month target price on Roan Resources, whose stock is currently trading at around $4.29 per share.
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Disclosures from Stifel Nicolaus & Company, Roan Resources., April 15, 2019
I, Derrick Whitfield, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Derrick Whitfield, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com.
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