Saratoga Resources, Inc. (NYSE MKT: SARA; the “Company” or “Saratoga”) today provided an update on the status of previously announced drilling operations as well as guidance regarding certain anticipated year-end 2012 financial results and hedging information.
With respect to the previously announced SL 195 QQ-25 “Roux Toux” well in Main Pass Block 47 Field, the well was drilled to a total depth of 8,453 feet MD (8,000 feet TVD) and was successfully completed as a dual in the 13 and 17 sands. The well recently underwent flow testing and demonstrated an initial production (IP) test rate of 290 gross barrels of oil per day (BOPD) and 2.5 million gross cubic feet of gas per day (MMCFPD), or net 509 barrels of oil equivalent per day (BOEPD). Flowing tubing pressure (FTP) was 1,800 pounds per square inch (psi) on a 14/64” choke on the short string and 275 psi on a 30/64” choke on the long string. The well has been tied back to the Company’s Grand Bay facilities.
The Company also announced total production for 2012 of approximately 1.1163 million barrels of oil equivalent (MMBOE), or an increase of 18% over total 2011 production. 2012 production was comprised of 61% crude oil and 39% natural gas. The increase in production was achieved in spite of the production shut down due to Hurricane Isaac in the third quarter and lingering effects into the fourth quarter of 2012. Saratoga sells crude oil on the Light Louisiana Sweet (LLS) and Heavy Louisiana Sweet (HLS) markets, which are both currently at a premium of approximately 20% to West Texas Intermediate (WTI) posted prices. Saratoga’s natural gas also sells on Louisiana markets and the Company receives a premium over NYMEX Henry Hub posted prices, due to BTU content and quality adjustments. In addition, Saratoga announced that it anticipates reporting discretionary cash flow of approximately $0.97 - $1.00 per share for 2012 in spite of the loss of discretionary cash flow in 2012 due to Hurricane Isaac production interruptions.