Enduro Royalty Trust (NYSE: NDRO) (the “Trust”) today announced
its 2014 capital program, including development opportunities in
the Wolfcamp play of west Texas, and reported its monthly cash
distribution to be paid in February 2014.
Recent Activity
In December 2013, Enduro Resource Partners LLC (“Enduro”), the
sponsor of the Trust, received drilling proposals from Pioneer
Natural Resources (“Pioneer”) for 3 gross (0.8 net) wells in the
Wolfcamp play in the Midland Basin. The wells have been drilled and
the completions are scheduled in late January. The wells are
anticipated to begin production in February 2014.
2014 Capital Program
Enduro has informed the Trust that total capital expenditures
included in 2014 distributions are expected to range from $27 to
$30 million attributable to the properties in which the Trust owns
an interest, or $22 to $24 million net to the Trust’s 80% net
profits interest. The 2014 capital program is expected to be
focused on Wolfcamp Permian Basin oil projects in the Midland
Basin, with $18 million of the capital program expected to be
allocated to drilling projects operated by Pioneer in Reagan County
and Irion County, Texas. The remaining $9 to $11 million of capital
is anticipated to be spent on workover and development
opportunities across several Permian Basin and north Louisiana
properties. The increase in expected capital during 2014 is based
on additional information obtained by Enduro from the operator of
the Wolfcamp projects.
During periods included in 2014 distributions, Enduro will
participate in several wells drilled by Pioneer in the Wolfcamp
play in the Midland Basin. Development began in the fourth quarter
of 2013 and through 2014, Enduro anticipates 25 locations to be
drilled on the properties in which the Trust has an interest, where
Enduro owns working interests ranging from 6.25% to 25%. Enduro
estimates that the projects in the Wolfcamp will provide internal
rates of return of approximately of 50% at $90 per Bbl crude oil
and $4 per Mcf natural gas prices. Capital costs per well are
expected to be $7.2 million gross with estimated ultimate recovery
of 525 MBOE. This development is anticipated to increase the
Trust’s oil production in 2014.
Enduro owns 4,800 gross (1,200 net) acres prospective for the
Wolfcamp in this area of the Midland Basin operated by Pioneer.
Enduro estimates that the area in which the Trust has an interest
could include up to 80 locations with full development of the
Wolfcamp B reservoir, which is the zone currently being exploited
by Pioneer on this acreage. Additional potential could be realized
and additional capital deployed if additional Wolfcamp zones are
prospective on the acreage.
Monthly Cash Distribution
A cash distribution of $0.117935 per unit will be paid on
February 14, 2014 to the Trust’s unitholders of record on January
31, 2014. The distribution primarily represents oil production
during the month of October 2013 and natural gas production during
September 2013.
The following table displays underlying oil and natural gas
sales volumes and average prices attributable to the current and
prior month distributions.
Underlying Sales Volumes Average Price
Oil
(Bbls)
Natural Gas
(Mcf)
Oil
(per Bbl)
Natural Gas
(per Mcf)
Current Month 75,378 507,407 $ 99.76 $ 3.82 Prior Month 69,045
541,653 $ 105.79 $ 3.79
Capital expenditures for the properties underlying the Trust
during the period were approximately $1.8 million, which relates to
expenses incurred during November 2013. Capital costs of $1.1
million related to the 3 Wolfcamp wells spud in 2013 are included
in the current month’s distribution.
The following projects constitute the capital expenditures of
$1.8 million included in this month’s distribution:
Well Name
Operator
Reservoir
County & State
Incurred Capital
(in millions)
Rocker B 42 H Pioneer Wolfcamp Reagan, TX $ 0.4 Rocker B 40 H
Pioneer Wolfcamp Reagan, TX $ 0.4 Rocker B 41 H Pioneer Wolfcamp
Reagan, TX $ 0.3 Arrowhead Grayburg Unit 126 ExxonMobil Grayburg –
San Andres Lea, NM $ 0.2 South Foster Unit Occidental Grayburg –
San Andres Ector, TX $ 0.2 Other Projects $ 0.3
Proceeds from the settlement of hedge contracts for the
properties underlying the Trust were approximately $0.6 million,
which primarily related to settlements of November 2013 natural gas
hedges.
About Enduro Royalty Trust
Enduro Royalty Trust is a Delaware statutory trust formed by
Enduro Resource Partners to own a net profits interest representing
the right to receive 80% of the net profits from the sale of oil
and natural gas production from certain of Enduro Resource
Partners’ properties in the states of Texas, Louisiana and New
Mexico. As described in the Trust’s filings with the Securities and
Exchange Commission, the amount of the periodic distributions is
expected to fluctuate, depending on the proceeds received by the
Trust as a result of actual production volumes, oil and gas prices
and the amount and timing of capital expenditures and the Trust’s
administrative expenses, among other factors. Future distributions
are expected to be made on a monthly basis. For additional
information on the Trust, please visit
www.enduroroyaltytrust.com.
Forward-Looking Statements and Cautionary Statements
This press release contains statements that are “forward-looking
statements” within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. All statements contained in this
press release, other than statements of historical facts, are
“forward-looking statements” for purposes of these provisions.
These forward-looking statements include the amount and date of any
anticipated distribution to unitholders, estimates of capital
expenditures, drilling activity and potential results of any such
drilling activity (including estimates of the gross estimated
ultimate recovery (“EUR”) estimated by Enduro relating to the
anticipated drilling in the Wolfcamp play and of internal rates of
return relating to the investment in the Wolfcamp play as more
fully described below, and Enduro’s expectations that any such
drilling will result in increases to the oil production
attributable to the Trust’s interest in 2014). The anticipated
distribution is based, in part, on the amount of cash received or
expected to be received by the Trust from Enduro Resource Partners
with respect to the relevant period. Any differences in actual cash
receipts by the Trust could affect this distributable amount.
Enduro has provided information disclosed in this press release
regarding the EUR of volumes of reserves potentially recoverable
through additional drilling by Pioneer in the Wolfcamp play in
Reagan County and Irion County, Texas. The SEC prohibits disclosure
of resources that do not constitute proved, probable or possible
reserves (in each case, as defined by the SEC) in filings with the
SEC. Consequently, the SEC’s rules prohibit the Trust from
including these estimates of the EUR in filings with the SEC.
However, the Trust is disclosing Enduro’s estimates of the EUR
relating to the Wolfcamp in this press release because Enduro has
advised the Trust that it believes the estimates to be highly
reliable and that, without this information, investors would be
unable to understand Enduro’s decision to participate in the
Wolfcamp drilling projects.
Estimates of the EUR are by their nature more speculative than
estimates of proved, probable or possible reserves and accordingly
are subject to substantially greater risk of being actually
realized. These EUR estimates have not been risk-adjusted. Actual
locations drilled and quantities that may be ultimately recovered
attributable to Enduro’s interest and the Trust’s interest may
differ substantially from Enduro’s estimates. Enduro is under no
contractual obligation to the Trust to drill any or all of the
drilling locations contemplated by these estimates in this press
release. Factors affecting ultimate recovery include the scope of
the drilling program, which may be directly affected by the
availability of capital to the working interest owners, drilling
and production costs, the availability and costs of drilling and
completion services and equipment, lease expirations, regulatory
approval, and by actual drilling results, whether of the wells
contemplated by this press release or by other wells drilled in the
area, whether by Pioneer or other operators. Estimates of the EUR
may change significantly as development of the area provides
additional data or other relevant factors change. Similarly,
estimated internal rates of return are highly sensitive to the
assumptions made in the estimates. Investors are cautioned that
actual results are likely to vary from estimates, that actual
results may be materially different from estimates, and that
Enduro’s actual internal rates of return on invested capital,
including capital expenditures relating to the Wolfcamp, may be
materially less than its estimates.
The EUR is Enduro’s estimate based on Enduro’s evaluation of
results in the area and consultation with independent engineers.
The EUR is a hypothetical recovery that may occur if assumptions
and estimates regarding recoverable hydrocarbons, recovery factor
and costs prove correct. Accordingly, such estimates may change
significantly as results from the initial wells are evaluated. The
EUR does not constitute reserves; rather it is an estimate of
contingent resources which the SEC has determined are too
speculative to include in SEC filings.
Other important factors that could cause actual results to
differ materially from the estimates and expectations included in
this press release include expenses, capital investments, timing of
production from new wells, production from the underlying
properties of the Trust and reserves for anticipated future
expenses. Statements made in this press release are qualified by
the cautionary statements made in this press release and by all of
the cautionary statements and risks described in the Trust’s Annual
Report on Form 10-K for the year ended December 31, 2012, filed
with the SEC on March 18, 2013 (the “2012 Form 10-K”). None of
Enduro Resource Partners, the Trust or the Trustee intends, and
none of them assumes any obligation, to update any of the
statements included in this press release. An investment in units
issued by Enduro Royalty Trust is subject to the risks described in
the Trust’s filings with the SEC, including the risks described in
the Trust’s 2012 Form 10-K. The Trust’s quarterly and other filed
reports are or will be available over the Internet at the SEC’s
website at http://www.sec.gov.
Enduro Royalty TrustThe Bank of New York Mellon Trust Company,
N.A., as TrusteeMike Ulrich, 1-800-852-1422
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