Saratoga Resources Provides Update on Operations and Cost Cutting Measures
December 18 2014 - 9:00AM
Business Wire
Saratoga Resources, Inc. (NYSE MKT:SARA; the “Company” or
“Saratoga”) today provided an update on results of recent
operations and measures being taken to reduce costs and enhance
operational efficiencies in the current challenging environment
with oil prices declining to five year lows.
The Company has successfully completed several thru-tubing
plugback operations with total capital expenditure of approximately
$400,000 with initial production rates of net 695 barrels of oil
equivalent per day (“BOEPD”), 14% of which is oil, with the results
of several ongoing operations still pending. These operations were
conducted in Breton Sound, Grand Bay, Lake Fortuna and Main Pass 25
fields. Given the recent sharp decline in commodity prices, the
Company expects to focus its near-term operations on similar
low-cost recompletions and workover operations that are available
to the Company due to the multiple stacked sands in many of its
fields.
Saratoga is continuing, and in light of commodity price declines
has accelerated, its cost cutting measures in lease operating
expenses (“LOE”) as well as general and administrative expenses
(“G&A”). Recent efforts in this regard have included replacing
outsourced accounting functions with new hires, leading to large
savings, and we continue to reduce our reliance on outside
consultants and contract staff while right- sizing our staff. The
Company has targeted reductions in LOE and G&A representing
potential cash savings of approximately $4.5 million in 2015.
Cash savings relative to 2014 levels are also expected to be
realized following significant expenditures during 2014 to bring
current deferred maintenance and upgrade infrastructure, including
salt water handling, transportation and re-routing the production
from its Main Pass 46 and 52 fields to Grand Bay, all with a view
to continuing to improve run times and operating efficiencies and
reducing future costs in the field. The Company expects that the
bulk of these expenditures are behind it and that run times will
show marked improvement in early 2015 as compared to 2014.
If commodity prices continue to fall, or remain at these low
levels for a sustained period, the Company will make even deeper
cuts. Additional cost savings are expected as costs of service
providers are expected to come down, and have already begun to come
down, in the current price environment.
Management Comments
The Company is moving quickly to position itself to weather the
recent decline in commodity prices. The Company expects that its
asset base, with stacked sands in multiple fields and
infrastructure in place, together with ongoing cost cutting
measures will allow it to operate in this lower price environment
while pursuing low-cost opportunities to enhance production. The
Company expects to temporarily shelve new drills in favor of
lower-cost alternatives such as workovers and recompletions similar
to those recently undertaken and possible sidetrack options, at
approximately one-half the cost of new drills, for future
horizontal wells at Breton Sound 32 and Grand Bay fields.
About Saratoga Resources
Saratoga Resources is an independent exploration and production
company with offices in Houston, Texas and Covington, Louisiana.
Principal holdings cover approximately 52,000 gross/net acres,
mostly held by production, located in the transitional coastline
and protected in-bay environment on parish and state leases of
south Louisiana and in the shallow Gulf of Mexico Shelf. Most of
the company's large drilling inventory has multiple pay objectives
that range from as shallow as 1,000 feet to the ultra-deep
prospects below 20,000 feet in water depths ranging from less than
10 feet to a maximum of approximately 80 feet. For more
information, go to Saratoga's website at www.saratogaresources.com
and sign up for regular updates by clicking on the Updates
button.
Forward-Looking Statements
This press release includes certain estimates and other
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, including, but not limited to,
statements regarding potential cost savings, results of specific
operations and future ability to sustain and/or improve run times
and production levels or achieve profitability under existing
market conditions, among others. Words such as "expects”,
"anticipates", "intends", "plans", "believes", "assumes", "seeks",
"estimates", "should", and variations of these words and similar
expressions, are intended to identify these forward-looking
statements. While we believe these statements are accurate,
forward-looking statements are inherently uncertain and we cannot
assure you that these expectations will occur and our actual
results may be significantly different. These statements by the
Company and its management are based on estimates, projections,
beliefs and assumptions of management and are not guarantees of
future performance. Important factors that could cause actual
results to differ from those in the forward-looking statements
include the factors described in the "Risk Factors" section of the
Company's filings with the Securities and Exchange Commission. The
Company disclaims any obligation to update or revise any
forward-looking statement based on the occurrence of future events,
the receipt of new information, or otherwise.
Saratoga Resources, Inc.Brad Holmes, 713-654-4009Investor
RelationsorAndrew Clifford,
713-458-1560Presidentwww.saratogaresources.com