HOUSTON--(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.
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.
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.