Rock Energy
USA
Finding a Balance In order for these numbers to be possible , Rock Energy takes a balanced approach in two key areas : risk versus reward and aptly enough , its actual balance sheet .
In balancing its risk and reward , Rock moved operations out of Northern Alberta , where drilling each well cost between $ 10 and $ 15 million , to Southern Alberta , where drill and abandonment costs were only $ 500,000 .
“ Back in the old area , with $ 30-40 million a year in cash flow , you could drill 3 wells ,” Bey said . “ Today , we drill today over 60 wells a year . We have to have enough wells to make statistics work so we can afford to continue to explore .”
Managing risk is important , as Rock ’ s focus on sustainable developments is entirely built on reliability .
“ What shareholders want is to know that they ’ re going to get paid every day ,” Bey said .
On the side of the actual balance sheet , Rock always aims to be below a 1 to 1 ratio of debt to cash flow on a long term basis . Despite having higher available bank lines , the company still believes in keeping the finances in balance , since they need to be ready to weather a storm .
“ We ’ re pretty confident in oil prices , but we ’ re seeing gas prices take a pretty big dive ,” Bey said . “ They ’ re coming back a little bit now , but you want to maintain your financial flexibility in that volatile market .”
A Rock-Solid Track Record Rock Energy is looking to continue to add to its already impressive asset base . While many companies are moving away from exploration , Rock is continuing successfully as both an exploration and production company . This has worked out brilliantly for Rock , as all of its current assets were exploration discoveries the company made . Not surprisingly , Rock is going to keep forging ahead with this approach .
“ We ’ re allocating $ 12 million to exploration each year for the next several years ,” Bey said . “ We ’ re going to take 10 shots per year and we think that ’ ll yield us one or two more pools , which will continue the growth of the company . Our track record on what we already
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