RAM Energy Resources Inc. (NASDAQ: RAME) shares surged nearly 18% to $2.37 mid-day. The company recently announced preliminary 2011 non-acquisition capital budget totaling $35 million. This is consistent with its historical strategy and non-acquisition capital expenditures are targeted to be within estimated annual cash flow.
The company expects modified EBITDA of $52 million-$55 million. For fiscal 2011 it estimates production of 1.7 million�1.8 million barrel of oil equivalents, reflecting the absence for fiscal 2011 the volumes associated with two asset sales which closed in December 2010. For first quarter of 2011 the production forecast is in the range of 400�420 thousand BOE. Approximately $18 million or 51% of the 2011 budget targets development and exploitation drilling along with recompletions from the company�s mature and developing fields aimed at offsetting natural declines and increasing production in the near term. An additional $9 million, or 26%, is expected to be allocated to exploratory activities for a total of $27 million, or 77%, of the budget dedicated to replacing or growing production through the drillbit. The remaining $8 million, or 23%, will be allocated to capitalized geological and geophysical expenditures (G&G), land and seismic costs, with the objective of identifying new drilling opportunities for 2011 and beyond.
Recently the company closed the sale of certain non-operated natural gas properties located in eastern Oklahoma to a privately-held E&P company for $8.0 million in cash. The transaction closed on December 30, 2010. The sale proceeds were used to reduce outstanding borrowings under its revolving credit facility to $116.5 million at December 31, 2010. It also prepaid $8.0 million on the term loan portion of its credit facility, reducing the outstanding balance under the facility to $80.2 million. The outstanding amount of the company’s senior secured credit facility has been reduced to $196.7 million at December 31, 2010.
The company�s borrowing base was reset to $145.0 million and the latest sale had no impact on the existing borrowing base. As a result of the sale and application of proceeds, RAM Energy’s effective liquidity has improved to $28.5 million at December 31, 2010.
The company stock traded in the range of $1.33 and $2.58 during the past 52 weeks. The company�s market cap is $199.03 million.
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