SRC Energy's primary objective is to enhance shareholder value by increasing the company's net asset value, net reserves and cash flow through acquisitions, development, exploitation, exploration and divestiture of oil and gas properties. SRC Energy intends to follow a balanced risk strategy by allocating capital expenditures in a combination of lower risk development and exploitation activities and higher potential exploration prospects. Key elements of the company's business strategy include the following:
Leverage management’s significant experience and expertise in the basin
Concentrate on the existing core area in and around the Wattenberg Field in the D-J Basin, where the company has significant operating experience. Currently all producing wells are located within the D-J Basin and the undeveloped acreage is located either in or adjacent to the D-J Basin. Focusing operations in this area leverages the management, technical and operational experience SRC Energy has in the basin.
Utilize an aggressive drilling program in proven low-risk areas with predicable rates-of-return
Drill and develop existing oil and natural gas properties. Since inception the company's principal growth strategy has been to develop and exploit acquired and discovered properties to add proved reserves. As of May, 2016 SRC Energy had leasehold covering approximately 69,000 net acres in the Wattenberg Field pro-forma for the pending Greeley Crescent Acquisition. SRC Energy began drilling operated horizontal wells in May, 2013 and now has 96 gross operated horizontal wells in production.
Continuing to expand acreage footprint through leases and acquisitions
Complete selective acquisitions. The company seeks to acquire undeveloped and producing oil and gas properties, primarily in the Wattenberg Field in the D-J Basin and certain adjacent areas. The company focuses on acquisitions of undeveloped and producing properties that provide opportunities for reserve additions and increased cash flow through production enhancement and additional development and exploratory prospect generation opportunities.
Operational control over the development drilling of horizontal Niobrara and Codell wells
As operator on a majority of its production and undeveloped acreage, SRC Energy controls the timing and selection of new wells to be drilled or work-over activities on existing wells. This allows the company the ability to modify capital spending as financial resources allow and market conditions support.
Maintain financial flexibility while focusing on controlling the costs of operations
SRC Energy intends to finance operations through cash on the balance sheet, internally generated cash flow, and utilization of its credit facility. The company believes it is fully funded to meet the estimated $130-$150 million cash capex program for calendar 2016. SRC Energy continues to focus on efficient operations with a goal to reduce costs.