Permian Basin-focused driller Resolute Energy (NYSE: REN) was up a remarkable 174.5% last month. While rising oil prices helped, the primary driver was the company's bullish projections for production. Those projections more than offset the fact that founding CEO Nicolas Sutton will be retiring at the end of this year.
In early August, Resolute Energy reported its second-quarter results. It noted that production was strong, up 32% from the prior quarter to 11,865 barrels of oil equivalent per day (BOE/d). Driving that growth was the company's Permian Basin assets, where production was up a stunning 90% sequentially and 53% year over year. Because production is coming in stronger than anticipated, Resolute energy boosted its full-year outlook by 13%.
As a result of the company's favorable drilling results, as well as the recent sale of its midstream assets, the board of directors approved the continuation of its 2016 drilling program. That will allow the company to drill another five wells this year. While those wells will not add any production in 2016, they will provide the Resolute Energy with significant momentum in 2017. Furthermore, the company said that it was planning to run a two-rig program in 2017, up from just one this year, which would drive meaningful growth in 2017.
Resolute Energy is one of a growing number of Permian Basin drillers ramping up for 2017. Another prime example is leading basin driller Pioneer Natural Resources (PXD 2.42%), which recently added $100 million to its capex plan to add five more drilling rigs by the end of this year. Those additional rigs put Pioneer Natural Resources in the position to grow its production by 13% to 17% next year.
While 2017 appears to be a big year for Permian drillers, several CEOs are planning to retire at the end of this year. Resolute Energy's founding CEO Nicholas Sutton will hand over operations to the company's COO Richard Betz on the first of next year. Meanwhile, Pioneer Natural Resources CEO Scott Sheffield will do the same thing. That said, both men are planning to stick around and remain on the boards of the companies they have led for so long.
Investors see a bright future at Resolute Energy, which is why they piled into its stock last month. They see the company on the cusp of driving meaningful production growth thanks to its prime position in the Permian. It is not alone, with that oil basin being the primary driver of the oil sector's growth these days.