RE:RE:Target LoweredCameron Bean - (403) 218-6786 (Scotia Capital Inc. - Canada) cameron.bean@scotiabank.com Rating: Sector Perform Valuation: 1.0x our 2P NAV plus risked upside. 1-Yr: 1-Yr: 34.5% Thursday, August 13, 2015, After Close RMP Energy Inc. Q2/15 Cash Flow Ahead; Guidance Reduced Target Key Risks to Target: Oil and natural gas prices; Drilling program success. Event RMP announced Q2/15 results. Production of 13.6 mboe/d was a touch behind expectations, but CFPS of $0.25 was >10% ahead on lower opex (an impressive $3.89/boe) and lower royalty expenses. Implications Focus Shifting to Waskahigan. RMP is currently running one rig in the Waskahigan. Production from RMP's initial hybrid slickwater fracs remains encouraging with the two step-out wells producing 225 bbl/d and 280 bbl/d after five months and all three wells showing early cumulative recoveries well ahead of the play average (see Exhibit 2). Ante Creek Volumes Down. Ante Creek was producing ~8.5 mboe/d (55% natural gas) in early August - roughly in line with public data from June 2015, but significantly behind the 12.2 mboe/d seen in April and the peak oil rates of >6 mbbl/d from mid-year 2014 (see Exhibit 3). RMP is moving forward with plans for secondary recovery (pilot targeted for Q1/16) and has about half of the wells on artificial lift. Guidance Reduced. RMP has cut its capital budget to $90M (from $95-100M; three wells removed). With the Alliance Pipeline shut- down, facility issues at Kaybob and Waskahigan and (we suspect) declines at Ante Creek, the company has reduced its 2015 production guidance to 12 mboe (from 13.5 mboe). Recommendation C$2.30 ROR We maintain our SP rating, but are reducing our target price to $2.30 (1.0x our 2P NAV) on the reduced guidance/declines at Ante Creek.