If historical success is any indicator of future returns, the management team at Raging River Exploration Inc. (TSX:RRX) has a huge leg up.

Wild Stream Exploration and Wild River Resources, their two previous companies, were both sold to Crescent Point Energy Corp. for big gains. Shareholders of Wild River Resources experienced average annual returns of 36%, despite the company being sold at depressed prices in 2009. Shareholders of Wild Stream Exploration experienced 39% annual returns until the sale of the company in 2012. Company executives own about 13% of Raging River shares, so they’re all in on this latest venture.

Over the last week, shares have dropped roughly 10%. Is this your last chance to buy cheaply into a company that has everything going for it?


Fundamentals look strong

While the company’s management team has proven its skill at executing accretive acquisitions, the success of Raging River thus far (up over 300% since its IPO) has been largely organic. In 2012 when the company first went public, production at its operating fields was only 1,000 barrels of oil per day. In the following four years that figure jumped to 16,000 barrels per day, all while adding nearly zero debt.

Most importantly, company management has focused on low-risk, low-cost wells. For example, even at US$35 a barrel oil, its projects would still generate an average rate of return of 17%; at US$45, annual returns average 52%; at US$50, 75%.

On the prowl

Why might this be your last chance to buy Raging River? With numerous distressed competitors looking to offload assets at fire-sale prices to reduce massive debt loads, Raging River is in the enviable position of being well-capitalized and willing to deal.

Today, the firm only has $45 million in net debt compared with a $2.4 billion market capitalization and $300 million in available credit facilities. It also has no issue raising additional capital at attractive rates. For example, it recently announced its intention to raise $86.5 million by selling 10 million shares. Two hours later, in response to mounting interest, it hiked the issue to 11 million shares for $95.2 million.

With this fresh round of financing, the company was rumoured to be eyeing Penn West’s Viking light oil development in Saskatchewan. At the time, Raging River Exploration’s CEO Neil Roszell said that Penn West would be pushed to divest the properties this year.

While Penn West ultimately sold the property to another buyer, Raging River was undoubtedly in the mix given that four bidders were interested. If anything, this shows that the company’s management is still looking for a sizable deal but won’t be forced to overpay.

A long-term buy

If you’re to believe Raging River’s management team—a good bet given their lengthy and proven history—the company is headed for massive shareholder returns. Their long-term projections call for $40 million in free cash flow by 2020, $160 million by 2022, and a whopping $280 million by 2025. In the meantime, expect the management team to continue to trove the market for deals that would provide immediate value creation.

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Fool contributor Ryan Vanzo has no position in any stocks mentioned.