Vintage Petroleum Announces 2004 Preliminary Capital Budget and Targets
05 Novembre 2003 - 11:14PM
PR Newswire (US)
Vintage Petroleum Announces 2004 Preliminary Capital Budget and
Targets TULSA, Okla., Nov. 5 /PRNewswire-FirstCall/ -- Vintage
Petroleum, Inc. today announced its preliminary 2004
non-acquisition capital budget of $225 million, a 22 percent
increase from 2003's planned capital budget of $185 million.
Approximately 73 percent, or $165 million, of the total 2004
capital expenditure budget is allocated to lower-risk exploitation
projects. About 50 percent of total exploitation spending, or $84
million, is allocated to drilling, workovers, seismic surveys and
secondary recovery projects in Argentina. The four-rig drilling
program initiated during 2003 will be continued in 2004, accounting
for about 70 percent of the Argentina exploitation budget, with
expectations of drilling 90 wells (88 wells in the San Jorge basin
and 2 wells in the Piedras Coloradas concession), a 29 percent
increase over the 70 wells planned for 2003. The remaining 30
percent of the Argentina exploitation budget is allocated for the
completion of 84 workovers in the San Jorge basin, the initiation
of waterflood projects and 3-D seismic surveys. Initial waterflood
production response is expected during 2005. Approximately 165,000
acres of 3-D seismic will be recorded on the Tres Picos-Caleta
Olivia, Cerro Wenceslao, and Cerro Overo concessions during 2004.
Currently, only 39 percent of the company's operated 1.1 million
gross acres in Argentina have been covered by 3-D seismic surveys.
The North American exploitation budget of $55 million accounts for
33 percent of the total exploitation budget with $46 million
allocated to the United States. The 2004 domestic drilling program
consists of 31 wells in California, Louisiana, Oklahoma and Texas,
with 63 workovers budgeted in those same states. In Canada, a total
budget of $22 million has been set with nearly 60 percent allocated
to exploration and 40 percent to exploitation. Fifteen exploitation
wells in the Peace River Arch, West Central and Sturgeon Lake areas
and 11 workovers in the Peace River Arch, East of 5 and Sturgeon
Lake areas are scheduled. On October 15, 2003, the Republic of
Yemen's Ministry of Oil and Minerals approved Vintage's S-1 Damis
block development plan covering approximately 285,000 acres for a
term of 20 years. Facilities construction and drilling in Yemen
account for the remaining $26 million, or 16 percent of Vintage's
2004 exploitation budget. Approximately $17 million has been
earmarked in the 2004 budget for the construction of facilities
near the An Nagyah light oil discovery and a pipeline.
Approximately $6 million in capital expenditures will be incurred
for facilities construction during the first quarter of 2005 to
complete the installation. The facilities will be designed to
process up to 10,000 gross (5,200 net) barrels of oil per day and
are expected to be completed by April 2005. The remaining $9
million allocated to Yemen is for the drilling of six An Nagyah
development wells and one Harmel appraisal well during 2004.
Vintage expects to install facilities which will allow for the
early production of up to 2,500 gross (1,300 net) barrels of oil
per day beginning during the first quarter of 2004. The remaining
27 percent of the 2004 capital budget, or approximately $60
million, will be directed toward exploration projects primarily
targeting gas in North America. About $51 million, or 85 percent of
the exploration budget, will be spent in North America and $9
million will be spent on international projects. In the United
States, $38 million will be spent on exploration activities. Of
this amount, $25 million has been allocated to 10 exploration wells
which will be drilled on eight prospects located in West Texas, the
Texas Gulf Coast and South Louisiana. The remaining $13 million has
been allocated to the acquisition of seismic and leasehold required
to continue to build the exploration prospect inventory in the
United States. Approximately $13 million has been allocated to
Canadian exploration where 12 wells are planned to be drilled in
the foothills trend of Northeast British Columbia and Peace River
Arch areas. Exploration outside North America has been allocated $9
million which will be spent primarily on the drilling of two wells
in Italy and the continuing geological evaluation of the high
impact, frontier project in Bulgaria. In early 2001, Vintage
acquired a 70 percent working interest in two exploration blocks
situated in the Po Valley, an industrial region of northern Italy
which has a long-established production history and well-developed
pipeline infrastructure serving a highly developed gas market.
Using seismic attributes analysis from reprocessed 2-D seismic
combined with newly acquired geochemical surveys, Vintage is
targeting shallow Pliocene gas sands in structural-stratigraphic
traps. The process of well permitting is underway and the company
plans to begin drilling the first of two exploration wells in early
2004. If successful, Vintage believes that numerous similar
prospects can be drilled using the same technology-driven
exploration concept. Vintage is the operator of the Bastiglia and
Cento blocks covering approximately 275,000 gross acres. Targets
for 2004 The 2004 non-acquisition capital budget is aimed at
stabilizing production in the short-term while devoting significant
resources to projects that can provide longer-term growth
opportunities. Approximately $78 million, or 35 percent of the
total 2004 non-acquisition capital budget, is comprised of
exploration and development expenditures that target production
growth in 2005 and beyond. Vintage is targeting production of 26.9
million barrels of oil equivalent in 2004. This targeted production
level takes into account the impact of the recent Simi Valley fire
that shut-in approximately 3,500 barrels of oil equivalent per day
of Vintage's production in California. Vintage expects the shut-in
wells to be returned to production throughout the first quarter of
2004. The company has assumed a lower average NYMEX price for the
year 2004 of $27.00 per barrel of oil versus its revised 2003
assumption of $30.40 per barrel. For natural gas, the company has
lowered its assumed NYMEX price for the year to $5.00 per MMBtu
from its revised 2003 assumption of $5.45 per MMBtu. The oil price
received in 2004 as a percent of the NYMEX price is anticipated to
be 84 percent compared to the 87 percent estimated for 2003. The
gas price received in 2004 as a percent of the NYMEX price is
anticipated to strengthen marginally to 69 percent from 68 percent
assumed for 2003. Given its preliminary outlook for the 2004
capital budget, production, assumed prices and costs enumerated in
the accompanying table, "Vintage Petroleum, Inc. Preliminary
Targets for 2004," as well as other expectations, Vintage has
established 2004 targets for cash flow (before all exploration
expenses and working capital changes) and EBITDAX of $214 million
and $315 million, respectively. The 2004 targets do not reflect the
impact of the costs to be incurred to repair damage to the
company's properties resulting from recent fires in California.
Vintage to Webcast Conference Call The company's third quarter 2003
conference call to review third quarter results and future plans
will be broadcast live on a listen-only basis over the internet on
Thursday, November 6, at 3 p.m. Central time. Interested parties
may access the webcast by visiting the Vintage Petroleum, Inc.
website at http://www.vintagepetroleum.com/ and selecting the
microphone icon, or at http://www.fulldisclosure.com/ and typing
VPI in the ticker search box and selecting "Go". To listen to the
internet broadcast, participants will need a multimedia computer
with speakers and the Windows media player installed. Download from
http://www.microsoft.com/windows/windowsmedia/download/default.asp
and test the software prior to the call. Vintage Petroleum is
unable to provide technical support for downloading the software.
The teleconference may be accessed by dialing (800) 362-0574 five
to ten minutes prior to the scheduled start time and providing the
call identifier, "Vintage" to the operator. The webcast and the
accompanying slide presentation will be available for replay at the
company's website. An audio replay will be available until November
14, 2003, by dialing (402) 220-0685. Forward-Looking Statements
This release includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts that address
estimates of assumed NYMEX prices, realized prices as a percent of
NYMEX, production, capital expenditures, cash flows, EBITDAX and
events or developments that the company expects are forward-looking
statements. Although Vintage believes the expectations expressed in
such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include oil and gas prices, exploitation
and exploration successes, actions taken or to be taken by foreign
governments as a result of economic conditions or other factors,
changes in foreign exchange and inflation rates, as well as
continued availability of capital and financing, and general
economic, market or business conditions and risk factors listed
from time-to-time in the company's reports and other documents
filed with the Securities and Exchange Commission. Vintage
Petroleum is an independent energy company engaged in the
acquisition, exploitation, exploration and development of oil and
gas properties and the marketing of natural gas and crude oil.
Company headquarters are in Tulsa, Oklahoma, and its common shares
are traded on the New York Stock Exchange under the symbol VPI. For
additional information visit the company website at
http://www.vintagepetroleum.com/ VINTAGE PETROLEUM, INC.
PRELIMINARY TARGETS FOR 2004 Oil production (MMBbls): 2004
Targets(c) U.S. 5.8 Canada .8 Argentina 11.1 Bolivia .1 Yemen .4
Total 18.2 Gas production (Bcf): U.S. 23.4 Canada 14.8 Argentina
8.5 Bolivia 5.5 Total 52.2 Total MMBOE 26.9 Assumed NYMEX(a)
prices: Oil $27.00 Gas $5.00 Net realized price (before impact of
hedging) as a percent of NYMEX(a) - Total Company: Oil 84% Gas 69%
DD&A per BOE (oil and gas only) $4.75 LOE per BOE (including
Argentine export tax impact)(e) $8.75 G&A per BOE $2.20
Non-Acquisition Capital Spending Budget (in millions) $225 Cash
Flow (before all exploration expenses, working capital changes and
current taxes associated with property sales) (in millions)(d)(e)
$214 EBITDAX (in millions)(b)(d)(e) $315 MMBbls -million barrels
Bcf -billion cubic feet MMBOE -million barrels of oil equivalent
(a) NYMEX - Oil - Average of the daily settlement price per barrel
for the near-month contract for light crude oil as quoted on the
New York Mercantile Exchange. Gas - Average of the settlement price
per MMBtu for the last 3 trading days for the applicable contract
month for natural gas as quoted on the New York Mercantile
Exchange. (b) EBITDAX: Earnings before interest, taxes, DD&A,
impairments, exploration expenses, cumulative effect of change in
accounting principle, loss on early extinguishment of debt, and
gains/losses on property sales. (c) Targets do not reflect any
future acquisitions or dispositions of assets. Targets reflect the
impact of existing hedges. See "Targets for 2004" and
"Forward-Looking Statements" elsewhere in the release. (d) The
targets for non-GAAP financial measures are not reconciled to the
most directly comparable GAAP financial measures as the company
does not establish targets for such GAAP financial measures. (e)
Before costs to repair damage resulting from recent fires in
California. DATASOURCE: Vintage Petroleum, Inc. CONTACT: Robert E.
Phaneuf, Vice President - Corporate Development of Vintage
Petroleum, Inc., +1-918-592-0101 Web site:
http://www.vintagepetroleum.com/
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