Energen Corporation (NYSE: EGN) affirmed today that its 2013 consolidated capital budget of $975 million will focus primarily on the exploration and development of its liquids-rich assets in the Permian Basin of west Texas.
Energen’s oil and gas exploration and production subsidiary, Energen Resources Corporation, plans to invest approximately $900 million in 2013, including some $745 million to continue developing the company’s vertical Wolfberry play in the Midland Basin, the horizontal 3 rd Bone Spring sand in the Delaware Basin, and its conventional and waterflood properties in the Central Basin Platform.
Another $130 million will be deployed largely to test the horizontal Wolfcamp and/or Cline potential in the Midland Basin and the horizontal Wolfcamp potential in the Delaware Basin. Energen Resources also expects to drill several wells in the Delaware Basin to test the vertical Wolfbone play.
In response to continued low natural gas prices, Energen does not plan to invest drilling capital in any of its dry gas basins. The company will, however, invest approximately $25 million largely for pay-adds and facilities in the San Juan Basin. Energen's utility operations will invest approximately $75 million in 2013 for normal system needs.Production Guidance Revised Energen Resources expects current infrastructure-related issues in the Permian Basin to negatively affect production in the fourth quarter of 2012 and potentially impact production in the first half of 2013, as well. Greater-than-expected ethane rejection, higher-than-anticipated line pressures, and completion delays are having a negative impact on production in the Midland Basin, while oil inventories at the well-head primarily in the Delaware Basin are growing in response to transportation infrastructure issues. As a result, Energen has lowered its estimated 2012 and 2013 production by 400,000 barrels of oil equivalents (BOE) in each period to 24.1 million and 26.1 million BOE, respectively. Total oil and natural gas liquids (NGL) production in 2013 is estimated to increase a solid 23 percent and comprise more than half of total production.
|2013 Capital, Drilling, and Production Summary|
|2013e Capital||2013e Wells||2013e||Production|
|($MM)||Gross (Net)||Rig Count||2013e||2012e|
|3 rd Bone Spring||$||240||32||(28)||4|
|San Juan Basin/Other||$||25||0||0||11.4||12.7|
|* Includes 5 gross (4 net) injector wells|
|Natural Gas||12.1||12.7||(5) %|
|Lease Operating expense|
|Base, marketing, and transportation||$||10.25|
|General & Administrative expense, net||$||3.57|
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