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OKLAHOMA CITY, Jan. 4, 2013 (GLOBE NEWSWIRE) --
PostRock Energy Corporation ("PostRock") (Nasdaq:PSTR) today announced a $29.7 million capital budget for 2013. The budget includes $25.6 million for drilling and recompletions, $600,000 for acreage and $3.6 million for maintenance. Given the Company's improved financial position, the budget represents a more than 40% increase over 2012 spending. PostRock expects its 2013 development work to more than double oil production. With minimal capital allocated to gas development, gas production is expected to decline 13%. On a 22:1 price equivalency basis, production is expected to increase approximately 5%. On a traditional 6:1 conversion, production is expected to decline 7%.
At year-end, PostRock held approximately 420,000 net acres in the Cherokee Basin and approximately 1,500 net acres in central Oklahoma, with each providing opportunities for multi-year growth in production and reserves. Approximately 70% of the 2013 budget targets oil projects in the Cherokee while 25% is expected to target oil projects in central Oklahoma. The remaining capital will fund a limited number of oil recompletions in Appalachia as well as maintenance expenditures. Lease operating expenses as well as general and administrative expenses are expected to continue to decrease. The Company expects to fund the 2013 capital budget with internal cash flow and availability under its new revolving credit facility. At year-end, the Company had $57.5 million of debt outstanding, leaving $32.5 million available under the facility.
Commenting, Terry W. Carter, the Company's President and CEO, said, "Our 2013 capital program should significantly increase our oil production. On a price equivalency basis we began 2012 with only 7% of our production represented by oil. By December 31
st, that had risen to 14%. We expect oil to comprise 27% of production in 2013 and it should reach 32% by the end of the year. While growing reserves and production, we will continue to focus on reducing expenses. Once natural gas prices recover, and we are confident they eventually will, we have a significant opportunity to exploit the Company's sizeable inventory of gas oriented development projects. As we look ahead, we are confident that PostRock is well positioned to generate very attractive shareholder returns."
PostRock Energy Corporation is engaged in the acquisition, development and production of oil and natural gas, primarily in the Cherokee Basin of Kansas and Oklahoma. The Company owns and operates over 3,000 wells and nearly 2,200 miles of gas gathering lines in the Basin. It also owns and operates oil producing properties in central Oklahoma and oil and gas producing properties in Appalachian.