Cano Announces Revised FY 2009 Capital Plan and First Quarter Production Growth of 8.7% Quarter on Quarter
October 29 2008 - 10:22AM
Business Wire
Cano Petroleum, Inc. (AMEX:CFW) today announced�that it has reduced
its FY 2009 capital budget to $35.5 million from $97.5 million.
Jeff Johnson, Cano�s Chairman and CEO stated �Unprecedented turmoil
in the capital markets, coupled with greater than 50% drops in
crude oil and natural gas prices have caused us to respond by
reducing our drilling capital budget. This reduction is being taken
to assure our shareholders that our balance sheet will remain
strong and to ensure our liquidity for the next 24 months as we
cannot confidently rely on the capital markets in today�s economic
environment. Additionally, our second half of fiscal year 2009
capital plan is well within operating cash flow. Cano�s current
hedge position provides floors of $80-$85 for our crude oil and
$7.75 - $8.00 for our natural gas for approximately 1,100 BOEPD
through March 2011. We believe these steps are prudent in light of
current market conditions.� Credit Facility The Company�s $100
million credit facility was reviewed by its bank group in
connection with the sale of our non-core asset, Pantwist, LLC on
October 1, 2008. The facility will remain in place with the
borrowing base unchanged at $60 million. The facility is currently
undrawn. The Company has no current plans or need to access the
equity capital markets. Crude Oil and Natural Gas Hedges The
company has hedges covering 3.0 MMcf per day of natural gas for
fiscal year 2009 at a weighted-average NYMEX floor price of $7.85
per Mcf and 600 Bbl per day for crude oil for fiscal year 2009 at a
weighted-average NYMEX floor price of $82.03 per Bbl. For fiscal
year 2010, natural gas hedges cover 2.7 MMcf of natural gas per day
at a weighted-average NYMEX floor price of $7.85 per Mcf and 600
Bbl per day for crude oil for fiscal year 2010 at a
weighted-average NYMEX floor price of $82.00 per Bbl. Operations
Update Cano achieved its previously announced production growth
target of 7 � 9%, growing first quarter FY 2009 production 8.7%
over the fourth quarter of fiscal year 2008. Pro forma for the sale
of Pantwist, LLC, production grew to 1,238 Boepd, from 1,139 Boepd.
In recognition of the new capital plan, we now expect to maintain
current production levels for the remainder of the fiscal year with
any potential production lift coming from prior investments in our
Cockrell Ranch and Cato waterfloods. Of the $35.5 million drilling
capital budget, $20 million was incurred in the first quarter. The
balance of the budget will go towards drilling five wells in the
Harvey lease (1st Panhandle mini phase), four observation wells in
the Nowata ASP Pilot and four wells to complete the waterflood
pattern at Cato. Second Quarter Results The Company anticipates
reporting its second quarter FY 2009 results no later than November
10, 2008. ABOUT CANO PETROLEUM: Cano Petroleum Inc. is an
independent Texas-based energy producer with properties in the
mid-continent region of the United States. Led by an experienced
management team, Cano�s primary focus is on increasing domestic
production from proven fields using enhanced recovery methods. Cano
trades on the American Stock Exchange under the ticker symbol CFW.
Additional information is available at www.canopetro.com.
Safe-Harbor Statement -- Except for the historical information
contained herein, the matters set forth in this news release are
�forward-looking statements� within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The company intends
that all such statements be subject to the �safe-harbor� provisions
of those Acts. Many important risks, factors and conditions may
cause the company�s actual results to differ materially from those
discussed in any such forward-looking statement. These risks
include, but are not limited to, estimates or forecasts of
reserves, estimates or forecasts of production, future commodity
prices, exchange rates, interest rates, geological and political
risks, drilling risks, product demand, transportation restrictions,
the ability of Cano Petroleum, Inc. to obtain additional capital,
and other risks and uncertainties described in the company�s
filings with the Securities and Exchange Commission. The historical
results achieved by the company are not necessarily indicative of
its future prospects. The company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
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