Mariner Energy, Inc. (NYSE: ME) today announced results from an
independent, fully engineered analysis of the company's properties
prepared by the Ryder Scott Company, L.P. The report is based on a
detailed study of Mariner's properties and assumes average
hydrocarbon prices for the 12-month period ending December 31, 2009
in accordance with the requirements of the Securities &
Exchange Commission (SEC). Prices used for this report were $61.18
per barrel for oil and $3.87 per million British Thermal Units for
gas. Highlights from the report and Mariner's year-end operations
review include:
-- Estimated proved reserves increased to a record 1.087 trillion cubic
feet equivalent (Tcfe) of natural gas, up 12% from the 973.9 billion
cubic feet equivalent (Bcfe) of natural gas reported at year-end 2008.
-- The company achieved a proved reserve replacement rate for 2009 of 190%
from all sources at an all-in reserve replacement cost of approximately
$3.13 per million cubic feet equivalent (Mcfe) of natural gas.
(See notes below.)
-- Onshore proved reserves comprise approximately 56% of the company's
total proved reserves.
-- Crude oil and natural gas liquids (NGLs) represent 47% of total proved
reserves, up from 43% in 2008.
-- Production in 2009 totaled 126.4 Bcfe, up 7% from 2008.
"In 2009 Mariner once again achieved significant growth in its
reserve base, and the reserve profile reflects a more profitable
product mix in the current environment. Due to the early stages of
development plans, our year-end 2009 proved reserve report includes
no contribution from recent, significant discoveries at Lucius and
Heidelberg, nor does it include proved reserves from discoveries at
Wide Berth, Bushwood, Dalmatian, and other projects that are in
various stages of development," said Scott Josey, Chairman, Chief
Executive Officer and President of Mariner Energy, Inc.
Of Mariner's 2009 year-end estimated proved reserves, 66% are
proved developed. Approximately 47% of the reserves are oil,
condensate and NGLs; and 47% are in the Permian Basin, versus 43%
and 45%, respectively, for 2008.
The following table sets forth certain information with respect
to Mariner's estimated proved reserves by geographic area as of
December 31, 2009. Reserve volumes and values were determined under
the method prescribed by the SEC, which requires the application of
average prices for the 12-month period ending December 31, 2009 and
costs held constant throughout the projected reserve life. Proved
reserve estimates do not include any value for probable or possible
reserves which may exist, nor do they include any value for
undeveloped acreage. The proved reserve estimates represent
Mariner's net revenue interest in its properties. Mariner uses the
U.S. Minerals Management Service's 1,300-foot deepwater designation
to differentiate its shelf and deepwater areas of operation.
Estimated Proved Reserve Quantities
% of
Total
Natural Estimated
Gas Oil NGLs Total Proved
Geographic Area (Bcf) (MMBbls) (MMBbls) (Bcfe) Reserves
--------- --------- --------- --------- ---------
Onshore
Permian Basin 148.6 33.1 27.9 515.0 47.4
South Texas 59.5 0.8 2.9 81.6 7.5
Other Gulf Coast 9.4 0.7 - 13.7 1.2
--------- --------- --------- --------- ---------
Subtotal - Onshore 217.5 34.6 29.9 610.3 56.1
Offshore Gulf of Mexico
Deepwater 120.8 6.3 0.5 161.7 14.9
Shelf 233.1 11.5 2.2 315.0 29.0
--------- --------- --------- --------- ---------
Subtotal - Offshore 353.9 17.8 2.7 476.7 43.9
--------- --------- --------- --------- ---------
Total 571.4 52.5 33.5 1,087.1 100.0
========= ========= ========= ========= =========
Proved developed reserves 406.8 31.5 20.1 716.4 65.9
========= ========= ========= ========= =========
About Mariner Energy, Inc.
Mariner Energy is an independent oil and gas exploration,
development, and production company headquartered in Houston,
Texas, with principal operations in the Permian Basin, Gulf Coast
and Gulf of Mexico. For more information about Mariner, visit the
company's website at www.mariner-energy.com.
Important Information Concerning Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements,
other than statements of historical facts, that address activities
that Mariner assumes, plans, expects, believes, projects, estimates
or anticipates (and other similar expressions) will, should or may
occur in the future are forward-looking statements. Our
forward-looking statements generally are accompanied by words such
as "may," "will," "estimate," "project," "predict," "believe,"
"expect," "anticipate," "potential," "plan," "goal," or other words
that convey the uncertainty of future events or outcomes.
Forward-looking statements provided in this press release are based
on Mariner's current belief based on currently available
information as to the outcome and timing of future events and
assumptions that Mariner believes are reasonable. Mariner does not
undertake to update its guidance, estimates or other
forward-looking statements as conditions change or as additional
information becomes available. Estimated reserves are related to
hydrocarbon prices. Hydrocarbon prices used in estimating reserves
may vary significantly from actual future prices. Therefore,
volumes of reserves actually recovered may differ significantly
from such estimates. Mariner cautions that its forward-looking
statements are subject to all of the risks and uncertainties
normally incident to the exploration for and development,
production and sale of oil and natural gas. These risks include,
but are not limited to, price volatility or inflation,
environmental risks, drilling and other operating risks, regulatory
changes, the uncertainty inherent in estimating future oil and gas
production or reserves, and other risks described in Mariner's
latest Annual Report on Form 10-K and other documents filed by
Mariner with the Securities and Exchange Commission (SEC). Any of
these factors could cause Mariner's actual results and plans of
Mariner to differ materially from those in the forward-looking
statements. Investors are urged to read Mariner's latest Annual
Report on Form 10-K and other documents filed by Mariner with the
SEC.
"Proved" oil and gas reserves are those that can be estimated
with reasonable certainty to be economically and legally producible
under existing economic conditions, operating methods and
government regulations. "Probable," "possible" and "non-proved"
reserves, reserve "potential" or "upside" or other descriptions of
volumes of reserves potentially recoverable involve estimates that
by their nature are more speculative than estimates of proved
reserves and accordingly are subject to substantially greater risk
of actually being realized by Mariner. The SEC generally does not
permit a company's filings with the SEC to include estimates of oil
or gas resources other than reserves, and any estimated values of
such resources, due to concern that resources other than reserves
are too speculative and may be misleading.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any securities of Mariner.
Note on reserve replacement rate: Mariner's reserve replacement
rate reported above was calculated by dividing total estimated
proved reserve changes for the period from all sources, including
acquisitions and divestitures, by production for the same period.
The method Mariner uses to calculate its reserve replacement rate
may differ from methods used by other companies to compute similar
measures. As a result, its reserve replacement rate may not be
comparable to similar measures provided by other companies.
2009 net additions, revisions, conversions, purchases, sales: 239.6 Bcfe
2009 production: 126.4 Bcfe
2009 proved reserves adds/2009 production: 189.6%
Note on reserve replacement cost: Reserve replacement cost is
calculated by dividing hydrocarbon development, exploration and
acquisition capital expenditures (including capitalized internal
costs and excluding hurricane expenditures net of insurance
recoveries and non-cash changes to asset retirement obligations)
for the period by net estimated proved reserve additions for the
period from all sources, including acquisitions and divestitures.
Mariner's calculation of reserve replacement cost includes costs
and reserve additions related to the purchase of proved reserves.
The method Mariner uses to calculate its reserve replacement cost
may differ significantly from methods used by other companies to
compute similar measures. As a result, its reserve replacement cost
may not be comparable to similar measures provided by other
companies. Mariner believes that providing a measure of reserve
replacement cost is useful in evaluating the cost, on a per-Mcfe
basis, to add proved reserves. However, this measure is provided in
addition to, and not as an alternative for, and should be read in
conjunction with, the information contained in our financial
statements prepared in accordance with generally accepted
accounting principles. Due to various factors, including timing
differences in the addition of proved reserves and the related
costs to develop those reserves, reserve replacement costs do not
necessarily reflect precisely the costs associated with particular
reserves. As a result of various factors that could materially
affect the timing and amounts of future increases in reserves and
the timing and amounts of future costs, the company cannot assure
you that its future reserve replacement costs will not differ
materially from those presented.
Reserve Replacement Cost 2007 2008 2009E
-------- -------- --------
Capital costs related to property acq, expl,
and devel 790.1 1,346.5 755.1
Hurricane expenditures, net of insurance
recoveries (12.3) (60.1) (6.1)
Proceeds from divestitures 4.1 0.0 0.0
-------- -------- --------
Capital expenditures before divestitures
($MM) (1) 781.9 1,286.4 749.0
Reserve additions (Bcfe) 222.6 256.7 239.6
Reserve Replacement Cost/Mcfe $ 3.51 $ 5.01 $ 3.13
Rolling 3-year capital expenditures 2,817.3
Rolling 3-year reserve additions 718.9
Rolling 3-year Reserve Replacement Cost/Mcfe $ 3.92
-------- -------- --------
(1) Unaudited
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