Vintage Petroleum Reports First Quarter Operational Results and Updates Plans for 2005
May 04 2005 - 4:52PM
Business Wire
Vintage Petroleum, Inc. (NYSE:VPI) announced today the results and
status of its first quarter operational activities and plans for
2005. In the first three months of 2005, the company made capital
expenditures totaling $64.3 million, with $54.3 million going to a
variety of lower-risk exploitation projects and $10 million spent
on potentially higher-impact exploration programs in the United
States and Yemen. United States - Exploitation For 2005, a capital
budget of $40 million was allocated to U.S. exploitation activities
encompassing 20 net exploitation wells to be drilled and
approximately 45 well workovers, principally in California,
Louisiana and Texas. Activity in the first quarter of 2005 included
the continuation of an infill drilling program at the South Gilmer
field of East Texas, where three wells were completed in the first
quarter and four are currently targeted for completion by the end
of June. Three wells are also planned in the field for the third
quarter. Expanded drilling programs and workover activity in the
Luling, Darst Creek and West Ranch fields in South Central Texas
continue, where six wells were completed at the end of the first
quarter with work underway to drill six additional wells. Two
workovers are in progress with 16 more planned for 2005. In
addition, eight new drilling locations have been approved with
another ten to fifteen locations under evaluation. In South
Louisiana, two workovers have been completed at South Pass 24 with
one in progress. At the company's Main Pass 116 complex in the
federal waters in the Gulf of Mexico, the company has increased net
daily production to 14.5 MMcf from 1.6 MMcf over the past year. Two
workovers are also planned to further increase production and the
company is evaluating four prospects in the field for 2005. First
quarter results from all of the aforementioned efforts have brought
over 1,800 net barrels of oil per day and over 7.2 net MMcf of gas
per day on to production, making a substantial contribution toward
the increased volumes supporting a revised production target for
2005. At the end of the first quarter of 2005, the company had
returned to production 4,500 net BOE per day of the total 6,100 net
BOE per day of production which was temporarily shut-in due to the
mudslides experienced in California during January. To date, a
total of 5,500 net BOE per day has been brought back on-line, with
the remaining 600 daily BOE expected to be returned to production
by the end of June. The company currently estimates that it will
complete the repair of mudslide damage for a total cost of
approximately $7.5 million, nearly $1 million less than previous
estimates. Of this amount, approximately $3.5 million was expensed
in the first quarter. United States - Exploration Vintage began
2005 with an inventory of 13 domestic exploration prospects and a
capital budget of $64 million. The focus of domestic exploration
activity is split between conventional exploration targeting the
Texas Gulf Coast and onshore unconventional gas resource plays.
Twenty-six million dollars has been allocated to the unconventional
gas resource exploration program to drill ten wells during 2005 to
test a minimum of four play concepts identified during 2004. In one
of these unconventional plays, located in the Palo Duro Basin of
Texas, the company has secured a substantial leased and optioned
position in excess of 130,000 net acres. One exploratory well was
drilled and cored in the first quarter, with a second well
following early in the second quarter. Cores from these wells have
been sent to a third party lab for analysis and testing that will
aid in the formulation of the completion and stimulation program
for these wells. Vintage owns working interests in this venture
which range between 65 and 75 percent. To date, in excess of 70,000
net acres have been acquired in four other areas of the country
with the intention of accumulating additional acreage and drilling
test wells later in the year. An additional $38 million has been
allocated to conventional exploration activities primarily
targeting natural gas that can be brought to production quickly.
This endeavor anticipates drilling 11 exploration wells to test
prospects primarily located in the onshore and offshore Texas Gulf
Coast. Two Miocene prospects were drilled at Matagorda Island 639
and 640 during the second half of 2004 with both encountering
apparent pay sands. Vintage holds a 25 percent working interest in
this offshore Texas gas prospect and expects these wells to be
brought online with the installation of production facilities late
in the third quarter. Vintage also controls a 53 percent working
interest in acreage in the Nueces Bay on the Texas Gulf Coast,
where 3-D seismic covering a 55 square mile area has been acquired
and is currently being processed. In this play, Vintage is
targeting gas in underdeveloped Frio and Vicksburg sands. Argentina
The company's forecasted production growth in 2005 is supported by
an increase in Argentina capital spending of 21 percent to $113
million, which targets the drilling of 110 wells. First quarter
activity included the drilling of 28 wells, with 13 in progress,
and the completion of 25 workovers. Currently there are six
drilling rigs and ten workover rigs active on the company's
concessions in the San Jorge and Cuyo Basins. Further, a portion of
2005 capital spending is budgeted for the implementation of four
waterflood projects which could enhance production in 2006. Two of
these projects have been approved and implementation will begin in
the second quarter. The company recently drilled and completed
three wells on the south flank of the San Jorge Basin with initial
net production rates between 880 and 1,950 BOPD, ranking them in
the top five percent of the more than 450 wells drilled by the
company to date in Argentina. One of the wells was drilled on a new
3-D seismic survey acquired during 2004, thus reconfirming the
continuing benefit of using this technology in the selection of
drilling locations. Yemen The recently completed An Nagyah #15 is
one of three horizontal wells planned for this year in order to
complete development of the field. Work began in late 2004 on the
construction of a permanent pipeline and central processing
facility that is slated to have initial gross daily capacity of
10,000 to 12,000 barrels of oil (5,200 to 6,250 net). The pipeline
is scheduled for completion by the end of June and will begin
transporting oil at that time, with the central processing facility
scheduled for third quarter completion. International Exploration
The company is continuing to pursue its exploration program in
Block S-1 in Yemen. Approximately $8 million has been allocated to
international exploration in 2005, with the majority dedicated to
the effort in Yemen. The company drilled one exploration prospect
in the Malaki area during the first quarter, but the well was
non-productive and plugged. A new exploration well on the company's
Wadi Markhah prospect, 31 miles (50 km) to the southeast of An
Nagyah, is currently being drilled and should be completed during
the second quarter. Also in Yemen, the company has installed two
pumping units as part of a long-term test to assess the economic
feasibility for further development of the reservoirs at our Harmel
discovery. Vintage to Webcast First-Quarter 2005 Conference Call
The company's teleconference call to review first quarter 2005
results will be broadcast live on a listen-only basis over the
internet on Thursday, May 5, 2005, at 3 p.m. Central time.
Interested parties may access the webcast by visiting the Vintage
Petroleum, Inc. website at www.vintagepetroleum.com and selecting
the microphone icon, or at www.fulldisclosure.com and typing VPI in
the ticker search box and selecting "Go". The teleconference may be
accessed by dialing 800/362-0571 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 May 10, 2005, by dialing
402/220-1123. 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 future production,
exploitation activities, exploration, operating costs, capital
spending, planned drilling levels, proved undeveloped, probable and
possible locations, and events or developments that the company
expects or believes 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, company realizations, exploitation and
exploration successes, actions taken and to be taken by foreign
governments as a result of political and economic conditions or
other factors, changes in foreign exchange rates and inflation
rates, continued availability of capital and financing, and general
economic, market or business conditions as well as other risk
factors described from time to time in the company's filings with
the SEC. The company assumes no obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise. Vintage Petroleum, Inc. is an
independent energy company engaged in the acquisition, exploitation
and exploration 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 www.vintagepetroleum.com.
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