Williams Replaces 148% of 2008 U.S. Natural Gas Production
February 19 2009 - 7:25AM
PR Newswire (US)
- Reserves Replacement Rate Was 176% Before Price-Related Revisions
TULSA, Okla., Feb. 19 /PRNewswire-FirstCall/ -- Williams (NYSE:WMB)
announced today that its domestic and international proved natural
gas and oil reserves as of Dec. 31, 2008, increased to
approximately 4.5 trillion cubic feet equivalent (Tcfe). Reserves
in the United States increased by 200 billion cubic feet equivalent
to approximately 4.34 Tcfe, which represents a 5 percent increase
compared with approximately 4.14 Tcfe a year earlier. More than 99
percent of Williams' U.S. proved reserves are natural gas. Williams
attributed the majority of its U.S. reserves additions to the
continued development of its drilling inventory, particularly in
Colorado and Wyoming. In 2008, Williams had a drilling success rate
exceeding 99 percent. The company participated in 1,787 gross wells
in the U.S., of which all but one were successful. Williams'
development activities in 2008 resulted in a net addition of 602
billion cubic feet equivalent (Bcfe) in net proved reserves. Based
on the higher year-end price in 2007, Williams would have realized
a net addition of 714 Bcfe for 2008. For comparison, Williams added
total net reserves of 776 Bcfe and 597 Bcfe in 2007 and 2006,
respectively. In 2008, Williams replaced its U.S. wellhead
production of 406 Bcfe at a rate of 148 percent. Adding back
revisions of 112 Bcfe that were not recognized due to lower
year-end prices in 2008, Williams would have replaced 176% of its
U.S. wellhead production. A reserves reconciliation follows the
main text in this news release. The company's three-year average
proved U.S. finding and developing cost was $2.57 per thousand
cubic feet equivalent (Mcfe). Excluding 2008 acquisitions, which
were heavily weighted toward unproved properties, the three-year
average was $2.32 per Mcfe. "Year-after-year, we have repeatedly
increased our reserves and increased our production at a very
attractive cost basis," said Ralph Hill, president of Williams'
exploration and production business. "Our successful track record
reflects the quality of the resources we're developing, the talent
that our people apply to their profession and a commitment to
achieve new efficiencies in our operations. "As we look at the days
ahead, we're firmly focused on preserving the long-term value that
we have in our vast drilling inventory. "For 2009, that means
decreasing our pace of new activity and positioning our future
growth for more favorable economic conditions," Hill said. Over the
past five years, Williams has now participated in the development
of more than 8,000 new natural gas wells in the U.S., helping
increase the company's total proved reserves by approximately 60
percent from 2004 to 2008. International reserves for year-end 2008
mirrored the same amount reported at the end of 2007 -
approximately 26 million barrels of oil equivalent. Fifty-four
percent of Williams' international proved reserves are crude oil
and liquids. The remainder is natural gas. Production sales solely
from interests in the United States increased 20 percent to 1,094
MMcfe per day, compared with 913 MMcfe per day in 2007. Average
daily sales production from domestic and international interests
was approximately 1,144 million cubic feet of gas equivalent
(MMcfe) in 2008, an increase of approximately 19 percent compared
with 960 MMcfe for the same period in 2007. Williams' exploration
and production business primarily develops natural gas reserves in
the Piceance, Powder River, San Juan and Fort Worth basins in the
U.S. Approximately 99 percent of Williams' year-end 2008 U.S.
proved reserves estimates were audited by Netherland, Sewell &
Associates, Inc., who in their judgment determined the estimates to
be reasonable in the aggregate for each basin. Reserves estimates
related to properties underlying the Williams Coal Seam Gas Royalty
Trust (NYSE:WTU), were prepared by Miller and Lents, LTD. These
properties comprise approximately 1 percent of Williams' total U.S.
proved reserves. Approximately 85 percent of proved reserves
estimates for international properties were reviewed and certified
by Ralph E. Davis and Associates, with approximately 15 percent
reviewed and certified by Gaffney and Cline. The U.S. reserve
replacement rate of 148 percent was calculated by dividing the sum
of changes (acquisitions, divestitures, additions and revisions) to
the estimated proved reserves during 2008 by Williams' 2008
wellhead production of 406 Bcfe. The three-year average U.S.
finding and development cost of $2.57 per Mcfe was calculated by
dividing total capital and exploration costs by the change in
proved reserves balances over the three-year period, adding back
production sold. For purposes of converting volumes of crude oil
and liquids reserves to a natural-gas-equivalent measure in this
report, the company used a ratio of one barrel to 6,000 cubic feet.
Proved reserves are estimated quantities that geological and
engineering data demonstrate with reasonable certainty to be
recoverable in the future from known reservoirs under assumed
economic conditions. U.S. Proved Reserves Reconciliation Amounts in
billion cubic feet equivalent of natural gas Proved reserves Dec.
31, 2007 4,143 Acquisitions 31 Additions and revisions 571 Wellhead
Production (406) Proved reserves Dec. 31, 2008 4,339 About Williams
(NYSE:WMB) Williams, through its subsidiaries, finds, produces,
gathers, processes and transports natural gas. Williams' operations
are concentrated in the Pacific Northwest, Rocky Mountains, Gulf
Coast, and Eastern Seaboard. More information is available at
http://www.williams.com/. Go to
http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our
e-mail list. Contact: Jeff Pounds Williams (media relations) (918)
573-3332 Richard George Williams (investor relations) (918)
573-3979 Our reports, filings, and other public announcements may
contain or incorporate by reference statements that do not directly
or exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. You typically can
identify forward-looking statements by the use of forward-looking
words, such as "anticipate," believe," "could," "continue,"
"estimate," "expect," "forecast," "may," "plan," "potential,"
"project," "schedule," "will," and other similar words. These
statements are based on our present intentions and our assumptions
about future events and are subject to risks, uncertainties, and
other factors. In addition to any assumptions, risks, uncertainties
or other factors referred to specifically in connection with such
statements, other factors not specifically referenced could cause
our actual results to differ materially from the results expressed
or implied in any forward-looking statements. Those factors
include, among others: -- availability of supplies (including the
uncertainties inherent in assessing, estimating, acquiring and
developing future natural gas reserves), market demand, volatility
of prices, and the availability and costs of capital; -- inflation,
interest rates, fluctuation in foreign exchange, and general
economic conditions (including the recent economic slowdown and the
disruption of global credit markets and the impact of these events
on our customers and suppliers); -- the strength and financial
resources of our competitors; -- development of alternative energy
sources; -- the impact of operational and development hazards; --
costs of, changes in, or the results of laws, government
regulations (including proposed climate change legislation),
environmental liabilities, litigation, and rate proceedings; -- our
costs and funding obligations for defined benefit pension plans and
other postretirement benefit plans; -- changes in the current
geopolitical situation; -- risks related to strategy and financing,
including restrictions stemming from our debt agreements and future
changes in our credit ratings; -- risks associated with future
weather conditions; -- acts of terrorism, and -- additional risks
described in our filings with the Securities and Exchange
Commission. Given the uncertainties and risk factors that could
cause our actual results to differ materially from those contained
in any forward-looking statement, we caution investors not to
unduly rely on our forward-looking statements. In addition to
causing our actual results to differ, the factors listed above may
cause our intentions to change. Such changes in our intentions may
also cause our results to differ. We disclaim any obligation to and
do not intend to publicly update or revise any forward-looking
statements or changes to our intentions, whether as a result of new
information, future events or otherwise. In regard to the company's
reserves in Exploration & Production, the SEC permits oil and
gas companies, in their filings with the SEC, to disclose only
proved reserves. We have used certain terms in this presentation
such as "probable" reserves and "possible" reserves and "unrisked
theoretical resource estimates" that the SEC's guidelines strictly
prohibit us from including in filings with the SEC. The SEC defines
proved reserves as estimated hydrocarbon quantities that geological
and engineering data demonstrate with reasonable certainty to be
recoverable in the future from known reservoirs under the assumed
economic conditions. Probable and possible reserves are estimates
of potential reserves that are made using accepted geological and
engineering analytical techniques, but which are estimated with
reduced levels of certainty than for proved reserves. Generally
under such techniques, probable reserve estimates are more than 50%
certain and possible reserve estimates are less than 50% but more
than 10% certain. Unrisked theoretical resource estimates are even
less certain than those for possible reserves and are not risk
adjusted. Unrisked theoretical resource estimates include (i) an
estimate of hydrocarbon quantities for new areas for which we do
not have sufficient information to date to classify the resources
as probable or even possible reserves and (ii) the amount by which
we have reduced our probable and possible reserves for existing
areas to take into account the reduced level of certainty of
recovery of the resources. Unlike probable and possible reserves,
unrisked theoretical resource estimates do not take into account
the uncertainty of resource recovery and are therefore not
indicative of the expected future recovery and should not be relied
upon. Reference to "Resource Potential" includes proved, probable
and possible reserves as well as unrisked theoretical resource
estimates that might never be recoverable and are contingent on
exploration success, technical improvements in drilling access,
commerciality and other factors. DATASOURCE: Williams CONTACT: Jeff
Pounds, media relations, +1-918-573-3332, or Richard George,
investor relations, +1-918-573-3979, both of Williams Web Site:
http://www.williams.com/
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