Remington Oil and Gas Corporation Announces Merger with Cal Dive International and Provides Operations Update
January 23 2006 - 7:35AM
PR Newswire (US)
DALLAS, Jan. 23 /PRNewswire-FirstCall/ -- Remington Oil and Gas
Corporation (NYSE:REM) announced it has agreed to a merger with Cal
Dive International, Inc. (NASDAQ:CDIS). Consideration for the offer
from Cal Dive will be $27.00 in cash and .436 shares of Cal Dive
stock for each Remington share. Completion of the merger is subject
to customary conditions to closing, including, without limitation,
approval by Remington's stockholders at a meeting to be called for
that purpose. Remington's Board of Directors has unanimously
recommended approval and adoption of the merger agreement and the
merger by Remington's stockholders. Randall & Dewey, a division
of Jefferies & Company, acted as financial advisor to the
Company. Remington will host a conference call today at 11:30 A.M.
EST (10:30 A.M. CST). The teleconference can be joined at
1-800-706-3705. International calls can join at 1-706-679-5649. A
replay of the call will be available from two hours after
completion of the conference by dialing 1-800-642-1687, or
international calls 1-706-645-9291, conference ID #4655326. 2006
Capital Budget Remington's Board of Directors approved a capital
budget of $293 million for 2006, representing a 202% increase over
its initial 2005 budget of $145 million. Management expects that
this level of expenditures will be within the Company's available
cash flow based on currently forecast commodity prices. Remington's
approved budget includes planned exploratory wells and known
developments. The budget includes the costs associated with risked
completions of new exploratory successes. The 2006 program assumes
drilling 26 offshore exploratory wells and 2 onshore exploratory
wells for a total investment of $146 million. Two of the 26
offshore exploratory wells are located in the deepwater Gulf of
Mexico. Development capital of $39 million will allow for platform
and pipeline installations on recent discoveries, along with
development drilling on existing fields. Additionally, the Company
has budgeted $73 million for anticipated development expenditures
related to the 2006 exploratory program. The remaining $35 million
will be used for seismic acquisitions, workovers, and lease
acquisitions. This budget assumes three to four operated rigs
working continuously during the year. Drilling Program Listed in
the table below are wells recently drilled, currently drilling or
completing, along with wells that are scheduled to be drilled in
the near term. Prospect Category W.I. Status/Spud Date Operator %
Offshore Vermilion 389 #1 Exploratory 60 P&A Remington S. Marsh
Island 116 #1 Exploratory 60 Discovery-Tested 13 Remington MMCFE/D
S. Pass 87 #6 Exploratory 50 P&A Marathon (Aquarius) West
Cameron 383 #2 Exploratory 52 Drilling Below Remington 5,000'
Vermilion 249 #1 Exploratory 30 Discovery-T&A Tana East Cameron
346 #6 Development 75 January Spud Remington Vermilion 250 #1
Development 50 February Spud Remington Eugene Island 391#1
Exploratory 50 1st Qtr. Spud Remington Main Pass 200 #1 Exploratory
50 January Spud Cimarex The Company's South Marsh Island 116 #1
exploratory well discovered oil and gas pay in a single sand below
8,000 feet. This well has been sub sea completed and was flow
tested at 7 million cubic feet of gas and 1,000 barrels of
condensate per day. Forward plans are to construct the flow line
and umbilical then connect the sub sea well to a nearby platform.
We expect first production from this discovery to commence in the
2nd quarter 2006. Remington operates South Marsh Island 116 and
owns a 60% working interest. Cimarex (NYSE:XEC) owns the remaining
40% working interest. Drilling operations at the Company's South
Pass 87 #6 (Aquarius) well have resulted in a dry hole. This well
was drilled to 22,214 feet and found no commercial quantities of
hydrocarbons. The wellbore is currently being temporarily abandoned
for future use for possible sidetrack opportunities on the eastern
half of block 87. Information gained from this exploratory test
will be beneficial to future deep potential on our adjacent blocks
86 and 89. Remington owns a 50% working interest in this Marathon
Oil Company operated well (NYSE:MRO). Drilling costs incurred to
date for the well are approximately $55 million. We expect take an
estimated $25 million pre-tax dry hole expense for this well in the
4th quarter 2005. The remaining costs associated with the well will
be incurred in the 1st quarter 2006. Production Update Remington's
4th quarter 2005 production is expected to range between 48 to 52
million cubic feet of gas equivalents per day compared to an
average of 81 MMCFE/D for the third quarter 2005. The Company
exited 2005 producing approximately 95-100 MMCFE/D. Management
expected to exit 2005 at approximately 125 MMCFE/D. However, ten
(10) of the Company's fields remain shut-in primarily due to third
party pipeline infrastructure damage. Remington's East Cameron 346
and surrounding satellite fields remain shut-in due to problems
related to the gas export line owned by a third party. Based on
communications in November of 2005 from the operator and owner of
this line, the line was expected to be operational in December of
2005. However this line has yet to be re-commissioned and most
recent communications indicate service to be restored in the
mid-first quarter 2006. Production volumes that remain shut-in from
these ten fields accounted for approximately 35 to 40 MMCFE/D prior
to Hurricane Rita. The Company anticipates most of the company's
storm related, shut-in production to be restored by the end of the
first quarter 2006. Remington does carry business interruption
insurance for most of its offshore producing assets. Because of the
ongoing shut-ins the Company is experiencing, the entirety of the
business interruption claim is not yet known. Rough estimates,
based on the Company's interpretation of the policy, result in an
expected reimbursement from the policy for the fourth quarter 2005
of approximately $8.5 million. In addition, the Company's business
interruption policy covers its largest producing field, East
Cameron 346, for a total of 365 days. The Company anticipates the
external audit of our year-end 2005 reserves to be completed in
February 2006. Internal estimates of our year-end 2005 total proven
reserves range between 270 to 285 billion cubic feet of gas
equivalents. Based on this internal estimate, the Company expects
2006 annual production to range between 45 to 49 billion cubic feet
of gas equivalents. A prolonged shut-in period at our East Cameron
346 complex beyond our previously stated mid-first quarter start-up
could materially impact this production guidance. A more detailed
guidance will be provided on 2006 production volumes, DD&A
rates per Mcfe and cash costs per Mcfe upon final completion of the
audited 2005 year-end reserves. Organizational Update Mr. Gregory
B. Cox has been promoted to Senior Vice President of Exploration.
Mr. Cox was previously Vice President of Exploration for the
Company. He joined the Company as Exploration Manager in November
of 1997. Remington Oil and Gas Corporation is an independent oil
and gas exploration and production company headquartered in Dallas,
Texas, with operations concentrating in the onshore and offshore
regions of the Gulf Coast. Statements concerning future revenues
and expenses, production volumes, results of exploration,
exploitation, development, acquisition and operations expenditures,
and prospective reserve levels of prospects or wells are
forward-looking statements. Prospect size and reserve levels are
often referred to as "potential" or "un-risked" reserves and are
based on the Company's internal estimates from the volumetric
calculations or analogous production. Other forward-looking
statements are based on assumptions concerning commodity prices,
drilling results, recovery factors for wells, production rates, and
operating, administrative and interest costs that management
believes are reasonable based on currently available information;
however, management's assumptions and the Company's future
performance are subject to a wide range of business, mechanical,
political, environmental, and geologic risks. There is no assurance
that these goals, projections, costs, expenses, reserve levels, and
production volumes can or will be met. Further information is
available in the Company's filings with the Securities and Exchange
Commission, which are herein incorporated by this reference.
Information in this document should be reviewed in combination with
the Company's filings with the Securities and Exchange Commission
and information available on the Company's website at
http://www.remoil.net/. DATASOURCE: Remington Oil and Gas
Corporation CONTACT: Steven J. Craig, Sr. Vice President of
Remington Oil and Gas Corporation, +1-214-210-2675 Web site:
http://www.remoil.net/
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