Burlington Resources Inc. CEO Bobby Shackouls said Tuesday the company's long-term project inventory had risen to 7 Tcfe of potential, with at least five years of drilling and development work at current activity levels. The company's "growth goal" is 3-8% this year, which "could extend into 2006," he said.
Shackouls brought along his management team for a financial analyst conference in New York on Tuesday, outlining the Houston-based company's plans going forward. Burlington, he said, will be sustained by the current market outlook for natural gas.
"We see a natural gas price band of $4.50 to $6.50/Mcf, with a floor price driven by an increasing margin cost structure," said Shackouls. The "ceiling test for natural gas is still untested, in our view." The company expects price cycles and continued volatility, he said, but there are "no visible market threats."
Still, competition for quality assets is strong in North America, where Burlington focuses about 90% of its exploration and production (E&P). Shackouls also noted that the pressure to consolidate continues, but added that the pressure is not on Burlington. The independent's "basin excellence model is succeeding," with an "enviable core asset position" and "several catalysts that offer exciting step-function growth. Burlington is staying the course," he said.
Although it holds a substantial inventory of exploration prospects overseas, its North American focus will be the major "growth catalyst," said COO Randy Limbacher. "Burlington has an asset base that keeps on giving while producing Tcf."
In 2005, Burlington "expects to be active in exploration," said Limbacher. "We are spending $325 million in E&P this year, which is up from $285 million in 2004. We've made commitments to new land opportunities, and most of the dollars are focused on the United States and Canada." Burlington also plans to ramp up unconventional plays in shale gas and coalbed methane.
"We have an enviable, stable rate of production," Limbacher said. "We have several exciting growth catalysts, and we are especially excited about the Bossier discovery."
The Bossier Trend is about 30 miles north of Bryan, TX, and it has been a major part of Burlington's unconventional resources exploration effort since its discovery two years ago. In the trend, Burlington discovered highly overpressured gas in a lower sand formation, and current gas production is 45 MMcf/d net, which could double by the end of this year.
"Four wells are currently producing from this sand and additional wells are awaiting completion of field infrastructure," said Limbacher. "Two of these wells are each currently producing approximately 30 MMcf/d gross." The company has expanded its lease holdings to 71,000 net acres in the area and currently plans to drill about 20 additional wells this year.
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