Ocean Energy Updates Production Forecast
Forecasting an excellent 2001, Houston-based Ocean Energy outlined its latest forecast Thursday, and announced it has completed the acquisition of Texoil Inc., which is expected to greatly impact 2001 operations.
"We see continued growth in production for 2001 over 2000," said William Transier, Ocean Energy executive vice president.. "In fact, we have increased both the quarter and the full year average production by approximately 2,500 boe/d to 147,000 boe/d." The executive credited the increase primarily to the Texoil deal.
The increase represents an 8% boost in average annual production for 2001 over 2000. "I believe that it is safe to say that Ocean will demonstrate its ability to grow production in a substantial way during 2001 and 2002," Transier said.
Regarding commodity prices, the company has revised its current operating plan to use average commodity prices of $25/boe and $5.50/Mcf of natural gas to reflect the market. "A dollar per barrel change in the price of oil and a 10 cent per Mcf change in the price of natural gas is estimated to impact Ocean's net income by $13 million, or seven cents per diluted share, and $8 million, or four cents per share, respectively," said the executive. "Similarly the effects on cash flow are $21 million and $14 million respectively for oil and gas."
Due in part to higher commodity prices, production taxes are higher as well., Ocean's forecast is based on a 20% increase overall in drilling cost and a 10% overall increase in service cost. "We will continue to attempt to offset this increase by aggressively focusing on cost reduction," said Transier.
In 2001, Ocean said it would participate in the exploration and production of 24-30 deepwater wells. "If you put this on a comparative basis, this is more than the top five E&P companies in our peer group combined," Transier said.
In announcing its acquisition of Texoil, Ocean said the deal is worth approximately $130 million,including assumed bank debt of approximately $15 million, plus certain other liabilities. The company expects the acquisition to be accretive to earnings and cash flow. Texoil's operations are focused in Texas and Louisiana.
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