Burlington Ups North American Spending 12%
Houston-based independent Burlington Resources Inc. has reallocated some of its overseas capital to strengthen its North American operations this year, setting aside 7% more for U.S. operations and 5% more for Canada.
Capital spending will remain at the same level as last year, about $1.5 billion. Nearly 36% of its capital budget is earmarked for the United States, up from 29% in 2003, while Canada will move to 50% of the spending, up 5% from last year. The remaining 14%, which is decreased from 26% in 2003, will be spent overseas.
The new spending philosophy has resulted from the completion last year of several overseas projects and the expected ramp-up of other projects this year, which in turn will boost oil and gas production and churn earnings growth, according to the company. The independent also expects to reach the upper end of its 3-8% annual production growth targets this year.
Burlington's fourth quarter net income was $404 million ($2.04/share), considerably higher than the same period of 2002, when fourth quarter earnings were $157 million (78 cents).
Total production in the final quarter of 2003 was 2,723 MMcfe/d, an 11% increase from 2,464 MMcfe/d in 4Q2002. Natural gas production was 1,957 MMcf/d, compared with 1,883 MMcf/d, and natural gas liquids production was 69.2 thousand bbl/d, compared with 59.6 thousand bbl/d a year earlier. Oil production was 58.5 thousand bbl/d, up from 37.3 thousand bbl/d in 2003.
As part of its earnings announcement, the company announced that it has agreed to acquire interests in 10 producing fields in South Louisiana from ChevronTexaco for $71.5 million, with closing anticipated during the first quarter. The company already has a rising production base in South Louisiana, as well as 660,000 acres of mineral fee lands and numerous state leases. The additional properties currently produce about 15 MMcfe/d net, and several development opportunities have been identified. The properties are located in Burlington's core areas and overlap with its fee acreage.
"Burlington had an outstanding year in 2003, both operationally and financially," said CEO Bobby S. Shackouls. "We grew volumes from our high-quality asset positions and controlled our costs, thereby reaping the benefits of the strong prices. Our objectives for 2004 include a continued focus on profitability, while turning our attention to longer-term growth initiatives for 2005 and the years beyond."
Total reserves at year-end increased to 11.8 Tcfe, up about 3% from 11.4 Tcfe a year ago. Burlington replaced 142% of its 2003 worldwide production from all sources. Excluding acquisitions, the replacement rate was 118%. Worldwide reserve additions from all sources totaled 1,426 Bcfe. Extensions, discoveries and additions totaled 1,107 Bcfe including revisions. Acquisitions added 228 Bcfe, primarily in the San Juan Basin, the Fort Worth Basin and the Dutch North Sea.