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El Paso Expects 'Material Negative Revision' to Proved Reserve Numbers
Based on an independent review of its oil and gas reserves, El Paso reported on Monday that it expects to make a "material negative revision" to its proved reserve estimates. The Houston-based company, which expects to announce the new figures in mid-February, made the statement in a Securities and Exchange Commission Form 8-K filing.
Production volumes for the fourth quarter averaged about 1 Bcfe/d, it said in a statement. And, in line with guidance provided in December, production volumes are expected to average 950 MMcfe/d for January.
However, Ryder Scott Co., which was appointed El Paso's primary reserve engineer in the third quarter of 2003, is now preparing an independent reserve estimate of properties as of Jan. 1, 2004, and preliminary findings indicate that the reserve numbers will be lower.
In the filing, El Paso noted that on Dec. 15, CEO Doug Foshee provided analysts with an update of the company and planned changes (see Daily GPI, Dec. 16, 2003). It said that in his presentation and in response to questions, Foshee indicated "that based upon recent production disappointments, especially in the South Texas region, there might be negative revisions to our proved reserve estimates."
According to El Paso's web site, the production segment's South Texas program is "focused on the prolific Vicksburg and Wilcox trends where the company's deep drilling expertise allows it to deliver another industry-leading reserve replacement rates and reduced finding and development costs. The company's recent discoveries in the South Texas trends, proved and probable, amount to over 4,400 Bcfe."
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