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Patina, Denbury Report Higher '03 Production, Noble Down on Sales, Reserve Revision
Patina Oil & Gas Corp.'s core U.S. oil and gas production grew 38% in 2003, while Denbury Resources Inc. reported a 5% year-over-year rise in its production levels last year. Noble Energy Inc., meanwhile, reported a 2% production decline in 2003, which it attributed to the sale of some reserves and a 13 Bcfe downward revision to its Gulf of Mexico offshore estimates.
Denver-based Patina Oil & Gas Corp. reported that its proved reserves rose almost 38% over last year and now exceed 1.5 Tcfe, including 1,024 Bcf and 81.9 million bbl. The increase was attributed to several factors, including discoveries that added 172 Bcfe, upward revisions of 9 Bcfe and the acquisition of Cordillera Energy Partners LLC last summer (see Daily GPI, Aug. 26, 2003). The increases were offset by 100 Bcfe of production and the sale of 36 Bcfe of reserves. Production replacement for the year totaled 515% (506% without the impact of higher prices). Patina focuses its exploration in Colorado's Wattenberg Field, the Mid Continent and the San Juan Basin.
During 2003, Patina's production averaged 274.0 MMcfe/d, which the company said was 44% higher than 2002. By the fourth quarter, production had reached 314.4 MMcfe/d, composed of 17,505 bbl and 209.4 MMcf, a level 47% over 2002 and 15% sequentially higher than 3Q2003. Patina now expects its production this year to increase 17-20%.
CEO Thomas J. Edelman said that Patina is continuing to diversify its asset base, which included adding a third core area in the San Juan Basin last year. "Having assembled nearly 600 Bcfe of proved reserves in the Midcontinent and San Juan, we expect to pursue rapid growth in those areas through a combination of ongoing development and acquisitions. We will also continue to dispose of non-core assets which cannot meaningfully contribute to long-term growth and profitability."
Patina is scheduled to release year-end earnings on Feb. 24.
Dallas-based Denbury Resources Inc. said Tuesday that its total proved oil and natural gas reserves were up 5% last year over 2002 to 128.2 MMboe, which consisted of 91.3 million bbl and 221.9 Bcf. The audited total reserves gained 5% over 2002, Denbury said, after adjusting for 8.3 MMboe sold last year. Denbury Resources Inc. (www.denbury.com) is a growing independent oil and gas company. Denbury is the largest oil and natural gas operator in Mississippi, and also holds significant operating acreage in the onshore Louisiana and offshore Gulf of Mexico areas.
Before sales and production, Denbury added 18.5 MMboe of proved reserves during 2003. It said that it replaced 146% of its estimated production, mostly on internal growth. The most significant reserve addition, 9.5 million bbl, came from recovery projects at McComb and Mallalieu Fields in Mississippi. Denbury also had significant reserve increases from its exploration discovery at Lirette Field in Louisiana, additional Selma Chalk natural gas wells at Heidelberg Field in eastern Mississippi, additional natural gas wells in the Barnett Shale near Fort Worth and two new wells offshore in the Gulf of Mexico at Brazos A-21 and additional interest acquired at Brazos A-22 Block.
"We are continuing to expand our operations in our primary core area, our tertiary recovery operations in Mississippi," said CEO Gareth Roberts. He said that the company estimates it has "another 40 to 55 million bbl of potential reserves in the southwestern Mississippi area near our CO2 pipeline that should be developed into proved reserves over the next few years."
Denbury will announce its year-end results on Feb. 19.
Houston-based Noble Energy Inc. attributed a 2% decrease in its year-over-year production figures last year to the sale of about 108 Bcfe, or 4% of 2002's proved reserves. The independent, which expects to record total proved reserves of 2.7 Tcfe for 2003, said Tuesday that its reserve replacement rate was 118% for 2003 in global production from all sources except for sales. "Excluding the impact of property sales, total proved reserves would have increased nearly 2% year-on-year," the company noted.
Noble operates throughout major basins in the United States including the Gulf of Mexico, as well as internationally, in Argentina, China, Ecuador, Equatorial Guinea, the Mediterranean Sea and the North Sea.
Reserve additions from extensions, discoveries and other additions totaled 217 Bcfe, revisions added 39 Bcfe and purchases accounted for another 6 Bcfe. Worldwide production totaled 222 Bcfe in 2003. Reserve replacement for international operations is estimated to be 265% of production for 2003; international production totaled 71 Bcfe in 2003.
Excluding sales, Noble's domestic reserve replacement is estimated to be 48% of production, with an average finding and development cost of $3.26 per Mcfe. Domestic reserve additions from extensions, discoveries and other additions are expected to total 56 Bcfe, with revisions adding 11 Bcfe and purchases contributing 6 Bcfe. Domestic production totaled 151 Bcfe. Domestic onshore is expected to replace 118% of 2003 production, predominantly from the Gulf Coast drilling program.
In a statement, Noble said, "domestic offshore is not expected to replace production due to restrained capital allocation. Of 2003 offshore capital, 52% was directed toward developing prior discoveries, carry-over wells or discoveries not yet booked. In addition, a negative revision of 13 Bcfe was made for an offshore property where recompletion and remediation activities produced less than expected results."
Noble CEO Charles D. Davidson said several of the international projects have been completed and those capital commitments are "rapidly declining." Moving forward, Davidson said that the company "is now in the early stages of a significant transformation to a company with enhanced financial flexibility, and our 2004 capital budget reflects that."
Noble's 2004 domestic capital budget is $270 million, with approximately two-thirds earmarked for the offshore division and one-third for the onshore division. Of the total domestic capital budget, approximately 55% is earmarked for exploration, and 45% for production and development. Average boe from continuing operations this year is expected to increase from 10-17% over 2003.
Along with its production estimates, Noble also reported that for 2003, net income was $78.0 million ($1.37/share). In the final quarter, Noble reported a net loss of $21.1 million (minus 37 cents/share).
"Full year and fourth quarter 2003 income from continuing operations included a pretax, non-cash charge for asset impairments of $31.9 million ($20.8 million after tax), primarily related to a reserve revision on the East Cameron 338 field in the Gulf of Mexico after recompletion and remediation activities produced less-than-expected results," Noble said in a statement. "An analysis of the performance response of the field resulted in a reduction in proved reserves of 2.2 MMboe. The impairment should result in substantially lower depletion costs in 2004."
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