Vastar CEO Sees Supply, Demand Balanced
Vastar Resources would appear to be taking a wait-and-see view
of next year's gas prices. CEO Chuck Davidson told Houston energy
reporters Tuesday that "not much" of the company's gas production
is hedged next year. Indeed, Vastar generally doesn't hedge more
than a year out and hedges less than 50% of its production.
Davidson said the company also is using more collars rather than
hedges linked to a specific price.
Unlike some in the industry who for the last several months have
been crowing about the coming 30 Tcf gas market and a perceived
uncertainty of supply's ability to meet demand, Davidson said he
sees supply and demand as pretty closely aligned right now. He
noted the industry has finally burned off the gas bubble that
plagued it for a number of years.
Davidson said Vastar's 2000 capital budget won't be hammered out
until next month. The 1999 exploration and production budget was
$700 million, with about 75% of that amount being spent offshore -
two-thirds on the Continental Shelf and one-third in the
deep-water. Breaking this year's budget up another way, about $250
was spent on exploration and $360 was spent on development. The
remainder went to acquisitions.
Clearly, Vastar has grown weary of being questioned about its
future following the merger of BP Amoco and ARCO, which owns 82% of
Vastar. The short answer from Davidson is the company doesn't know
yet what will happen. He said Vastar's success can continue "under
a variety of ownership structures."
Joe Fisher, Houston
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