WGR Reports Record Results, Talks Growth
Denver-based Western Gas Resources (WGR) reported last week that its net income for the fourth quarter and end-of-year reached all-time highs during 2000. The independent diversified natural gas company posted fourth quarter net income of $18.1 million ($0.47 per share), compared to a loss of $1.2 million ($0.12 per share) in 1999 for the same time period.
For the year 2000, the company reported net income of $56.1 million ($1.39 per share), when in 1999 it posted a dismal loss of $17.1 million ($0.86 per share). Overall revenues increase by 72% to $3.3 billion compared to 1999.
WGR said although its average gas sales volumes went down by 3% for 2000 to 1.8 Bcf/d, the natural gas price spikes helped the company to achieve record results. Average gas prices increased 80% to $3.90/Mcf in 2000, the company said. The company drilled about 950 wells in the Powder River Basin in 2000, and expects to drill another 840 in 2001.
"The fourth quarter and year 2000 were exceptional for Western as we set records for net income, revenue and EBITDA in both periods. After several years of depressed prices and limited drilling activity, we are now benefiting in all of our operating segments by greatly improved commodity prices and increased volume," said Lanny Outlaw, CEO of Western. "We believe that the demand for clean burning natural gas will increase and prices will remain at levels which will continue to provide opportunities for a company with our asset base and capabilities."
At the end of 2000, Western increased its proved reserves by 50% to 408 Bcf from the 272 Bcf reported at year-end 1999. The company added 164 Bcf of reserves, or replaced 586% of its 2000 production of 28 Bcf.
WGR also released it 2001 capital expenditure budget, which increased 29% from 1999's $105.5 million, to $136.4 million. Of the 2001 budget, $71.8 million will go to gathering, processing and pipeline assets, $56.9 million will go into exploration and production and the remaining $7.7 million will be used for administrative and miscellaneous expenses. In addition, the company said it would pursue an active growth strategy through acquisitions.
"Over the last two years we have sold several non-strategic assets and have substantially improved our balance sheet and financial position. In 2001, we will aggressively target acquisitions and actively seek to identify and pursue new opportunities for expanding both our gathering and production business segments primarily in the Rockies and Canada," said Outlaw. "Based on our 2001 forecast assumptions, we believe we have the capacity to invest $50 to $100 million in acquisitions or other growth projects over and above our current capital budget and still maintain our debt to cap level at 50% or less at year-end 2001."
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