Burlington Resources Inc. said last week that it is raising its first quarter production guidance and has resumed repurchasing shares of its common stock under an existing $1 billion repurchase authorization.

Burlington estimates that its average daily natural gas production will achieve the upper half of the previously provided first quarter guidance range of 1,800-1,900 MMcf/d. Burlington raised the mid point of its Q1 production guidance by 2.8% from 2,405 MMcfe/d to 2,473 MMcfe/d. In addition, the Houston-based producer said it believes that its natural gas price realizations for the quarter will average between $5.00-5.25/Mcf, including the impact of hedging and location differentials.

Burlington also raised it estimates on average natural gas liquids production to 60,000-65,000 b/d, exceeding the previous guidance range of 52,000-60,000 b/d. The company noted that oil production is expected to achieve the upper half of the previously estimated range of 35,000-38,000 b/d. Despite the upward revisions, Burlington said it has not revised its volumetric guidance estimates for the full year.

As a result of the company’s upward revision, Thomas Driscoll of Lehman Brothers said he is raising Burlington’s 2003 EPS and CFPS.

“With nearly 70% of its production consisting of North American natural gas, Burlington is highly leveraged to the strong natural gas prices in the continent,” Driscoll said. “In the short term we view Burlington’s emphasis on the North American natural gas fairway as a significant advantage.”

Driscoll raised his 2003 EPS and cash flow per share estimates for Burlington following an increase in first quarter production guidance by the company and an increase in our benchmark gas price estimate for the first quarter. However, he noted that the increased estimates are tempered by an increase in estimated natural gas price differentials for the quarter.

“Although the company maintained its full year guidance at 2,573-2,708 MMcfe/d (mid point = 2,641 MMcfe/d), we are raising our production estimate for the year by roughly 0.5% from 2,611 MMcfe/d to 2,623 MMcfe/d.” Driscoll is maintaining a 2004 production estimate for the company at 2.87 Bcfe/d.

“Based on our revised estimates we believe that (proforma for asset sales) Burlington’s 2003 production will increase by 12% and by nearly 2.5% on an as reported basis (versus guidance of 0-5% growth).”

As part of the company’s stock repurchase program, Burlington said first-quarter repurchases are estimated to total approximately 1.7 million shares for $79 million, representing an average cost of about $45 per share. If this estimate holds true, it would raise cumulative repurchases to nearly 18 million shares, with approximately $230 million remaining under the current authorization.

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