A “growth spurt” from several production projects will lead Burlington Resources Inc. toward the higher end of its projected 3-8% growth next year, led by a surge in international growth and a more modest climb in Canada, the CFO told a Denver audience Wednesday.

Steven Shapiro, in a presentation at EnerCom Inc.’s 8th Oil & Gas Conference, said U.S. production is expected to be flat, while Burlington Canada volumes will be 5% or higher. However, international production is expected to grow 40%, Shapiro said. He explained, though, that the international growth is for a smaller base of operations, which now make up about 10% of the Houston-based producer’s business.

Along with more production, Burlington also is focused on increasing the return on capital employed, said Shapiro. In the past few years, the company has focused on reducing costs and increasing efficiencies by concentrating on fewer geographic areas. To accomplish this, Burlington has sold off assets in some regions to allow it to buy more in areas where it already has production.

With a smaller focus, Shapiro said, the company has been able to differentiate itself from competitors with sharper data and information, stronger infrastructure, better supplier relationships and institutional knowledge. The strategy, now used in North America, will be the same overseas, he said, and eventually, Burlington will reduce its foreign operations to three or five from the current eight or nine.

A good “problem” ahead for Burlington between now and 2005 will be the nearly $2 billion in “free” cash flow, that is, operating cash minus the capital expenditures, if natural gas prices average $4/MMBtu, Shapiro said. The producer is considering how to spend the expected windfall, which could include acquiring new assets, expanding the exploration and production (E&P) program, repurchasing stock or increasing dividends.

Burlington would consider acquisitions, but only at the right price. So far this year, Burlington has purchased about $20 million in new assets, mostly in basins where it already holds a strong presence, but has held off in open auctions, unwilling to bid more than some of its competitors. E&P also could benefit, but Burlington expects that part of its budget to be flat for the short term. Although the company is benefiting from higher commodity prices, it also is paying more in service costs, which would only increase with more exploration.

What Shapiro prefers, especially as the company’s CFO, is for Burlington to repurchase shares because the repurchases offer more financial flexibility. Repurchases also could be cut back easier than if Burlington again raised its dividend, something it did less than a month ago, he said. In late July, Burlington announced a 9.1% increase in the dividend for an annualized rate of 60 cents a share.

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