Consolidated Natural Gas (CNG) is taking advantage of depressedprices in the E&P sector and spending more of its money where itsees the most long-term bang for the buck. Having pulled out of themarketing business, CNG’s $524.5 million capital budget for 1999continues the company’s focus on expanding its exploration andproduction business. More than 60% of the 1999 budget is allocatedto CNG’s E&P subsidiary, CNG Producing Co.
“We intend to use CNG’s financial strength to press ouradvantage in E&P,” said George A. Davidson Jr., CEO of thePittsburgh-based company. “While many other companies are forced tocurtail their drilling programs, the portion of our E&P budgetdedicated to exploration – the key to future growth – is targetedto go up 25% next year.”
CNG’s overall 1999 capital budget is down from this year’santicipated spending of $792 million. This is primarily because of$191 million that was invested in projects in 1998 in Australia andArgentina that will not be duplicated. International investmentsare made on a case-by-case basis as projects are identified.Spending for information systems throughout CNG also is expected tofall by about $30 million as those projects have been finished orare nearing completion.
Spending at CNG Producing is budgeted at $326 million in 1999,compared with an initial 1998 budget of $307 million and expectedspending of $354 million. The added E&P spending in 1998 was dueprimarily to increased exploration and developing exploratorysuccesses.
“While we will work with our partners – Shell and Murphy – todevelop the recently announced North Marlin deepwater discovery inthe Gulf of Mexico, total E&P development spending is expectedto be down in 1999 because most of the work has been completed onCNG’s Nautilus and Nemo discoveries on the continental shelf,”Davidson said.
In other business segments, the 1999 capital budget comparedwith 1998 anticipated spending is: gas distribution, $128 millionvs. $147 million; gas transmission, $55 million vs. $58 million;and corporate and other, $16 million vs. $42 million. The segmentreductions are generally due to the lower requirements forinformation systems.
Joe Fisher, Houston
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