Equitable Resources revealed its 1999 capital budget Monday,demonstrating its dedication to focusing on only its coreAppalachia production and gas utility businesses. Equitable’s 1999spending plan for its four main divisions, Equitable Production,Utilities, Services, and its corporate group, adds up to $119million, representing a $64 million decrease from 1998. Theproduction unit was allocated 54% of the budget, down 21% from theyear before.

“Equitable Resources’ capital spending program is consistentwith our strategy of earning a higher rate of return on investedcapital in each of our primary businesses,” said Murry Gerber, CEOof Equitable. “Our fundamental approach to maximizing shareholdervalue includes becoming more cost competitive and investingprofitably in our core businesses to achieve revenue and net incomegrowth.” Last week, Equitable announced a $120 million charge as aresult of the company’s efforts to focus on what it called corecapabilities. The charge was due to severance, staff reductions,debt repayment, and property devaluation.

Bob Butter, an Equitable spokesman, said the major reason forthe cut in the budget was a switch in emphasis from exploration todevelopment. Equitable Production, the company’s exploration andproduction unit, was allocated $81 million for 1999 compared to$133 million in 1998. Its Gulf operations received $47.7 million,which represents a $59.3 million decrease from last year. “When newmanagement came in mid-year, they felt a smaller Gulf presencewould be to the benefit of the shareholders,” Butter said. “We arenow going to develop what we have and not concentrate so much onexploration.” The company estimates its gas and oil reserves in theGulf to be 110 Bcfe, with daily production currently averaging 80MMcfe.

Conversely, Equitable Production’s Appalachian operationsreceived an increase in budget from $26 million in 1998 to $33.4million in 1999. The additional income demonstrates the company’sdesire to increase the number of coal-bed methane (CBM) wellsdrilled from 38 in 1998 to 51 in 1999. The company also plans toincrease the number of conventional wells drilled from 45 to 56.”The advantage we have in the Appalachia area is experience. We’vebeen drilling there for about 100 years, so we have confidence thatwe can use that land profitably,” Butter said. He added that mostof the drilling will take place in the Virginia counties ofDickinson and Wise. Equitable’s natural gas reserves in itsAppalachia territories are estimated to be more than 850 Bcfe.Daily production averages 145 MMcfe.

Equitable Utilities, which runs its distribution, interstatepipeline, and storage systems, received $27 million, a 17% increaseover 1998’s total. The company said that the utility, which serves265,000 people in Pennsylvania, has targeted $5.5 million indevelopment, maintenance, and regulatory compliance. EquitableServices, which handles the company’s marketing and energymanagement operations received $10 million. The company’s corporategroup, which was cut from 150 employees to 50, received $1 millioncompared to $11 million last year.

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