Magnum Hunter Resources said its board has approved a $20 million increase in its 2004 capital spending budget to $220 million. About three-quarters of the additional funds will go to Gulf of Mexico drilling activities on lease blocks acquired over the last four years.

Magnum Hunter and its partners have continued to increase their drilling efforts in the Gulf this year in an effort to take advantage of high commodity prices. The high prices have led to higher cash flows, which have allowed the company to spend more on Gulf exploration and production and pay down debt.

“Commodity prices received during 2004 from our daily production mix has exceeded all previous estimates,” said COO Richard R. Frazier. “Our net daily oil and gas production is currently in the 250 MMcfe/d range. We continue to divest of non-strategic and high-operating cost properties which allows our net margins to continue to improve. We are on track to grow our net daily production by an annual rate of almost 10%.

“With the recently announced EnCana and Permian acquisitions, Magnum Hunter’s total proved reserves are just over 1 Tcfe.” Frazier said. “Even though we have been drilling higher risk prospects, our management team has been able to continue to maintain a very high drilling success rate of 96% during 2004 with a total of 118 wells completed successfully, out of 123 wells drilled through Aug. 31.”

Magnum Hunter said its 2004 budget breakdown is as follows: Gulf of Mexico, $125 million; southeast New Mexico, $37 million; West Texas, $28 million; Midcontinent, $14 million; and Gulf Coast onshore $16 million.

The company has budgeted to participate in drilling 150 new wells in 2004, including 40 offshore in the shallow waters of the Gulf and 110 wells onshore, primarily in southeastern New Mexico, West Texas and the Texas Panhandle.

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