The past year has been relatively quiet for many North America independent producers, but with natural gas prices remaining high, many have begun to ramp up production across the continent and especially in the deepwater Gulf of Mexico. Although they are loathe to offer production projections going forward, positive results should show up by the end of the second quarter, executives said Tuesday at the UBS Warburg Energy Conference in Scottsdale, AZ.

“Once you put your mark on the wall, to preserve credibility, you will do everything to get there,” said Roger Plank, CFO of Apache Corp., explaining why the company avoids providing production forecasts. “The environment is extremely volatile [and] sometimes it is economic not to drill, not to acquire.” However, Plank said that as the company entered this year — following a year of curtailing capital costs and strengthening its balance sheet — it now holds a competitive advantage with an “A” credit rating to borrow money as it steps up production. But Apache also will not just boost production to make money, said Plank.

“Picture if you can the idea to bob and weave,” said Plank. “We have to be very aware of what the environment gives you and not be tied to production figures. If you don’t have a mark on the wall, you have a lot more flexibility. Accept that as true that we’re not driven to grow, but we’re driven to grow economically.” He said Apache in 2003 “got out of the chute riding dynamite,” and the corporate objective is to have $1 billion in earnings this year. “I think we have a shot,” he added.

Tim Dove, CFO of Pioneer Natural Resources, said the Dallas-based independent remains focused on natural gas in the deepwater Gulf, with a “bunch” of exploration prospects lined up through next year. The company, whose U.S. gas production is 135% higher than it was a year ago, is confident enough of its deepwater exploration so far to order wellheads for some of its prospects. The Falcon field, which Pioneer operates in the western deepwater about 100 miles east of Corpus Christi, TX, began producing in March, and its two-well development there is now producing 185 MMcf and 650 bbl of condensate a day. Falcon, which was drilled at 3,400 feet, is Pioneer’s first operated deepwater project.

Pioneer’s Harrier discovery, a single-well subsea tie-back to the Falcon field, also has been encouraging, Dove said. Pioneer, which has a multi-year inventory of prospects on its 32 Gulf blocks, owns a 100% working interest in the Harrier field, with estimated gas reserves of 55-80 Bcf. An additional parallel pipeline connecting the field to the Falcon Nest platform on shelf will be added to the Falcon facilities, and that is expected to double capacity to 400 MMcf/d.

By the time the Harrier field begins production, expected within nine months, Falcon and Harrier together will produce about 275 MMcf/d. And two additional prospects in the Falcon area will be drilled this year, said Dove, which, if successful, also would be tied back to the Falcon field.

Also promising is a joint exploration between Pioneer and Woodside Energy (USA) Inc., which has a two-year program in the shallow water Texas shelf region. Under the agreement, Australian-based Woodside has taken a 50% interest in 47 offshore exploration blocks operated by Pioneer. The agreement covers eight prospects and 19 leads and includes five wells in 2003 and three in 2004. Most of the wells will target gas plays below 15,000 feet (4,500 meters).

“Our current growth and our future growth looks good,” said Dove. “We’ve got our heads down, and we’re implementing our plan.” He said Pioneer has a “substantial amount of excess cash flow to deal with in the next few years,” and has had a high rate of return on its projects. Its plan to reduce its debt by $100 million this year is on track, and Pioneer also plans to buy back more of its shares.

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