Magnum Hunter Resources Inc. is escalating its drilling efforts in the Gulf of Mexico (GOM) through the end of this year, and has boosted its 2003 capital budget by $50 million toward the effort.

The independent also provided 2004 production guidance, estimating it will range between 205-235 MMcfe/d. Annual production should range from 74.8-85.8 Bcfe. Oil production is expected to average 10,800-11,700 bbl/d next year, with gas production ranging between 140-165 MMcf/d.

The budget was increased to $165 million from $115 million. Most of the increased monies, which will be funded internally, are earmarked for leases obtained in the past three years in Minerals Management Service GOM lease sales.

CEO Gary C. Evans said the company wanted to take “full advantage” of strong commodity pricing, noting that to date, Magnum Hunter’s daily production mix had “exceeded all previous estimates.” Net daily oil and gas production is currently more than 205 MMcfe/d, after divestitures of non-strategic and higher operating cost properties. Magnum Hunter has three new high working interest wells coming online in the GOM by mid-October, which also will impact daily production, he said.

“When combining our 2003 net available free cash with proceeds from 2003 asset sales, we feel very comfortable in increasing our capital budget in a manner that allows for continued debt reductions as well as supporting meaningful organic production growth from internally generated projects,” said Evans. “We are on track to grow our net production by a 10% annual rate.”

Evans added that more than 1 Tcf of risk-adjusted GOM drilling prospects have been identified for future exploration activities through a recently completed third-party study.

“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 93% during 2003 with a total of 81 wells completed successfully, out of 87 wells drilled through Aug. 31, 2003.”

The revised ’03 budget remains front-loaded, with almost 59% of the total spent in the first six months. By operating region, Magnum Hunter expects this year to spend $112 million in the GOM; $36 million in the Permian Basin; $11 million in the Midcontinent; and $6 million in the Gulf Coast onshore.

Approximately 144 new wells are scheduled to be drilled this year, including 38 wells offshore in the shallow waters of the GOM and 106 wells onshore, primarily in southeastern New Mexico, West Texas and the Texas Panhandle. In the GOM, 36% of the anticipated capital expenditures will be spent on drilling, 26% on completion operations, and 38% on new leases and facilities. Of the planned 38 GOM wells, 31 are deemed exploratory and seven are developmental. Onshore, 101 of the 106 planned new wells for 2003 are deemed developmental.

In other news, Jody Powers was elected to the company’s board of directors in September, and he also will serve on the compensation committee. Powers, 57, spent 34 years with Halliburton Co. and various subsidiaries with increasing levels of domestic and international management responsibilities, culminating with his retirement in May 2002 holding the executive position of president of Halliburton Energy Services.

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