Houston-based Noble Affiliates said Tuesday it would reduce its capital budget for the year, dumping 29% from its downstream projects and cutting more than half of its domestic offshore budget. However, domestic onshore exploration and development was almost doubled from last year’s allocation to $136 million, with the focus on properties picked up through its acquisition last year of Aspect Resources LLC of Denver.

With the announced capital program, Noble expects average production for 2002 to increase 4-7% over 2001 in both natural gas and liquids, with most of the growth from its international assets.

Noble entered into several costless collar hedges to support its 2002 investment program. For the period February to March 2002, the company has entered into hedges of 100,000 MMBtu/d of natural gas production with an average floor price of $2.04/MMBtu and average ceiling price of $2.54/MMBtu. For the period April to June 2002, the company has entered into hedges of 50,000 MMBtu/d of natural gas with an average floor price of $2/MMBtu and an average ceiling price of $3.09/MMBtu. All of the April to June hedges have a knockout price of $1.70/MMBtu.

Noble has hedges related to the Aspect Resources transaction that cover an average gas volume through 2003 of 44,000 MMBtu/d. Of these hedged volumes, 87% are collars, while the remainder are at fixed prices. The hedged positions have an average floor or fixed price of $3.10/MMBtu. The average ceiling price on the collars is $3.78/MMBtu. In addition to the gas hedge position Noble has relating to Aspect properties, Noble had previously announced hedged volumes amounting to 50,000 MMBtu/d in 2002 with a floor of $3.25/MMBtu and a ceiling of approximately $5.07/MMBtu. Of the 50,000 MMBtu/d previously announced, 25,000 MMBtu/d were terminated. As a result, Noble will recognize an additional $0.70/MMBtu on 25,000 MMBtu/d this year.

Noble last week reported net income of $134 million, or $2.36 per share, for the year — the company’s second highest year of earnings, but down 30% from its record earnings in 2000 of $192 million, or $3.42 per share. Production levels in 2001 grew 7% from the previous year’s 94 MBoe/d to 101 MBoe/d. Total worldwide reserves reached 463 MMBoe by Dec. 31, 2001, up 17% from a year earlier. More complete earnings figures are available on the web site at www.nobleaff.com.

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