Pogo Producing Co. became one of the first independents to report second quarter numbers on Tuesday, with natural gas and liquid hydrocarbons production both up for the quarter, and earnings more than doubled from a year ago. Encouraging production results in the Gulf of Mexico also convinced the Houston-based producer to increase its ’03 capital budget 11%.

Second quarter production of liquid hydrocarbons, including oil, condensate and plant products, rose to 69,137 bbl/d, up 35% from the same quarter of 2002. Natural gas production also rose, to 301.7 MMcf/d from 285.6 MMcf/d a year earlier. Natural gas prices averaged $4.48/Mcf, up from $2.91/Mcf in Q202. Crude oil and condensate prices rose to an average of $27.44/bbl, up from $24.29/bbl a year ago.

“As a result of Pogo’s very successful drilling program during the last couple of years, we are now enjoying record production rates for both crude oil and natural gas,” said CEO Paul G. Van Wagenen. “Fortunately, this dovetails with a period of unusually favorable energy prices. Our challenge, and I believe we are up to it, is to continue the successful drilling.”

Van Wagenen said the board of directors had authorized a $35 million increase in this year’s capital and exploration budget, which will bring the budget to $355 million. “The additional dollars will be directed to the drilling of at least six new high-potential Gulf of Mexico exploration prospects,” he said. “The leases were acquired, in most cases, in the federal and Louisiana state lease sales held in 2002 and 2003.”

Pogo recorded second quarter 2003 net income of $79.7 million ($1.29 per share), on revenues of $295.6 million, compared to net income in Q202 of $28.6 million (51 cents) on revenues of $184.4 million. For the first half of 2003, Pogo’s net income was $168.2 million ($2.73 per share), on revenues of $606.3 million, compared to first half 2002 net income of $37.6 million (68 cents), on revenues of $327.3 million.

In its Gulf of Mexico operations, Pogo has planned at least six exploratory tests slated in the Main Pass, Eugene Island and Ewing Bank areas of the Outer Continental Shelf in the last six months of this year. The third quarter, said Pogo, is expected to include the spudding of natural gas tests at Eugene Island Block 250 and Main Pass Block 128, and the drilling of a crude oil prospect on Ewing Bank Block 830. Each of the exploratory wells will be solely owned by Pogo, drilled on recently acquired leases.

Pogo has enjoyed success in its domestic divisions during the quarter, with seven successful wells drilled in the onshore Gulf Coast area. In the Permian Basin, Pogo participated in 32 second quarter wells, all of which were successful and half of which were drilled on the lower interest Spraberry Aldwell field. Pogo also conducted some shallow drilling at the Madden field in the Wind River Basin in central Wyoming, a field where Pogo owns approximately 11%.

The Madden field’s Lost Cabin gas plant was shut in on June 19, and Pogo said its net production there was reduced by about 20 MMcf/d. About one-fourth of that production was restored on June 30. The operator is continuing to study and make repairs as necessary, Pogo said.

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