If Questar’s predictions concerning its Pinedale Anticline fieldhold true, then the Utah-based company is about to embark on one ofthe most significant exploration and production projects in itshistory. Although some drilling has already taken place at theSublette County, WY, field, Questar is preparing to launch amassive drilling program aimed at cultivating the projected 3 Tcfthe field holds.
Questar said that if the five-to-10 year program is successful,the company’s nearly 500 Bcf of reserves could double. By 2002, thecompany is estimating it will exceed 300 MMcf/d of production.There are an estimated 135 to 150 drilling locations on site. Itowns 60% of the field and holds leases on more than 13,500 acres ofland. In addition, Questar Gas Management has the rights to thefield’s gas gathering operations, and Questar Energy Trading hasthe marketing rights to the production.
Kurt Burnett, a Questar spokesman, said last week that althoughno final amounts have been agreed upon, the company plans on makinga $60 to $70 million investment into the drilling program nextyear. Overall, Questar has said it expects to direct more than $350million to the development project over the course of 10 years.”The Pinedale field holds the potential to be our most importantproject over the next five to 10 years,” Burnett said.
The company, however, is not jumping head-first into theproject. Questar still has not decided on the speed of the program.”There are a lot of factors that will determine the speed withwhich we develop the field,” Burnett said. “The main contingent isdrilling success. But commodity prices and other factors will alsoaffect the decision. Dependant on these factors, we will decide ifwe want two or four rigs drilling wells.”
Petrie Parkman & Co., an equity research firm, viewed thisplay as a major boost for Questar. In a report published earlierthis year, Petrie said production from this play could have majorpositive implications on the company’s overall future performance.”Despite our forecast of modestly lower commodity prices in 2001,success at the Pinedale Anticline is expected to boost 2001 net gasproduction by some 16% and lower amortization by $0.04 MMBtu,causing net income..to reach $143 Million ($1.70/share),” thereport said.
The boost is sorely needed. Excluding write-downs on its oil andgas properties, Questar’s year-end 1998 net income was $97.2million, or $1.18 per diluted share, compared with $104.8 million,or $1.27 per diluted share, for the prior year. Early last week,its share price hit a 52-week low of $14.75.
Petrie sees this field as vital for Questar’s success as acompany. “Known for its low-risk, profitable growth, QuestarE&P now has a new project that could nearly double thecompany’s proved reserves and production at a time of strong NorthAmerican demand growth.”
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