Houston-based Southwestern Energy Co., which focuses its oil and natural gas activities in the United States, on Thursday said it would spend up to $352.7 million, or 24% more, in 2005 for capital investments than it expects to spend this year. The budget includes up to $339 million for exploration and production (E&P) and $13.7 million to improve utility systems.

“We will have a very active drilling program in 2005,” said CEO Harold M. Korell. “Our capital program will again be heavily weighted toward our lower-risk activities at our Overton Field in East Texas and our conventional drilling program in the Arkoma Basin, and is planned to include a significant increase in activity in our unconventional Fayetteville Shale play in Arkansas. Our strategy will remain focused on adding value through the drill bit, as approximately 83% of our 2005 planned E&P capital will be allocated to drilling.

Southwestern plans to drill 380 wells in 2005, up from an estimated 206 wells during 2004. Southwestern also plans to drill 35 exploration and exploitation wells in the onshore Texas Gulf Coast, the Permian Basin and in its other operating areas.

Of the $339 million E&P capital budget, $271.2 million will be invested in development drilling, $10 million in exploratory drilling, $26.8 million for land and seismic, $24.0 million in capitalized interest and expenses, and $7 million in equipment, facilities and technology.

Southwestern is targeting 2005 production at 61-63 Bcfe, an increase of 13-17% over the company’s forecasted 2004 production. The 2005 targeted oil and gas production includes targeted natural gas production for the Fayetteville Shale play of 2.5-3.0 Bcf, “assuming positive operational results and full utilization of the allocated capital,” the company said.

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