Budgets

With few exceptions to the rule, U.S.-based producers reported soaring 3Q income, however, U.S. natural gas production continued to fall, and capital spending for exploration and production dropped for some of the largest operators.

U.S. and Canadian-based producers began unveiling their second quarter results last week, and while some were able to take advantage of higher commodity prices, the results so far are mixed. However, some the larger U.S.-focused independents with extra cash said they will use some of their extra cash to not only pay down debt, but to increase exploration and production (E&P) efforts in the last six months of the year.

Calgary-based Talisman Energy Inc. said it plans to spend a record C$2.35 billion on exploration and development in 2004, of which, C$1.13 billion is earmarked for North America. The company also reconfirmed its annual production growth expectations of 5-10% per share through 2006.

Calgary-based Talisman Energy Inc. said it plans to spend a record C$2.35 billion on exploration and development in 2004, of which, C$1.13 billion is earmarked for North America. The company also reconfirmed its annual production growth expectations of 5-10% per share through 2006.

Analysts at Raymond James and Associates said they are expecting exploration and development (E&D) capital spending budgets to continue to increase in 2004 despite rising a massive 41% in 2003 from last year. The analysts believe gas and oil market fundamentals will remain strong, there will be fewer assets available for purchases, and that E&P companies will focus on stock buyback and debt reduction plans only about as much as they had in 2003.

Flush with cash on higher commodity prices, U.S.-based independents’ record quarterly earnings have overshadowed stellar natural gas production numbers from some of the gas-rich domestically focused producers. Mega-independent Devon Energy Corp. gained production-wise with its Ocean Energy Inc. merger; however, Houston Exploration Co., Swift Energy Co. and Range Resources Co. also posted higher North American natural gas production numbers, and will use their bonus cash on exploration and production (E&P) through 2003.

Anadarko Petroleum Corp. on Friday reported lower production volumes for the quarter compared with a year ago, and upped its capital budget for this year by 9% after logging exploration successes in the Gulf of Mexico, Canada and Algeria. Meanwhile, junior independent Southwestern Energy Co. also reported lower production numbers, but it too increased its spending for the year on expected drilling successes.

President George W. Bush last Monday targeted additional funding for energy infrastructure and oversight activities in his $199.4 million budget request for the Federal Energy Regulatory Commission for fiscal 2004.

President George W. Bush on Monday targeted additional funding for energy infrastructure and oversight activities in his $199.4 million budget request for the Federal Energy Regulatory Commission for fiscal 2004.