Finding

Houston-based Anadarko Petroleum Corp. said that its 2003 finding and development (F&D) costs are expected to be at the low end of its previous guidance of $7.50 – $8.50/BOE, noting the significant improvement over 2002 results.

The prospect of finding deep gas in the shallow waters of the Outer Continental Shelf (OCS) appeared to be the impetus for bidding in Western Gulf of Mexico (GOM) Lease Sale 187 on Aug. 20. Shallow water leases, in plays less than 200 meters deep and more than 15,000 true vertical depth, piqued most producers’ interests, with the offshore sale netting $258.7 million in total bids for chances to explore 3,996 blocks.

The cash market was under pressure from several negative factors Tuesday, and it showed in double-digit losses nearly everywhere except for a few flat to slightly lower points in the West.

The prospect of finding deep gas in the shallow waters of the Outer Continental Shelf (OCS) appeared to be the impetus for bidding in Wednesday’s Western Gulf of Mexico (GOM) Lease Sale 187 on Wednesday. Shallow water leases, in plays less than 200 meters deep and more than 15,000 true vertical depth, piqued most producers’ interests, with the offshore sale netting $258.7 million in total bids for chances to explore 3,996 blocks.

Fresh off of the issuance of a Department of Energy (DOE) study finding solid net benefits from FERC’s proposed standard market design (SMD), FERC Chairman Pat Wood last Wednesday said that he wants to “take the lead” from Congress in terms of the timing for implementing a final rule in the SMD proceeding.

A recently issued Commission staff report finding pervasive manipulation of California’s energy markets in 2000-2001 shouldn’t be made a part of the evidence in an ongoing case at FERC involving PacifiCorp’s challenge to several power contracts the utility entered into with four power suppliers, a Reliant Energy Services Inc. attorney told FERC Commissioners on Thursday.

Finding little of significance in new price influences upon emerging from the Easter weekend, virtually all of the cash market was content to mark time Monday. Outside of declines ranging to nearly a quarter in the Rockies, most other points stayed within about a nickel up or down from flat. There was a slight bias to the upside.

Ultra Petroleum expects to report average finding and development costs of $0.23/Mcfe on its 273 Bcfe of reserve additions before production. Ultra posted a 2002 reserve replacement ratio of 1,483%. Ultra has elected to defer booking reserves in China, yet includes capital expenditures in China in its F&D calculation. Ultra has delivered a four year average F&D cost of $0.22/Mcfe. The company expects production and reserves to grow 25% to 22 Bcfe and 875 Bcfe, respectively, during 2003. Ultra’s board has approved a $70 million capital budget, with $50 million slated for Wyoming. At year-end 2002, Ultra had hedges in place covering 13 MMcf/d for 2003 at an average price of $3.35/Mcf, basis Opal. Recently, Ultra entered into hedges covering an additional 9 MMcf/d for April 1-Oct. 31 at $3.95/Mcf basis Opal. “Our extraordinary success in Wyoming has allowed us to deliver industry leading reserve additions and production growth at unprecedented low costs,” stated CEO Michael D. Watford. “Over the past four years we have grown reserves sixteen fold and production 400%. When production from China starts in late 2004, we expect to add another wedge of additional reserve and production growth at attractive costs. We look forward to many years of industry leading growth from projects already identified on our existing property base.” Ultra is focused on developing its long life natural gas reserves in the Green River Basin of Wyoming, and oil reserves in Bohai Bay, offshore China.

A finding last week by a regulatory judge that power generators don’t owe California anywhere near the $8.9 billion in overcharges claimed by the governor for power deliveries in 2000-2001 didn’t play well in Hollywood or its environs, but Wall Street appeared to like it a lot.