Capping off a strong 2003, Denver-based Western Gas Resources Inc. said Friday that proved reserves as of Dec. 31, 2003 increased 16% to 685 Bcfe. The company noted that it drilled 601 gross wells during the year, 99% of which were successful. At year-end, 42% of reserves were proved developed.

According to an independent reserve report prepared by Netherland, Sewell & Associates Inc. (“NSAI”), Western Gas’ additions net of revisions totaled 149 Bcfe and 97 Bcfe net of production. The company replaced 283% of 2003 production of 52.6 Bcfe and net production increased 10% in 2003. In the breakdown, drilling activities provided 93% of the reserve additions and Rocky Mountain natural gas reserves represent 99% of the reserve base.

In total, net probable and possible reserves on Western Gas’ leasehold increased to 2.13 Tcf at year-end 2003, including 1.94 Tcf in the Powder River Basin and 198 Bcf in the Greater Green River Basin. The company noted that potential unbooked reserves could increase to approximately 2.64 Tcf if twenty-acre spacing proves successful across the company’s Pinedale Anticline leasehold.

Finding and development costs during 2003 were approximately $0.58 per thousand cubic feet equivalents (“Mcfe”) based on estimated capital expenditures of $87 million for exploration and production operations in 2003.

In the reserve breakdown, Western Gas as of the end of 2003, had 326 Bcfe in proved reserves from its Powder River coal bed methane (CBM) operations. The company noted that 2002 proved reserves for the area were 424.1 Bcfe. Western Gas controls approximately 529,000 net acres in the Powder River Basin CBM development. During 2003, a total of 536 gross CBM wells were drilled. Net CBM production increased three percent to 43.7 Bcf in 2003 and averaged 120 MMcf/d.

Looking to full-year 2004, the company expects to drill approximately 800 wells in the Powder River Basin, including 500 wells in the Big George coal. In 2004, Powder River Basin CBM production is expected to remain constant to 2003. However, the company noted that production is expected to return to double-digit growth of approximately 10-15% in 2005 based on a significant number of existing and new wells beginning to produce gas in the Big George coal and the federal permitting process accelerating in 2004.

In the Greater Green River Basin, Western Gas posted end-year 2003 proved reserves of 359 Bcfe, more than doubling 2002 reserve levels of 174 Bcfe. The company added that 330 Bcfe of its reserves that are currently in the area are in the Pinedale Anticline. The increase was attributed to stepped-up drilling operations and also included 10.6 Bcfe related to the acquisition of a non-operated interest in the company’s Sand Wash Basin properties.

The Company controls approximately 179,000 net acres in the Greater Green River Basin, including 31,000 net acres in the area of the prolific Pinedale Anticline and Jonah Field in southwest Wyoming. During the year, Western Gas participated in 53 gross wells in the Pinedale Anticline, more than twice the number of wells in 2002. Production volumes in the Greater Green River Basin are expected to increase approximately 80% in 2004 and 25% in 2005 based on current drilling plans.

Looking ahead, Western Gas said it expects to participate in approximately 90 new wells on the Pinedale Anticline in 2004, nearly doubling the number of wells from 2003. If drilling on the increased density proves successful, the company could participate in as many as 1,000 future well locations on the Pinedale Anticline during the next ten or more years.

“We are pleased to report double-digit production and reserve growth for 2003 at very attractive returns for our shareholders, while reducing debt throughout the year,” said Peter Dea, CEO. “For the sixth straight year we have realized net reserve additions, with the majority of the growth resulting from the drilling operations. Our probable and possible resource potential remains three to four times our proved reserves and will provide future reserves and production growth. The revisions in the Wyodak coal were a disappointment, although they were more than offset by the combined additions in the Big George coal and Greater Green River Basin.”

Western Gas said total net equivalent natural gas production in 2004 is expected to increase to an average of approximately 164 MMcfe/d or approximately 13% from 2003 levels with the majority of the increase to occur in the second half of the year.

“Production volumes from the Big George coal are expected to continue to ramp up in 2004,” Dea said. “Additionally, the Pinedale Anticline activity looks very promising for 2004 between the increase in drilling, 20-acre pilots and expanded capacity of both our Rendezvous Gathering system and Granger processing plant. Several of our company-building exploration projects will see additional drilling, leasing and seismic activity in 2004. Complementing our upstream success is our continued high cash flow and solid net margins in our gathering and processing assets in the Rockies, West Texas and western Oklahoma. Overall 2004 is expected to be another excellent year for our shareholders.”

The company said it expects capital expenditures to reach approximately $243.5 million in 2004, primarily for growth and expansion projects in its Rocky Mountain upstream and midstream operations. The new budget represents a 9% increase from the estimated $223 million expended in 2003.

Western Gas will release its fourth quarter and year end 2003 financial results at 7:00 a.m. Eastern time on Feb. 19.

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