Western Gas Resources Inc. said its proved reserves as of Dec. 31, 2002 increased 24% to 588 Bcfe with additions net of revisions totaling 162 Bcfe and 114 Bcfe net of production. The company noted that it replaced 334% of 2002 production of 48.7 Bcfe and its net production increased 34% in 2002.

Western Gas said the drill bit provided all of the reserve and production growth with Rocky Mountain natural gas reserves representing 99% of the reserve base. The company drilled 937 gross wells in 2002 with a 98% success rate, Finding and development costs were approximately $0.43/Mcfe based on estimated capital expenditures of $70 million for exploration and production operations in 2002.

At year-end, Western Gas said the pretax present value of the reserves discounted at 10% was $536.6 million, based on year-end NYMEX prices of $4.74/Mcf of gas and $29.83 per barrel of oil, adjusted for regional pricing differentials and considering existing hedging positions.

At the close of 2002, the company said it controlled approximately 515,000 net acres in the Powder River Basin coal bed methane (CBM) development. Net reserve additions in the Powder River CBM play totaled 64 Bcfe. Western Gas said net CBM production increased 33% to 43.2 Bcfe in 2002 and averaged 118 MMcfe/d.

Looking ahead for 2003, the E&P company said coal bed methane production in the play is expected to see only a modest increase relative to past years, as industry awaits the final Environmental Impact Statement (EIS). Western Gas said the EIS record of decision is expected later in the quarter after which drilling and water discharge permits can be issued on federal acreage, followed subsequently by the longer dewatering time of the Big George coals.

Of its proved reserves, Western Gas said 49 Bcfe are from the Big George coal, primarily in the All Night Creek Unit. Gross production from the Big George coal has continued to increase and is currently over 24 MMcf/d from the All Night Creek Unit and the Pleasantville and Kingsbury Unit pilot areas, the company added. Industry Big George production is estimated to be approximately 60 MMcf/d currently.

The company also updated its 2002 progress on approximately 209,000 net acres in the Greater Green River Basin, including 32,000 net acres in the area of the Pinedale Anticline and Jonah Field in southwest Wyoming. During the year, the company participated in 26 gross wells in the Pinedale Anticline. The company also drilled 2 successful wells and spudded a third well on its acreage in the Sand Wash Basin in northwest Colorado. The success rate in the Greater Green River Basin was 100%. Western Gas said natural gas production volumes from these areas increased 46% from a year ago to 15 MMcfe/d net in 2002. Total production was 5.4 Bcfe.

“We are very pleased to report a 34% net production growth in 2002 and solid reserve additions for the fifth straight year, particularly since all of the growth resulted from the drill bit,” said CEO Peter Dea. “Our 98% drilling success rate, with $0.43 per Mcfe finding and development costs and reserves to production ratio of 12 years, further confirms the low-risk, low-cost and long-lived nature of our leasehold.”

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