With 2001 earning results out of the way, Denver-based Western Gas Resources Inc. announced Thursday its Dec. 31, 2001 reserve additions and its capital budget and hedging positions for 2002. The company replaced 275% of 2001 production of 36.3 Bcfe. Net production increased 31% in 2001 compared to 2000.

For 2001, the company reported proved reserves of 476 Bcfe. Additions and discoveries totaled 100 Bcfe. The increase of 64 Bcfe net of production, or 15% growth from year ago levels occurred despite sharply lower gas and oil prices. Reserve additions included 26 Bcfe from the Big George coal, primarily in the All Night Creek unit of the Powder River Basin. The company said that Rocky Mountain natural gas reserves represent 99% of the reserve base.

As of year-end 2001, the company said it controlled approximately 527,000 net acres, the largest coal bed methane (CBM) acreage position in the Powder River Basin. During the year, Western Gas drilled 819 gross CBM wells and achieved its year-end goal of 107 MMcf/d of net CBM production (270 MMcf/d gross). Production includes early contributions from the Big George coal [formation in Wyoming’s Powder River Basin], which is currently producing 6.1 MMcf/d from the All Night Creek unit. The Powder River Basin CBM project is expected to provide significant growth in both upstream and midstream operations.

The company also participated in 37 gross wells in the Pinedale Anticline and prolific Jonah Field in southwest Wyoming in addition to drilling two successful wells on its acreage in the Sand Wash Basin in northwest Colorado. Natural gas production volumes from these areas at year-end was approximately 12 MMcf/d net, bringing total company production to 119 MMcf/d at year-end 2001.

“We are very proud to report 31% net production growth and solid reserve additions for 2001, particularly since all of the growth resulted from the drill bit,” said Peter Dea, Western Gas CEO. “We plan to continue our excellent track record in 2002. Based on current drilling plans, we expect to realize a higher growth rate in our net gas production volumes in 2002 compared to last year.”

Looking forward, the company forecasts 2002 capital expenditures of approximately $140 million, primarily for growth and expansion projects in its Rocky Mountain upstream and midstream operations. Due to lower commodity prices, Western Gas said the budget represents a 20% decrease from the estimated $175 million expended in 2001. The Rocky Mountain region will consume $115 million of the 2002 budget with approximately $75 million of that going into Powder River Basin CBM development.

“Our capital budget for 2002 is designed to allow us to continue our full-scale development of CBM reserves in the Powder River Basin and participate in continued drilling on the Pinedale Anticline,” Dea said. “We also plan to selectively expand our gathering and processing systems in the Powder and Green River Basins as well as our core gathering and processing areas in West Texas and Oklahoma. These expansions will capture incremental value between the wellhead and the marketplace for our shareholders.”

Western also reported that it has hedged approximately 58% of its projected equity natural gas volumes and approximately 59% of its estimated equity production of crude, condensate and NGLs for 2002. The company said its 2002 natural gas hedges consist of 80,000 MMbtu/d with an average minimum and maximum price of $3.81 and $5.87 per MMbtu respectively.

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