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Western Gas to Spend 30% More to Expand CBM Projects in Rockies
Natural gas explorer Western Gas Resources Inc. projected Thursday that its total net production this year will increase to an average of 146 MMcfe/d, or 10% more than 2002. The company plans to spend 30% more for expansion projects this year, with most directed toward coalbed methane (CBM) growth projects in the Powder River and Greater Green River basins.
The Denver-based company said that its fourth quarter profit was up 43% because of higher gas prices. In the final quarter, net income was $15.4 million (37 cents/share), up from $10.8 million (22 cents) for 4Q01. Revenue jumped to $645.6 million in the quarter, up from $596.2 million a year earlier.
Western Gas plans to spend $182.3 million this year, mainly for growth and expansion projects in its Rocky Mountain upstream and midstream operations. Natural gas production from Powder River CBM development is expected to average approximately 126 MMcf/d net, while volumes from activities in the Greater Green River are expected to average 20 MMcfe/d net in 2003.
In December 2002, net CBM production averaged 126 MMcf/d, excluding prior-period revisions for third-party operated production, but declined during January 2003 to an average of 122 MMcf/d. Average net production for the first half of 2003 is expected to be similar to December 2002, with the net increases in the second half and an exit rate averaging 132 MMcf/d. Western Gas said several factors accounted for the recent hiatus in otherwise steep production growth, including operational and permitting delays, Hoe Creek under-performance and the timing of an environmental impact statement.
Approximately 70% of the company’s gas production is sold into the Mid-Continent market with the remainder in the Rocky Mountain region. Western Gas said it expects to have virtually no net exposure to Rockies prices in 2003 for its equity production because of its transportation contracts, equity hedges and derivative contracts for regional basis differences.
Gas throughput volumes at Western Gas facilities are expected to average approximately 1.3 Bcf/d, while plant sales are forecast to average about 560 MMcf/d. Approximately 50% of plant gas is sold in the Rockies, while 25% is sold in each of the Mid-Continent and Permian Basin areas. Marketed natural gas volumes (which include equity and third-party gas) are expected to be approximately 2.0 Bcf/d.
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