Venoco, Inc. announced that it expects its 2009 production to average between 20,500 to 21,500 barrels of oil equivalent per day, an organic growth rate of 10-15% relative to 2008 after giving pro forma effect to the sale of the company’s Hastings complex, which is expected to close in the first quarter. The company’s 2009 exploration, exploitation and development capital expenditures are expected to be $400 million. Contingent upon the receipt of approvals for Venoco’s South Ellwood development plan, up to an additional $75 million could be deployed in 2009.
“We have a solid inventory of projects to develop this year, which we expect will translate into significant production growth from each of our operating areas,” commented Tim Marquez, Venoco’s Chairman and CEO.
“In the Sacramento Basin we will be adding two more drilling rigs to our current five rigs and continuing the hydraulic fracturing program we began in late 2007. In Texas, where we’ll close on the sale of the Hastings complex in the first quarter, we expect to increase our efforts in the Manvel field where we’ll utilize the experience we’ve gained in Hastings to enhance the field. And, our efforts in Southern California will be aimed at the West Montalvo field, where we expect to drill 6 onshore development wells, and the Sockeye field where we expect to continue our waterflood project,” continued Mr. Marquez.
“In anticipation of regulatory approvals related to our South Ellwood full-field development project, we are initiating expenditures on certain long-lead items. Once approvals are received, we will increase capital spending on the development effort,” noted Mr. Marquez.
Approximately $200 million (50%) of the capital budget will be deployed in the Sacramento Basin, $70 million (17%) in Southern California and $20 million (5%) in Texas, with $75 million (19%) going toward exploration projects in a variety of areas and the remaining $35 million (9%) toward leasehold and capitalized G&A. By category, $251 million (63%) will be spent on development wells and wellwork, $75 million (19%) on exploration, $39 million (9%) on facilities and other, with the balance toward leasehold and capitalized G&A.
“We plan to manage our financial requirements for the 2009 capital budget using cash flow from operations and a portion of the proceeds from the sale of the Hastings complex,” explained Tim Ficker, CFO.
General & Administrative and Lease Operating Expenses
2009 General & Administrative expenses are expected to average $4.25 per barrel of oil equivalent (BOE) and Lease Operating Expenses are expected to be $15.00 per BOE.
“Solid execution of our growth plans in 2008 has translated into a very successful year for Venoco,” Mr. Marquez continued. “Venoco has increased production as planned during the year while laying the foundation for future growth.”
Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California and Texas. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates four onshore properties in Southern California, has extensive operations in Northern California’s Sacramento Basin and operates eighteen fields in Texas.