Wyoming gas production to be restored by year-end

Burlington Resources says pipeline problems can be fixed at Madden Field

Petroleum News Houston Staff

Big exploration and production independent Burlington Resources believes it can restore the lion’s share of 310,000 million cubic feet of daily natural gas production at the Madden Field in central Wyoming by the end of the year.

Madden was shutdown in late June for safety reasons after pipeline deformities were found in lines that transport gas to the Lost Cabin Gas Plant. In a July 24 conference call with analysts, Burlington disclosed plans for repairing pipelines, which included the installation of expansion loops, anchor blocks and guides.

Randy Limbacher, Burlington’s chief operating officer, characterized the job as “bricks and mortar type of stuff,” adding that pipeline corrosion was not the problem. However, he declined to say what caused the problem. The job will cost Burlington about $5 million in repairs and another $25-to $30 in pre-tax operating income.

“The bottom line is that we are very encouraged that we can restore a significant amount of production,” Limbacher said, adding that by year-end most production would be restored but in stages as repairs are completed. About 65,000 million cubic feet of daily production was restarted in early July.

Because the Madden shutdown represents just 3 percent of Burlington’s production, it would have little impact on future earnings or production, the company said. Burlington said it expects 2004 production to average 2.650-to 2.850 billion cubic feet of gas equivalent per day compared to expected 2003 output of 2.5-to 2.640 billion cubic feet of equivalent.

In the 2003 second quarter, Burlington said it averaged 2.502 billion cubic feet of gas equivalent versus 2.646 bcf of equivalent for the same period last year, a 5.6 percent decline. Excluding about 303,000 million cubic feet of properties sold in 2002, Burlington’s 2003 second quarter production actually increased 7 percent compared to the 2002 second quarter, the company noted.

Burlington also had an active drilling program in the Lower 48 during 2003 second quarter with 56 rigs, up 115 percent year-over-year and up 16 percent compared to the previous quarter.

Burlington also turned in strong earnings, reporting second quarter net income of $278 million or $1.38 per share. That compared to $268 million or $1.33 per share in the first quarter and $170 million or $0.84 per share for the year-ago period.