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Tom Brown emerging from price doldrums Seeking 14 % production growth, excluding Matador acquisition Petroleum News Staff-Houston
Denver-based independent Tom Brown says it has broken the stranglehold of last year’s depressed natural gas prices in the Rocky Mountains region and is now poised for dramatic growth on a more diversified production and exploration base.
Tom Brown reported Aug. 7 that its 2003 second-quarter production of 224,500 million cubic feet per day of gas equivalent dropped 8 percent from the prior year’s quarter. The drop was attributed largely to a forced cut back in drilling last year due to exceptionally low gas prices in the Rockies and to seasonal restrictions that slowed drilling startups in this year’s first quarter.
With stronger prices across the board and a key third-quarter acquisition that broadens the company’s property base, Tom Brown said it stepped up its drilling program for this year’s second half. In the third quarter, the company said it expects to boost output by 30 percent over the second quarter to 292,000 million cubic feet per day of equivalent. Production expected to increase “We’re climbing out of the momentum hold that was seducing us because of the extremely low prices in the Rockies last year,” Jim Lightner, Tom Brown’s chief executive officer, said in a conference call with analysts.
He said Tom Brown’s production should increase about 14 percent from this year’s first quarter through the fourth quarter, excluding production and reserves from its $388-million acquisition of Dallas-based independent Matador Petroleum.
The Matador deal, closed June 27, gives Tom Brown an additional 61,000 million cubic feet per day of equivalent and also increases company reserves by 269 billion cubic feet to 1.02 trillion cubic feet. Matador property is situated primarily in the East Texas Basin and the Permian Basin of West Texas and southeastern New Mexico.
“We now have six or seven strong core areas,” Lightner said. “When one starts to suffer or a play is not working or we can’t get a permit, the others carry it along. What we are hoping for is steady growth.”
Lightner noted that because of environmental issues and restrictions, it could take five months to acquire a drilling permit in some areas of the U.S. Rockies. “In East Texas we can get a permit in two weeks,” he said.
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