Southwestern Energy planning 2004 boost in exploration spending

Allen Baker

Petroleum News contributing writer

Southwestern Energy Co. is increasing its capital investment program to $203.5 million this year, up from $180.2 million in 2003. The bulk of the investment — $194 million — will go into the E&P segment.

The 2004 program includes 180 wells and is weighted heavily toward development drilling, according to executives in the Houston-based company. East Texas will get $111 million in drilling money and the Arkoma basin more than $44 million.

“We plan to accelerate development of our Overton field in East Texas by drilling 70 wells” this year, says Harold M. Korell, president of Southwestern Energy. “We also plan to drill over 80 wells and perform 95 workovers in the Arkoma basin.”

Southwestern produced the equivalent of 41.2 billion cubic feet of gas last year, up just a bit from 40.1 bcfe in 2002. It predicts a bigger gain in 2004, in the range of 47.5 to 50 bcfe.

The company added 145 billion cubic feet of equivalent to its reserves in 2003, bringing that total to 503 bcfe. The company replaced 351 percent of 2003 production at a finding and development cost of $1.18 per thousand cubic feet of gas equivalent.

Southwestern had profits of $48.9 million for the year, and predicts 2004 earnings will be in the range of $69 million to $72 million. That estimate is based on New York pricing of $5 per thousand cubic feet of gas and $26 for a barrel of oil.

Southwestern ranked 69 in the Petroleum News’ Top 70 report for North American E&P spending and was number 52 in U.S. expenditures in 2002, when its capital spending totaled $85 million.