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Burlington bullish on Canada CEO Shackouls rates Western Canada as ‘far less mature’ than Lower 48; takes measured approach to Mackenzie Delta; opposes Alaska Highway incentives Gary Park Petroleum News Calgary Correspondent
Burlington Resources is moving Canada up its priority list, going against the prevailing wisdom that the Western Canada Sedimentary Basin is a fading opportunity.
Bobby Shackouls, chairman and chief executive officer of the Houston-based independent, said May 13 that Canada is a “far less mature oil and gas province than the Lower 48.”
Bullish about his firm’s prospects in Alberta, British Columbia and the Mackenzie Delta, he told reporters after meeting North American analysts in Calgary that “the gas is there.”
The challenge, he said, is to apply the right technology and skills to get the economics “to the point that getting (the gas) out of the ground makes for good business.”
Already Canada’s third largest gas producer after spending C$6.3 billion over four years taking over Poco Petroleums and Canadian Hunter Exploration along with some Alberta gas assets of Atco, Burlington is increasing its spending to achieve growth of 5 percent to 8 percent a year even without further purchases.
For the first quarter, when it spent 46 percent of its 2003 budget of C$600 million and drilled more than 300 wells as operator and 50 as a partner, the company raised daily production to 852 million cubic feet of natural gas, 28,000 barrels of natural gas liquids and 5,100 barrels of oil.
In the opening quarter of 2002, output averaged 790 million cubic feet of gas, 28,900 barrels if liquids and 11,300 barrels of oil. Forty percent of volume from Western Canada Combined Canadian volumes averaged 1.05 billion cubic feet equivalent per day, a gain of 2 percent from a year earlier, meaning that 40 percent of Burlington’s total volumes came from Western Canada.
Exiting 2002, Burlington held Canadian reserves of 2.29 trillion cubic feet of gas — after gaining 341 bcf from the drill bit and 268 bcf through purchases — making up 29 percent of its worldwide proved reserves.
Its oil reserves dwindled to 14.4 million barrels, largely following the sale of 43.3 million barrels, but gas liquids climbed to 59.8 million barrels from 47.7 million barrels.
Chief Operating Officer Randy Limbacher told a conference call April 24 that Burlington is “very pleased with the performance of these assets and are continuing to realize appreciable growth in these properties.”
Its confidence in prospects north of the 49th parallel was reflected in first-quarter land buying, when Burlington Resources Canada spent C$11.32 million on 61,650 acres — 42,130 acres in Alberta and 19,520 acres in British Columbia.
Of those buying land under their own name, Burlington topped the list, although brokers operating on behalf of unidentified clients led the way, with Scott Land & Leasing spending C$47.07 million for 448,255 acres.
Shackouls said further acquisitions are possible by his company, although a deal would have to offer a “competitive advantage ... and be accretive to value creation.” Mackenzie Delta also of interest In addition to Burlington’s many prospects in Alberta and British Columbia, the Mackenzie Delta is attracting strong company interest, boosted by last month’s North Langley K-30 commercial find with farm-in partners Chevron Canada Resources and BP Canada Energy.
Shackouls expects another one or two wells will be drilled in 2004, but spending will be cautious until a Mackenzie Valley pipeline moves closer to reality.
He said Burlington hopes to gain “enough data to make appropriate decisions” without having “a lot of stagnant capital that we can’t get a return on.”
Shackouls was emphatically opposed to any U.S. government incentives to build an Alaska Highway pipeline, arguing that the market should “determine both the price and the route” of North Slope gas.
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