Vintage Petroleum punished by Canadian reserve write-down

Gary Park

Petroleum News Calgary correspondent

Vintage Petroleum has joined the lengthening list of companies to make a hefty reduction in their Canadian reserves, blaming the write-down for its net loss for 2003 of US$241 million.

The negative Canadian revisions for the Tulsa, Okla.-based company, were 26.3 million barrels of oil equivalent.

It exited 2003 with 3.5 million barrels of oil and 66.7 billion cubic feet of gas, compared with proved reserves a year earlier of 18.5 million barrels and 183 billion cubic feet.

Vintage Chief Operating Officer Bill Abernathy said the company was “disappointed to have to report results such as these, but we felt compelled to do so given the state of our analysis of our fields.”

The company said a critical review of all remaining future activities included in its Canadian proved reserve base was performed to revise or re-validate each of them.

Vintage has shrunk its Canadian E&P budget for 2004 to $22 million from last year’s $38 million.

Canadian oil output declined to 1.25 million barrels in 2003 from 1.83 million in 2002 and gas production was down to 19.15 billion cubic feet from 29.95 billion in 2002.

Vintage made its entry into Canada in 2001 by acquiring Genesis Exploration for C$740 million, paying C$39,000 per barrel of production. Another reserve decrease was reported by Calpine Natural Gas Trust, a subsidiary of Calpine Corporation, which exited 2003 with proved holdings of 15 million boe, a drop of 14 percent from mid-2003.

But the gas trust expects production to average 6,600-7,200 boe per day in 2004, compared with 5,441 boe per day in the 78 days after it began operations last fall. That target includes gas properties acquired for C$40.5 million in the Peace River Arch area of northwestern Alberta.

The trust has budgeted C$10 million for its current properties this year, including C$7 million for drilling and completions.