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Western Gas pumps up drilling
Petroleum News-Houston
U.S. Rockies independent Western Gas Resources has loaded up its drilling program for the second half of 2003, believing the government will be more prompt in issuing permits for coalbed methane wells on federal lands in Wyoming’s Powder River Basin.
Delays attributed to a Bureau of Land Management environmental impact statement caused Western Gas to curtail planned drilling activities during the first half of the year. BLM issued its long-awaited record of decision on the EIS in April and began accepting permit applications in May.
Denver, Colo.-based Western Gas participated in 273 coalbed methane wells through July and now plans to take part in a total of 600 to 650 coalbed methane wells in 2003. The company has boosted 2003 capital spending 15 percent to $210.1 million.
Western Gas said it has received about half of the 86 permits issued since the BLM decision took effect. To reach 600 to 650 wells in 2003, however, the federal government would have to issue between 150 to 200 permits by year-end, the company said.
“We’re very optimistic of getting these permits,” Peter Dea, Western Gas’ chief executive officer, said in a conference call Aug. 12. Production forecast lowered Because of permitting delays, growth-minded Western Gas lowered its daily production forecast for 2003 to an average 145,000 million cubic feet of gas equivalent. That would represent an 8 percent increase from 2002 levels versus the 10 percent growth rate the company had anticipated.
However, Dea said the company likely would not return to double-digit growth until later half of 2004 or early 2005, largely because of the de-watering time required for coalbed methane wells. But he indicated that the outcome of pending lawsuits against the EIS process could impact drilling permits down the road.
Nevertheless, “we feel confident that the recent release of permits from the BLM is an indication of a steady stream of permits to follow in the coming months,” Dea said, adding that the company would like to participate in up to 800 wells in 2004. “We (view) 2003 as a transition year,” he said.
Despite permitting delays during the first half of 2003, Western Gas saw its second-quarter natural gas production jump to 149,000 million cubic feet of equivalent, up 24 percent compared to the same period last year. All of the company’s production growth was in the Powder River and Greater Green River basins.
Western Gas also posted net income of $20.9 million or 56 cents per share for the 2003 second quarter, up nearly 52 percent versus the 2002 second quarter. Prices received for natural gas and natural gas liquids increased significantly from a year ago, the company said.
In addition to be being an explorer and producer, Western Gas gathers, processes, transports and markets natural gas. “Our strong performance in the second quarter continues to reflect the benefits of our integrated approach to the natural gas business,” Dea said.
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