Canadian assets to claim half of Burlington’s spending

Gary Park

Petroleum News Calgary correspondent

Canadian development and exploration will consume more than half of Burlington Resources’ US$5 billion capital budget over the next three years, executives told a conference call.

Of the US$2.3 billion earmarked for Canada, 80 percent will go to development work and the rest to exploration, with the primary focus on natural gas and gas liquids.

Augmenting Burlington’s activities, $10.6 million will be spent on coalbed methane wells in Alberta over the next two years.

The final spending could vary if the Canadian dollar continues to rise against its U.S. counterpart.

The company has 2.8 trillion cubic feet of equivalent of proven reserves in Canada, or almost one-quarter of its total holdings, and has 2 tcf equivalent of drilling inventory in Canada. It raised output in Canada by 5 percent last year on a “reported basis.”

The drilling target for the Deep basin area is 225 wells this year, up from 200 in 2003, with the objective of producing 330 million cubic feet per day from 1.1 million net acres and an average 65 percent working interest in wells.

For the Ring Border region straddling the northern British Columbia-Alberta border, Burlington has 550,000 net acres and an average 75 percent working interest. It is aiming for 70 wells this year and daily production of 70 million cubic feet equivalent.

Burlington Chief Financial Officer Steve Shapiro said the company does not believe gas prices above $5 per thousand cubic feet or below $4 are sustainable for long periods because of either demand destruction or the industry’s ability to maintain supply.

He forecast that power generation, home heating and cooling will claim the largest chunk of gas demand.