Magnum Hunter boosts capital spending by $20 million

Ray Tyson

Rapidly growing independent Magnum Hunter Resources has increased its capital budget for fiscal year 2004 by $20 million from $200 million to $220 million, the company said Oct. 5. Seventy-five percent of the $20 million increase is earmarked for Gulf of Mexico drilling activities on lease blocks acquired from the federal government over the last four years.

“Magnum Hunter and its industry partners have continued to increase their drilling efforts in the GOM this year in an effort to take full advantage of the continuing higher commodity price environment,” the company said.

Magnum Hunter said its 2004 capital budget will be financed entirely from the company’s record high levels of cash flows from operating activities, adding that it plans to use available cash beyond what is required to finance the drilling program to reduce debt. For the current fiscal year, the company said it now plans to spend $125 million in the Gulf of Mexico, $37 million in southeast New Mexico, $28 million in West Texas, $14 million in the Midcontinent and $16 million onshore Gulf Coast.

“Commodity prices received during 2004 from our daily production mix have exceeded all previous estimates,” said Richard Frazier, Magnum Hunter’s chief operating officer. The company currently produces about 250 million cubic feet of gas equivalent per day, he said.