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Burlington profit soars Big E&P independent says it has reached point of sustainable production growth of 20 percent over three years Ray Tyson Petroleum News Houston Correspondent
Burlington Resources, which used to infuriate analysts with missed production targets, is dancing to a different tune these days.
The first of the major U.S. exploration and production independents to report 2004 first-quarter earnings, Houston, Texas-based Burlington saw its profit jump 32 percent from a year earlier on production that rose 14 percent to set a new quarterly record.
The big North American natural gas producer also said April 21 that it remains on pace to increase overall production 20 percent over three years, beginning this year.
In early March, the company upped its production commitment with a pledge to spend about $5 billion on developing its so-called “base of excellence” properties, located primarily in 10 core producing areas in the Rocky Mountains corridor between New Mexico’s San Juan Basin in the United States and Western Alberta in Canada. The company said it plans to spend $1.5 billion in 2004 alone.
“These outstanding (first quarter) results confirm that we are entering what we believe will be a period of sustainable growth for our company,” said Bobby Shackouls, Burlington’s chief executive officer. First quarter beats analysts’ expectations Burlington reported net income for the first quarter of 2004 of $1.78 per share or $354 million, beating analysts’ expectations of around $1.63 per share. That compared to net income of $1.33 per share or $269 million for the year-ago quarter.
However, 2004 first-quarter net income was down from the $2.04 per share or $404 million earned in the 2003 fourth quarter, due in part to a $59 million, non-cash charge taken in this year’s first quarter.
Net cash provided by operating activities increased to $742 million in 2004 first quarter from $589 million in the prior year’s quarter. Discretionary cash flow increased to $812 million from $721 million during the prior year’s quarter. In addition, at the end of the first quarter the company’s balance sheet included more than $1 billion in cash and cash equivalents, an increase of $270 million during the quarter, Burlington said.
Burlington’s daily production, about 90 percent weighted to natural gas, increased to 2.849 billion cubic feet of gas equivalent in the 2004 first quarter from 2.490 bcf in the 2003 first quarter. The company said it expects to produce 2.606-2.804 bcf of equivalent during this year’s second quarter. North America “performing strongly” “Our North American core properties continue performing strongly, while the major international development programs are ramping up during a very favorable price window,” Shackouls said. Burlington’s 2004 first-quarter production growth included a 4 percent increase in daily natural gas production to 1.953 bcf per day from 1.872 bcf during the prior year’s quarter.
Natural gas liquids output rose 5 percent to 66,900 barrels per day from 63,700 bpd during the prior year’s quarter. However, oil production jumped a whopping 110 percent to 82,400 bpd from 39,300 bpd during the prior year’s quarter. The substantially higher crude volumes were attributed to higher production from the Williston Basin in the United States and from start-ups during 2003 of fields in Algeria, China and elsewhere. Increases in natural gas and NGL production resulted primarily from higher volumes in the Barnett Shale trend in North Texas, and from properties in South Louisiana and Northwestern Europe, Burlington said. During the quarter, the company said it had ongoing development in virtually all its major properties.
Since coming under criticism in the late 1990s for consistently missing its own production goals, Burlington management has restructured the company, divesting costly non-core properties and focusing on its “keeper assets.” While divestitures eliminated about 10 percent of Burlington’s production base, output from these keeper assets also rose 10 percent.
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