Approximately 85 percent of Burlington's 2004 capital budget is allocated for investments in North America, with the vast majority earmarked for natural gas development in the Rocky Mountain fairway in the lower 48 U.S. states and Canada. This compares to the allocation during 2003 of about 75 percent of capital to investments in North America.
Burlington will allocate about 15 percent of its 2004 capital investments to international projects, down from the 2003 allocation of about 25 percent, due to the impending completion of several major development projects. Production has already begun from these projects in Algeria and the South China Sea, and is expected to begin shortly from a project in the East Irish Sea.
Burlington expects to fund the entire 2004 capital investment program through internally generated cash flow.
"We remain very optimistic about our plans and programs. During 2004 we expect to generate production growth at the upper end of our previously announced guidance range of 3-to-8 percent in annual average long-term growth," said Bobby S. Shackouls, chairman, president and chief executive officer. "Meanwhile, the flat 2004 capital budget reflects our philosophy of maintaining consistent spending throughout commodity price cycles, rather than ramping activity up and down. We've proven that this measured approach delivers greater capital efficiency and differential financial returns."
During December, Burlington has hedged additional volumes of expected future natural gas production, primarily for the first quarter of 2004. To date these actions have added approximately 310 million cubic feet per day (MMcfd) of fixed-price contracts at a Henry Hub equivalent price of $6.57 per thousand cubic feet. Total hedged volumes are currently 790 MMcfd for the first quarter of 2004, and 187 MMcfd for the second quarter.
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