Production before royalties is expected to average between 255,000 and 275,000 boe/d. Our conventional investments in Canada and the shallow-water Gulf of Mexico are focussed on maximizing return on investment rather than offsetting production declines. Our Buffalo field, offshore Australia, and our Ejulebe field, offshore Nigeria, will both be fully depleted in 2004.
Production after royalties is anticipated to average between 180,000 and 195,000 boe/d, supported by new, low cost production from Aspen and from Gunnison in the deep-water Gulf of Mexico. "The production volumes we're adding in the deep-water Gulf of Mexico are more valuable than the barrels they are replacing," stated Fischer. "Aspen and Gunnison's low operating costs and royalties are having a dramatic impact on our cash netbacks. Normalizing for prices and exchange rates, our overall corporate netback from our oil and gas production will grow significantly again in 2004."
Better oil and gas margins will partially offset lower assumed commodity prices and a stronger Canadian currency. Assuming oil prices average US$25 per barrel, gas prices average US$4.25 per thousand cubic feet and the exchange rate averages US$0.75 in 2004, we plan to generate cash flow of approximately $1.3 billion, compared to cash flow of $1.9 billion in 2003. However, in a price neutral and exchange rate neutral environment, cash flow would grow by approximately 10% in 2004, similar to the growth experienced in 2003.
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