Vintage Provides 2003 Results and Outlines 2004 Plans

Vintage Petroleum reported the results and status of its recent operational activities and plans for 2004. During the fourth quarter 2003, $54 million of the company's total 2003 non-acquisition capital spending of $184 million was spent drilling 43 wells and performing 53 workovers. The company met its target to drill approximately 130 wells and undertook a variety of lower-risk exploitation projects with approximately 67 percent of capital expenditures during 2003. The remaining 33 percent of capital spending was allocated toward potentially higher-impact exploration programs in the United States, Canada and Yemen.

"We are very optimistic about our potential for 2004 production additions from our organic capital spending program and expect average production in the second-half of the year to exceed fourth quarter 2003 production of 6.8 million BOE. Since reinitiating drilling in Argentina in 2003, we've started to see our volumes there on the rise again. Our U.S. exploitation program is likewise meeting with success. From our exploration program, we're looking forward to important up-tics in the next few months as production is initiated from projects in High Island and Yemen. We're working very hard to exceed our production expectations for 2004," said William L. Abernathy, COO.

United States - Exploitation

During 2003, the company participated in the drilling of 31 exploitation wells with an 85 percent success rate and 134 workovers were completed. During 2004, 32 exploitation wells are planned to be drilled and workovers are also planned for about 55 wells during the year, principally in Texas and California.

Fourth quarter drilling activity included eight wells with an 81 percent success rate. In addition, 35 workovers were completed during the quarter. During the quarter, Vintage drilled the State Tract 65-2R well (50 percent working interest), a replacement well for the State Tract 65-2 which went off production in June 2003 due to a mechanical problem. The ST 65-2R has been completed and is testing with a net daily flow rate of 3 to 4 MMcf (8 to 10 MMcf gross) of gas anticipated. In the Darst Creek Field, Texas, Vintage completed five infill horizontal wells (100% working interest) with a combined initial net daily production rate of 730 (837 gross) barrels of oil. Several additional horizontal drilling locations are planned in the Darst Creek and Luling fields for 2004.

Vintage noted that it has spent approximately $2.6 million during the fourth quarter and returned to production 2,800 BOE per day lost due to the California fires in October 2003. The company now estimates that it will complete the remaining repair of fire damage for an additional cost of approximately $3.4 million dollars with volumes from remaining wells planned to be returned to production by the end of the first quarter 2004.

United States - Exploration

During 2003, the company drilled five exploration wells and recorded a success rate of 80 percent. Vintage begins 2004 with the largest inventory of domestic exploration prospects in its history and a capital budget of $38 million. The company is focusing its U.S. exploration efforts on the Gulf Coast, Permian Basin and California.

Vintage is pursuing company-generated Oligocene and Miocene prospects in the Texas Gulf Coast based on 3-D seismic and geochemical surveys. Within these targeted play concepts, the company has acquired leases covering four shallow water prospects. Three wells have been successfully drilled on the Tres prospect, High Island #55-L, which was based on a Miocene gas exploration target coupled with the redevelopment of additional Miocene oil and gas sands. Facility and pipeline construction is underway, with initial daily net production in the range of 10-15 MMcfe (20-30 MMcfe gross) anticipated by mid-year 2004. Vintage is the operator and has a 65 percent working interest in this prospect. Current plans are to commence drilling on the Wesson prospect, Mustang Island #775 by mid-year 2004. The target is a four-way dip anticline with potentially stacked pays at depths from 16,000 to 18,000 feet. Vintage presently owns 100 percent working interest in the Wesson prospect, but anticipates securing partners prior to drilling.

Vintage has an interest in over 19,500 gross acres in the Permian basin encompassing three, multi-well exploration prospects targeting known tight carbonate gas reservoirs. These prospects are predicated on an established play concept which utilizes horizontal drilling and fracture stimulation technology to significantly improve production and economics over the historical results obtained utilizing vertical wellbores. The company recently drilled the Rosehill prospect (Wilbanks 53 #2-H well) in Martin County, Texas, and the Austin prospect (Hannah 17 State #2-H well) in Lea County, New Mexico, with both horizontal wells successfully penetrating the targeted Mississippian formation. The wells are undergoing completion and long-term testing. If successful, additional wells could be drilled on these prospects in 2004. Vintage has a 100 percent working interest in both the Rosehill and Austin prospects.

In California, Vintage is preparing to drill a 12,500 foot oil prospect in the San Joaquin basin. If this prospect is successful, production could commence by mid-year 2004 and multiple offset locations could be drilled before year-end. The company has a 50 percent working interest in this prospect. Further, Vintage plans to spend approximately 15 percent of its domestic exploration budget of $38 million assessing the potential of unconventional resource projects in various locations in the U.S.


During 2003, the company successfully reinitiated its aggressive growth program in Argentina. A total of 67 wells were drilled and 70 workovers were performed during the year with the expanded capital budget. Twenty-two exploitation wells were drilled and completed on several concessions in the San Jorge Basin and the Cuyo Basin during the fourth quarter with a success rate of 100 percent. In addition, 15 workovers were performed during the quarter. Four drilling rigs and seven workover rigs were running during the fourth quarter, reflecting the highest activity level since the company began operations in Argentina. As a result of the revitalized drilling campaign, daily gross operated oil production has now reached 30,000 barrels, the highest level since mid-2002. A new 3-D seismic program covering nearly 63,000 acres was started during the fourth quarter on the Cerro Wenceslao concession and is being continued into the first quarter 2004 with the additional acquisition of over 138,000 acres of seismic on the Cerro Overo, Canadon Leon, Tres Picos and Cerro Wenceslao concessions. The company plans additional production growth in 2004 supported by an increase in Argentina capital spending of 45 percent to $84 million and targets drilling 92 wells. Further, capital is budgeted for the implementation of 4 waterflood projects which are targeted to contribute to production in 2005 and beyond.


During 2003, Vintage participated in the drilling of approximately 31 exploitation and exploration wells in Canada with activity concentrated in the Sturgeon Lake, West Central and Peace River Arch areas of Alberta and the foothills trend in northeastern British Columbia. Exploitation spending for 2004 has been reduced in favor of other opportunities, limiting planned drilling to 15 exploitation wells.

Exploration activity continued in the Cypress area located in the foothills trend of northeastern British Columbia. Two wells targeting Triassic zones were recently drilled, one was successful and is currently awaiting a pipeline connection and the second was deemed to be non-commercial due to a lack of porosity development. Vintage has a 40 percent, non-operated interest in both of these wells. The company also began to evaluate the potential of the deeper Mississippian formation in the Cypress area. Although the first well testing the Mississippian potential was dry, the company remains encouraged about the high impact potential of this deeper horizon.

During 2003, Vintage and its partners acquired 25,200 gross (10,775 net acres) in the Cypress prospect area. Vintage has in its 2004 drilling inventory one Mississippian and five Triassic prospects with total net unrisked reserve potential of 90 Bcfe. Planned 2004 exploration capital expenditures will be similar to 2003 at $13 million. Activity will continue to be focused in the foothills of northeastern British Columbia and the Peace River Arch of Alberta with an anticipated 12 wells to be drilled.

International Exploration

The company is continuing to mature its international programs in Yemen, Italy and Bulgaria. In the S-1 Block in Yemen, the company is preparing to commence drilling the An Nagyah #5 well, an appraisal well on the western side of the An Nagyah structure. Soon to follow will be the An Nagyah #6 development well. Six wells are planned in Yemen in 2004, including one designed to appraise the company's Harmel discovery. Initial production from the An Nagyah wells is anticipated to commence late in the first quarter at a net daily rate of 1,300 (2,500 gross) barrels. About one-third of Yemen's 2004 planned capital expenditures of $27 million will be allocated to drilling with the remainder to the design and construction of processing facilities and a pipeline to transport oil to an existing pipeline for export.

In its Po Valley shallow gas exploration play in Italy, the company continues to work to obtain drilling permits. Depending on the timing of permits, the company anticipates the first of two planned wells could be drilled before mid-year 2004. The play targets shallow gas sands in stratigraphic traps defined by 2-D seismic and a geochemical survey. In addition, 1,575 kilometers of 2-D seismic acquired during 2003 covering the company's Bulgarian Black Sea concession is under interpretation to aid in the detailed mapping of a large structural lead. Upon completion of additional geological and geophysical work, the company expects to secure majority participation by an industry deep water partner to drill and operate this prospect.

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