The following estimates are based on current expectations for production, expenses and other parameters resulting from ongoing operations and development budget activities. These statements are forward-looking, as described in the final paragraph of this release, and actual results may differ materially. These estimates do not include derivative fair value gains and losses, stock incentive compensation, the effects of possible future acquisitions or divestitures, or unforeseen events that may occur after this release.
The following table sets forth the Company's estimated range of average daily production by quarter for the remainder of the year:
Q2 Q3 Q4 Natural Gas (Mmcf) 790 - 795 870 - 875 920 - 925 Oil (Mbbl) 17.5 - 18.0 28.0 - 28.5 33.0 - 33.5 NGL (Mbbl) 6.0 - 6.5 6.0 - 6.5 6.0 - 6.5Pricing Differentials
For the remainder of the year, the Company's realized natural gas prices are expected to be $0.40 to $0.50 below the NYMEX Henry Hub price, assuming a $5.00 per Mcf gas price and before consideration of hedging activities. Natural gas liquids prices are expected to be about 55% - 65% of the average NYMEX oil price. The Company's realized oil prices should be about $1.50 to $2.00 below the average NYMEX price, before consideration of hedging activities.
The Company's natural gas hedging positions are unchanged from the positions reported in the 2003 Form 10-K filed and are summarized below:
Futures Contracts Production Mcf NYMEX Period per Day Price May-June 2004 380,000 $ 4.77 July-Dec 2004 400,000 $ 4.77 Jan-Dec 2005 100,000 $ 5.21Expenses
The following table presents the Company's expected expenses per Mcfe for the remainder of 2004 assuming a $5.00 per Mcf NYMEX gas price and a $30.00 per Bbl NYMEX oil price:
Expense ($/Mcfe) Q2 Q3 Q4 Production $0.62 $0.66 $0.67 Taxes, transportation and other 0.43 0.44 0.44 Exploration 0.03 0.03 0.03 Depreciation, depletion and amortization 1.05 1.09 1.11 Accretion of asset retirement obligation 0.02 0.02 0.02 General and administrative 0.19 0.18 0.18 Interest 0.25 0.27 0.28Income Tax
The Company has a 37% effective tax rate, of which up to 30% is expected to be currently payable.
The Board of Directors has also approved a revised 2004 capital budget for development and exploration expenditures of $600 million to provide for activities on properties acquired year-to-date. As originally stated, activities in East Texas and Louisiana will account for $340 million. The San Juan, Raton and Arkoma basins combined will be allocated about $100 million in development funds. Alaska, the Permian Basin and the Hugoton Royalty Trust properties' development plans are expected to total another $35 million, while $25 million will be utilized for exploration events. The budget has increased for year-to-date acquisitions to include $30 million for work in the Barnett Shale, $15 million for activities on the ExxonMobil properties and $15 million for events on ChevronTexaco properties. The remaining $40 million has been allocated to $10 million in facilities additions and $30 million for projected increases in steel prices.
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