Burlington Resources Announces 2005 Capital Budget

Burlington Resources announced plans for capital investments of approximately $2.0 billion during 2005, compared to estimated expenditures of $1.8 billion during 2004, which included approximately $85 million in capital for acquisitions.

The 2005 budget anticipates higher activity levels in all major operating areas and includes adjustments for expected industry service cost increases and shifts in foreign currency exchange rates, particularly the rising strength of the Canadian dollar. Geographically, 88 percent of the budget is planned for investment in the U.S. and Canada, continuing the company's strategic focus on North America. The North American portion of the budget includes an allocation of approximately $170 million for discretionary land acquisitions and drilling associated with potential unconventional resource exploration success, most notably in the Bossier trend in East Texas and the Bakken Shale trend in the Williston Basin. Twelve percent of next year's capital is allocated to the international sector. On a functional basis, 85 percent of the budget is allocated to development and extension projects, and 15 percent to exploration.

"Our base capital program, adjusted for the service cost and currency exchange impacts, is up only modestly," said Bobby Shackouls, chairman, president and chief executive officer. "This reflects Burlington's larger scale, while honoring our commitment to invest consistently throughout price cycles, which we believe is essential for maintaining our efficiency."

Burlington's board of directors also restored a $1 billion share repurchase authorization. This is the third time since late 2000 that the board has authorized a share repurchase program. Since that date, the company has repurchased 60.6 million shares, nearly 15 percent of its total shares outstanding, at an average cost of $25.20 per share, all on a post-stock-split basis. Thus far during 2004, as of December 7, Burlington has repurchased 13.3 million shares, representing more than 3 percent of shares outstanding, at an average cost of $35.80 per share, on a post-stock-split basis.

"The share repurchase program is an integral part of our continuing effort to add value for shareholders," said Steve Shapiro, executive vice president and chief financial officer. "It supplements our dividend while serving as a value play for the company, since we are in effect repurchasing reserves in the ground at prices lower than the industry's average replacement costs, and lower than the equivalent cost of acquisitions we've seen in the marketplace this year."

The company expects to fund both the capital investment and share repurchase programs from internally generated cash flow.

Burlington also estimates that during 2004 it will replace over 115 percent of its production with new reserves at an average cost of $1.35-to-$1.45 per thousand cubic feet of natural gas equivalent (Mcfe). If adjusted for the service cost and currency exchange impacts, this performance would be comparable to the company's previous three-year average replacement cost of $1.22 per Mcfe. Reserve replacement cost is defined as oil and gas capital costs incurred, including acquisition costs, divided by the sum of reserve extensions, discoveries and additions, purchased reserves in place and revisions.

"This favorable reserve replacement record and cost performance further confirms the quality of our opportunity portfolio," said Randy Limbacher, executive vice president and chief operating officer. "We've achieved Basin Excellence in a number of areas that offer long-term, repeatable development programs, and we look forward to future operational success."

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