Individual projects that comprise the $40 million capital expenditure budget will be selected from the Company's large inventory of projects based on availability of drilling rigs and service equipment. Every project in inventory is located on existing leasehold in Texas and Wyoming and considered development in nature, with the vast majority being 100% owned and operated by the Company. Abraxas plans to fund the 2006 capital expenditure budget out of cash flow and availability under its revolving credit facility.
"Even though we remain in a tight environment in terms of available rigs and related services, we are optimistic about our ability to spend our 2006 capital expenditure budget of $40 million, a 25% increase over the 2005 budget. We will begin the year utilizing our own workover rigs for re-entry and re-completion projects, primarily in the Delaware Basin of West Texas, while we secure larger rigs for grass roots and deeper projects. As the selected projects are successfully completed and placed on-line, we anticipate a growing production profile in line with our guidance," commented Bob Watson, President and CEO.
Abraxas further provided the following operational and financial guidance for 2006: Production Annual 7.5 - 8.5 Bcfe Exit Rate (per day) 22 - 24 MMcfe Differentials off NYMEX Oil $ 1.00 Gas 5% Production Taxes 10% of revenue Direct Lease Operating Expenses (LOE) $ 1.10 per Mcfe General & Administrative (G&A) $ 0.55 per Mcfe Interest $ 2.00 per Mcfe Depreciation, Depletion & Amortization (D/D/A) $ 1.30 per Mcfe (The above guidance does not include non-cash and extraordinary items, including, but not limited to, stock-based compensation, stock option expensing or bonuses.)
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