Remington Oil & Gas Increases Capital Budget
Remington Oil and Gas Corporation has increased its 2002 capital budget to $93 MM from $75 MM. The increased budget primarily reflects new development expenditures associated with recent exploratory successes. These expenditures will increase from $20 MM to $43 MM for completions and associated facilities at West Cameron 347, Eugene Island 148, and Eugene Island 397 plus other planned development expenditures. The exploration budget will be increased to $46 MM from $36 MM to reflect a higher working interest in certain wells and an increased activity level for the second half of the year. The lease and property acquisition budget will be reduced to $4 MM from the original $18 MM. We budgeted acquiring up to a 25% working interest in South Pass 86 in anticipation of being offered the preferential rights afforded to us in the Operating Agreement. However, the seller has informed us that it does not intend to offer this interest to us. This revised budget will be funded principally from our available cash flow and available borrowing capacity under the company's credit facility.
Production for the second quarter was 7.6 Bcfe, 3% above the second quarter of 2001 and 9% over the first quarter of 2002. We are lowering our 2002 production forecast from 35 Bcfe to between 32-34 Bcfe. Our original forecast did not anticipate the full impact of the weather delays, production start-up problems and pipeline interruptions for several of our fields. We also assumed the acquisition of all or part of the working interest at South Pass 86 would more than offset the production sold in South Texas earlier this year.
James A. Watt, President and Chief Executive Officer stated, "Although we have encountered numerous delays in start-up production from new discoveries, we still anticipate a significant increase in production volumes over the prior year. We have a very active exploratory drilling program for the second half of the year with significant new reserve exposure. Our increased capital program is well within our available cash flow and borrowing capacity."