Vero Energy 2008 Capital Budget Makes Room for 38% Production Growth
Vero Energy currently has three operated drilling rigs working and will therefore have a very active first quarter. Plans for the first quarter are to drill 10-12 (7.3-8.8 net) wells including 4 (2.9 net) horizontal wells. With the exit production of 5,700 boed, the current optimization process underway, wells currently waiting to be put into production and a quick start to the new year with regards to the drilling program, the Company is increasing its previous average guidance for 2008 to 6,000-6,400 boed from 5,800-6,200 boed. Vero's Board of Directors has approved an initial capital budget of $50 million for 2008, which is less than estimated cash flow. Capital spending for 2008 will be focused primarily on drilling as less facility infrastructure is expected to be needed due to the extensive facility work done in 2007.
The 2008 drilling program is currently anticipated to consist of approximately 30-32 (22-23.5 net) wells, which are highlighted by higher working interests than those participated in by Vero in the past. With budgeted 2008 drilling rates, the Company has over three years of drilling inventory.
Vero is currently forecasting an estimated fourth quarter, 2008 net debt to cash flow ratio of less than one while providing yearly average production growth of 38%. The capital budget will be continually reviewed and changes made on a quarterly basis as circumstances dictate. Vero believes that 2008 will provide a number of opportunities which fit with the management teams' philosophy of building a company with a long term view and strategy. Vero will continue to manage its business in a prudent and efficient manner and this will ensure that profitable growth and sustainability occurs for its shareholders.