"We added a sixth drilling rig late in the first quarter. By the end of March, our partner, Blue Star Oil & Gas, spudded the long-awaited deep Jurassic well on our Paloma lease, raising the count to seven rigs actively drilling for oil and gas on our Maverick Basin lease block. This is the most activity we have seen on our lease block and it comes at a time when commodity prices are particularly strong."
TXCO participated in 24 wells in the first quarter of 2003, including three re-entries, despite a seasonal moratorium on drilling operations on several leases during January. First-quarter drilling activities resulted in 11 wells successfully completed as producers, five wells in completion phase, five wells shut in pending further evaluation, one well temporarily abandoned pending sidetrack operations, while two wells remained drilling at the end of March.
By comparison, the Company participated in nine wells in the first quarter of 2002. The record number of first-quarter wells targeted multiple productive formations under TXCO's acreage block, including the Glen Rose, San Miguel, Georgetown and Jurassic intervals. The $5.7 million CAPEX increase impacts several budget categories including targeted drilling activities and additional leasehold acquisitions. TXCO continues to target participation in a record 93 gross wells on its Maverick Basin acreage this year.
"We anticipate 2003 continuing with similar activity levels as the first three months," added Sigmon. "Provided our cash flow and borrowing base keep pace with our increased drilling program, this year will set records for exploration and development activity as we continue to aggressively and successfully drill our Maverick Basin acreage."
"TXCO expects new oil and gas well completions from its ongoing 2003 drilling program will result in overall gas and oil production increases over comparable prior period production levels," Sigmon added.
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