Berry Petroleum has announced a 2009 capital budget of $100 million, according to Robert F. Heinemann, president and chief executive officer. At this level of investment in 2009, the Company is targeting production to average approximately 33,500 BOED. Production growth in 2009 will increase 3% over the 2008 estimated annual average.
Heinemann stated, "The 2009 budget was designed to reflect development activity in the current commodity price environment. We expect to spend $25 million to $30 million in East Texas including 2 Haynesville wells, 8 vertical wells and the completion of the 2008 program. The Rockies budget will be between $10 million and $15 million. The remainder of the $100 million will be spent in California on Diatomite development and other high rate of return heavy oil projects. The Diatomite budget will be $30 million to $35 million to drill 50 wells.
"The remaining California capital will be spent on South Midway Sunset drilling and the Poso Creek expansion. The capital program assumes West Texas Intermediate (WTI) crude prices of $47.50/Bbl and Henry Hub (HH) natural gas prices of $5/Mcf. If commodity prices recover back to $75 WTI and $7.00 HH, we have a number of opportunities in our portfolio and we would quickly implement a $200 million capital budget."
David D. Wolf, executive vice president and chief financial officer said, "Based on our commodity price assumptions, we expect discretionary cash flow to be in the $220 to $240 million range. We would expect excess cash flow of over $50 million which will be applied to debt reduction. Based on our reduced capital budget and other initiatives to reduce debt, we expect to remain in compliance with our senior secured credit facility covenants and pay our dividend as usual. Our strong hedge position in 2009 provides greater than $200 million of discretionary cash flow down to $20 WTI and $4.00 HH."
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