Mariner Energy announced that its Board of Directors has approved a 2009 capital budget for exploration and development expenditures of $431 million, approximately 70% less than estimated 2008 total capital expenditures.
For the Gulf of Mexico, the budget includes the start-up of production at new fields and a diverse exploration program testing several high-potential prospects. Capital spending in the Permian Basin will focus on the delineation of recent discoveries and a modest continuation of infill development drilling activities. The budget, which is based on oil and natural gas prices of $55/bbl and $6/MMbtu, respectively, may be adjusted based upon exploration success and changes in commodity prices and industry costs.
Scott D. Josey, Chairman, Chief Executive Officer, and President of Mariner Energy said, "Despite a major reduction in our capital program and a challenging operating environment, we believe it is extraordinary that we expect to deliver production growth of approximately 20% and generate significant excess cash flow. Since we operate most of our properties and have minimal leasehold commitments in 2009, we have discretion over most of our capital spending for the year. Given current market conditions, we have elected to conserve capital, without sacrificing growth. I believe the company is well positioned to capitalize on opportunities that may materialize."
Mariner's performance guidance for 2009 is listed below. Factors that could materially affect the company's actual results are noted in the forward-looking statements section of this release.
Production: Mariner estimates that its full-year 2009 production will range from 135 Bcfe (billion cubic feet of natural gas equivalents) to 150 Bcfe.
Capital Expenditures: Mariner's 2009 capital program includes approximately 14 wells offshore (12 exploration and 2 development) and 30 wells onshore. The program is summarized in the table below. These amounts exclude hurricane-related expenses that the company plans to submit for insurance reimbursement and acquisitions.
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