Petro Resources has revised its 12 month CAPEX forecast to approximately $10.7 million, a reduction from the previously estimated budget of $19.0 million.
The downward revision in capital expenditures is generally driven by a reduction in drilling operations in 2009 by several of the Company's exploration partners and is representative of the overall reduction of drilling activity across the industry. The Company has reduced forecasted capital spending in each of the Company's active exploration areas.
The Company continues drilling operations in the Cinco Terry Field in Crockett County, Texas operated by Approach Resources. The operator has reduced the number of drilling rigs active in the field from four to three. A three drilling rig case should provide for approximately forty eight new wells during 2009. Production continues to increase from the Cinco Terry Field with the Company's net daily production averaging approximately 330 boe per day of natural gas and oil.
Drilling operations also continue on the fourth well in the Surprise Prospect in Nacogdoches County, Texas operated by Goodrich Petroleum. The Surprise Prospect has three previously drilled vertical wells each of which been cased and is currently in or awaiting completion operations. The Company anticipates that two additional wells will be drilled on the Surprise Prospect during 2009.
In the East Chalkley Prospect, the Company continues to produce from the Pine Pasture #2 well that was drilled earlier this year. The Company anticipates continued development of this prospect during 2009 with the drilling of a salt water disposal well and at least one development well. The Pine Pasture #2 well continues to produce at rates in excess of 100 bbls of oil per day and the Company has a 34% working interest in the prospect.
Production from the Williston Basin area of North Dakota continues to average approximately 340 boe/day of oil and natural gas. The Company has reduced its CAPEX budget in the Williston Basin for 2009 and will minimize capital expenditures there until such time as oil prices begin to rebound.
In total, the Company is currently producing approximately 700 boe per day from all areas, representing a 75% increase since the beginning of 2008.
The Company has acquired a 50% working interest in a 300 acre prospect located in Allen Parish, Louisiana known as the LeBlanc Prospect. The prospect is an up-dip oil play supported by 3D seismic. The prospect will be operated by the Company and is scheduled to be drilled during the first half of 2009.
Don Kirkendall, the President of Petro Resources Corporation, commented, "The reduced CAPEX budget and the lowered level of anticipated activity should still allow for the Company to expand its production in 2009; although, not at the pace we had anticipated six months ago. The Company will also continue to look for additional opportunities during this downturn."
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