El Paso Exploration & Production expects to spend between $0.9 billion and $1.3 billion in 2009 depending on market conditions. In order to maximize returns on capital, the allocation between drilling programs and the timing of spending will be reviewed on a continuous basis. El Paso has already reduced the pace of capital activity in the first quarter of 2009 and will adjust it further based on changes to the company's commodity price outlook and the costs of materials and services.
The 2009 drilling program is typified by lower-risk, repeatable programs, with approximately 35 percent of domestic spending in the Arklatex area, which includes the company's Haynesville Shale and Cotton Valley horizontal drilling programs. Internationally, El Paso expects to spend approximately $250 million, with the largest portion devoted to the Camarupim (Bia) development project. Production from Camarupim, which is operated by Petrobras, is expected to begin in the second quarter, reaching 50 to 60 MMcfe/d, net to El Paso's interest, later in the year.
At the current range of capital, the company expects to produce between 725 to 815 million cubic feet equivalent per day (MMcfe/d), including its proportionate interest in Four Star Oil & Gas in 2009. Per-unit cash costs and DD&A rates are expected to be $2.05 - $2.35 per Mcfe and $2.30 - $2.50 per Mcfe, respectively.
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