The balance of the budget increase, excluding the acquisitions, is a $9 million increase in the drilling budget as a result of an increase in planned wells from 21 to 27 wells in the original budget to 33 to 38 wells in the current forecast.
Since the end of the second quarter, Edge has participated in the drilling of six wells, all successful, which brings the year to date total to 23 wells with a success rate of 87%. Currently, Edge is drilling two wells. They are the ChevronTexaco - Lopez No. 9 (Edge W.I. 31%) and the Westech Federal 16-29 (Edge W.I. 50%). For the remainder of 2003, Edge expects to continue its drilling programs at O'Connor Ranch East, Encinitas, and Gato Creek, all of which have had wells added to the original program. Edge also expects to continue the recently initiated drilling program at Bayhorse and to initiate the drilling program in its recently announced new venture in Southeast New Mexico.
John Elias, Edge's Chairman, President and CEO, reports, "We believe that our strong financial condition and growing cash flow have provided the foundation for a significant increase in our planned activity level and that this is an excellent time to take advantage of moderate service costs and strong commodity prices. Our recently announced exploration joint venture in Southeast New Mexico adds significant potential, which we expect will begin to impact our production volumes and cash flow next year. I expect it will be a major contribution to our activity level in 2004. The increased activity as a result of our growing capital budget and the expected closing of our planned acquisitions is expected to impact our production volumes late in 2003. As previously reported, we continue to project 2003 quarter over quarter production growth in excess of 15%. The real impact of our expanded 2003 program will be felt in 2004 where we now expect a year over year production increase in excess of 20%, before the impact of what we hope to be a significant drilling program in 2004."
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