3TEC Announces 2001 Results
3TEC participated in the drilling of 82 wells in 2001, versus a target of 100 wells. Of those, 65 were producing, 7 were being completed, 7 were dry and 3 were drilling at year-end. 3TEC exited the fourth quarter at an average daily production rate of approximately 85 Mmcfe. Rig availability in the first half of 2001 slowed development drilling, while declining gas prices and unfavorable drilling and completion economics depressed second half activity. These factors contributed to the lower than anticipated activity level and production volumes. Despite this, for the year 3TEC averaged approximately 81 Mmcfe per day, a 21% increase from 2000 production levels.
During the fourth quarter the company completed a new well in the Breton Sound area in the state waters of Louisiana, the 3TEC #4 S/L 14217. It was put on production in December at 15.8 Mmcfe per day, and continues to produce at approximately that level. 3TEC owns a 62% working interest in the well and is the operator. 3TEC initiated drilling of a second well in Breton Sound in late December and it is currently awaiting pipeline connection. Logging results on this well compare favorably to the 3TEC #4 S/L 14217. The company had other drilling activities in south Louisiana at year-end, with results expected during the first quarter of 2002.
3TEC's proved reserves at Dec. 31, 2001 were approximately 264 billion cubic feet of gas equivalent (Bcfe), which was net of 3TEC's successful divestiture program. Natural gas reserves, which comprise 88% of total proved reserves, were 231 billion cubic feet (Bcf) while oil and condensate reserves totaled 5 million barrels (MMbls). 3TEC's proved reserves are 77% proved developed. Approximately 84% of the total proved reserves are located in 3TEC's core operating areas of East and South Texas and the Gulf Coast. Total proved reserves at Dec. 31, 2000 were 238 Bcf of gas and 11 MMbls of oil and condensate, totaling 302 Bcfe.
3TEC has budgeted $45 to $63 million for drilling and completion expenditures in 2002, depending on the price of gas and drilling and completion costs. In general the $45 to $63 million range is a function of average cash market gas prices of $2.50 to $3.00 for the year. The 2002 budget will be 75% developmental and 25% exploratory, with approximately 36% allocated to East Texas, 36% to the Gulf Coast and 28% to South Texas.