Enterra Clarifies 2009 Guidance, May 'Curtail, Modify or Postpone' Budget
Enterra Energy Trust provides clarification on the 2009 guidance issued on November 18, 2008, in light of current commodity prices.
"As communicated to our unitholders in November, our objective is to execute a conservative business plan aimed at replacing our reserve volumes in 2009," said Don Klapko, Enterra's President and CEO. "However, recent erosion in commodity prices may limit our flexibility to pursue the full capital budget that was announced.
It is our intention to fund any capital program from operating cash flow and not to increase debt. We continue to monitor oil and gas prices and exchange rates closely and will curtail, modify or postpone our capital spending and operational plans as necessary to live within our financial means. We are also considering alternative investment opportunities to add to unitholder value in addition to our conventional drilling program."
Enterra was able to achieve its key goal of strengthening it's balance sheet in 2008 through conservative cash management and debt repayment while maintaining a modest capital reinvestment program. For 2009, Enterra's budget and operational approach announced in November was based on commodity pricing assumptions which were similar to forward prices available at the time, and which Enterra considered to be reasonable. Recent commodity prices have been substantially lower than these assumptions; particularly the benchmark West Texas Intermediate oil, which has recently traded below US$40 per barrel compared with Enterra's budget forecast of US$70 per barrel. Enterra will maintain its conservative approach during 2009 and will monitor market circumstances and commodity prices continuously and will adjust its priorities accordingly.