VENOCO : Reduces 2009 Capital Expenditures
01/12/2009| 07:01am US/Eastern
- 2009 Production Guidance is Unchanged at 19,000 BOE/D
- New Hedges Provide Floors on 100% of 2009 Forecast Production
- Sale of Hastings Complex Proceeding to February 2nd Closing
DENVER, Jan. 12 /PRNewswire-FirstCall/ -- Venoco, Inc. (NYSE: VQ) today announced a further reduction to its capital expenditure plans for 2009 to $150 million dollars; however, 2009 production guidance remains at 19,000 barrels of oil equivalent per day (BOE/d) The company also announced that it has restructured its hedging arrangements to secure floors on 100% of 2009 forecast production, and floors on over 80% of 2010 anticipated production volumes.
"We have been successful in locking in new floors covering 100% of our 2009 forecast production. Our new weighted average floor prices for 2009 forecast production is $54.06 per barrel and $6.92 per Mcf," said Tim Marquez, Chairman and CEO.
"On the Hastings sale to Denbury, we were pleased with the year-end bump in prices, but are still waiting on the final reserve report to calculate the sale price," Mr. Marquez continued. "We still have the option to take a volumetric production payment, but barring any sudden changes in the commodities and financial markets, we anticipate taking a cash payment to enhance our liquidity."
The sale is scheduled to close on February 2, 2009. After the sale, Venoco will retain a 2% overriding royalty interest in the Hastings Complex and will back in to a 22.3% working interest once Denbury reaches payout from its investment in a CO2 flood of the complex. The potential net reserves to Venoco from the CO2 flood and back-in working interest are estimated to be 15 to 30 million barrels.
The sale of the Hastings Complex is expected to reduce the company's net debt by more than $150 million. "We are approaching this year with caution regarding the financial markets and are committed to managing our operating costs and capital expenditures to maintain our flexibility," said Tim Ficker, CFO. "The floors we added give us a great deal of assurance that we will have operating cash flow to sustain an active drilling program in the coming years without having to rely on the capital markets," Mr. Ficker noted.
The company's year-end 2007 reserves for Hastings were 14.4 million barrels of oil equivalent (BOE). Venoco's net production from Hastings for full-year 2008 is estimated to be 2,580 BOE/d.
The company's current debt includes $150 million of Senior Notes due in December 2011, a $500 million Term Loan due in September of 2011 (with the ability to extend the maturity to May 2014 in certain circumstances) and a Revolving Credit agreement due, unless refinanced, in March 2011.
About the Company
Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California and Texas. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates four onshore properties in Southern California, has extensive operations in Northern California's Sacramento Basin and operates eighteen fields in Texas.
Statements made in this news release relating to Venoco's 2009 production, planned capital expenditures and development projects, and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in oil and gas prices, the timing and results of drilling and other development activities, the availability and cost of obtaining drilling equipment and technical personnel, risks associated with the availability of acceptable transportation arrangements and the possibility of unanticipated operational problems, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, and pipeline curtailments by third parties. All forward-looking statements are made only as of the date hereof and the company undertakes no obligation to update any such statement. Further information on risks and uncertainties that may affect the Company's operations and financial performance, and the forward-looking statements made herein, is available in the company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein. The SEC permits oil and gas companies to disclose in their filings with the SEC only proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Estimates of unproved reserves which may potentially be recoverable through additional drilling or recovery techniques are by their nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.
SOURCE Venoco, Inc.