BR Announces Preliminary Estimates of Year-End 1999 Reserves.HOUSTON--(BUSINESS WIRE)--Dec. 16, 1999-- Burlington Resources Burlington Resources, is an American oil and gas company. Their headquarters are in Houston, Texas. Based in Houston, Texas, BR has major offices located in Calgary, London, Farmington, Midland and Fort Worth. Inc. (NYSE NYSE See: New York Stock Exchange :BR) ("BR") today announced that it expected to replace approximately 140% of its 1999 worldwide oil and gas production at an average reserve replacement cost of approximately $0.72 per thousand cubic feet of natural gas equivalent (MCFE MCFE MATLAB Central File Exchange ). The Company said its proved oil and gas reserves as of year-end 1999 are expected to exceed 10.2 trillion cubic feet of natural gas equivalent (TCFE Tcfe Trillion Cubic Feet Equivalents TCFE Transportation Center, Fort Eustis, Virginia TCFE Tangential Continuous Finite Element ), approximately 4% above year-end 1998 totals. Reserves added through extensions and discoveries, or "drill bit" additions, are expected to total over 1,250 billion cubic feet of natural gas reserves (BCFE BCFE Boundary Committee for England BCFE Ballyfermot College of Further Education (Dublin, Ireland) BCFE Board Certified Forensic Examiner Bcfe Billions of Cubic Feet Equivalent (Per Day; Gas Exploration) ); reserves added through acquisitions are estimated at 200 BCFE; and net negative reserve revisions are expected to total 140 BCFE. BR indicated that the estimated year-end reserve balances for both 1999 and 1998 include the reserves of Poco po·co adv. Music To a slight degree or amount; somewhat. Used chiefly as a direction. [Italian, from Latin paucus; see pau-1 in Indo-European roots.] Petroleums Ltd. ("Poco"), which was acquired by BR in a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. transaction in November of 1999. Production for the combined company is expected to total approximately 925 BCFE for 1999. BR said that its reserve revisions include performance related downward adjustments associated with certain properties located on the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east Shelf and in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. . These adjustments were necessitated by accelerating decline on the Gulf of Mexico Shelf properties and poorer than expected waterflood response on a secondary recovery project in West Texas. The Company indicated that it would record a one-time, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $225 million (pretax) in the fourth quarter of 1999 to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the affected properties in accordance with Statement of Financial Accounting Standards No. 121. The Company also indicated that fourth quarter 1999 results would include a one-time charge for costs associated with the Poco acquisition totaling $40 million (pretax). BR's total oil and gas capital expenditures for 1999 are estimated at $940 million. Exclusive of acquisitions, the 1999 internal oil and gas capital expenditures are estimated to be approximately $800 million, down 40% from the comparable total for 1998. Reserve replacement costs (which include the effect of reserve revisions) are expected to average approximately $0.72 per MCFE, with finding and development costs per MCFE (which exclude acquisitions) averaging a similar amount. BR reported that proved reserve acquisitions during 1999 totaled approximately 200 BCFE at a cost of $135 million, or $0.68/MCFE. On a standalone basis, BR acquired 140 BCFE of proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. at an average cost of $0.50/MCFE, while Poco acquired 60 BCFE at an average cost of approximately $1.10/MCFE. These acquisitions augmented BR's reserve, land and infrastructure positions in key core operating areas. BR indicated that, excluding the results of Poco's operations, net reserves added from all sources are expected to total 1,100 BCFE, resulting in a reserve replacement ratio of approximately 150%. Reserves added through extensions and discoveries, or "drill bit" additions, are expected to total 1,060 BCFE; reserves added through acquisitions totaled 140 BCFE; and net negative reserve revisions are expected to total approximately 90 BCFE. Reserve replacement costs (which include the effect of reserve revisions) for BR on a standalone basis are expected to average $0.60 per MCFE, with finding and development costs per MCFE (which exclude acquisitions) also averaging $0.60 per MCFE. Bobby Shackouls, Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of BR said, "We are very pleased with our overall operating results in 1999. With our high-graded investment program, we were able to reduce our internal oil and gas capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by 40% in comparison to 1998 while improving our reserve replacement performance substantially. Our finding and development costs are significantly below our average for the last several years. This is clear evidence that our fiscal discipline aimed at improving financial returns on the capital we invest is working. "Undoubtedly, the downward reserve revisions associated with our Gulf of Mexico Shelf operations were, in part, related to our decision to scale back investments there. However, the steeper than anticipated declines that we have continued to experience on the Shelf have reinforced our view that we made the right decision in redirecting that capital to higher return projects with lasting value creation prospects. We believe that the impact of future natural production declines in this area will be less than we have experienced this year, and will be more than offset by production growth elsewhere in our operations. "We are pleased to see the long-term value generating projects which were funded in our 1999 program begin to bear fruit. We brought East Irish Sea Irish Sea, arm of the Atlantic Ocean, c.40,000 sq mi (103,600 sq km), 130 mi (209 km) long and up to c.140 mi (230 km) wide, lying between Ireland and Great Britain. It is connected with the Atlantic by the North Channel and (on the south) by St. George's Channel. production onstream ahead of schedule, we again achieved record production in the San Juan Basin The San Juan Basin is a drainage basin and geologic structural basin in the Four Corners region of the Southwestern United States; its main portion covers around 4,600 square miles, encompassing much of northwestern New Mexico, northeastern Arizona, and parts of Colorado and Utah. , we expanded our Madden mad·den v. mad·dened, mad·den·ing, mad·dens v.tr. 1. To make angry; irritate. 2. To drive insane. v.intr. To become infuriated. field operations substantially and we made major strides toward first production in Algeria. Our financial strength allowed us to take advantage of several value-added property acquisition opportunities that have solidified our position in several core areas. Finally, with the Poco acquisition, we have expanded our company's growth potential significantly in an area which allows us to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. some of our existing organizational competencies." Schedule is attached. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the Company's periodic reports filed with the Securities and Exchange Commission.
Burlington Resources Inc.
PRELIMINARY
Estimated Proved Reserves
BCFE
------------------------------
BR BR Canada(a) Total
----- ------------ -----
December 31, 1998 8,020 1,855 9,875
Revisions of previous
estimates (90) (50) (140)
Extensions, discoveries
and other additions 1,060 190 1,250
Production (730) (195) (925)
Purchases of reserves
in place 140 60 200
Sales of reserves in place -- (10) (10)
------- ------- -------
December 31, 1999 8,400 1,850 10,250
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Estimated Costs Incurred
(In Millions) BR BR Canada(a) Total
------ ----------- -----
Oil and Gas
Exploration $180 $85 $265
Development 405 135 540
Reserve Acquisitions 70 65 135
------ ------ ------
Year Ended December 31, 1999 $655 $285 $940
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(a) Parent Company of Poco Petroleums Ltd.
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