Provident Announces 2006 Capital Budget and Operational Guidance.CALGARY, Alberta -- Provident Energy Trust (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :PVE PVE, n an abbreviation for prosthetic valve endocarditis. See endocarditis, infective. .UN)(NYSE NYSE See: New York Stock Exchange :PVX PVX Potato Virus X ) announced today that its Board of Directors has approved a capital expenditure budget for 2006 of just under $140 million. This total includes approximately $55 million for the Canada Oil and Gas Production business (COGP COGP Commission On Government Procurement COGP Crude Oil Generating Plant ), about $51 million for the U.S. Oil and Gas Production business (USOGP), and approximately $33 million for the Midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. Services business. "Our strategy of creating long-term value through diversification has produced viable growth opportunities in all three of our core businesses," said Provident Chief Executive Officer Tom Buchanan
Tom R. Buchanan (also known as Big Tom, born October 30, 1955) was a player on the CBS reality shows and . . "Our 2006 capital budget enables us to realize what we currently view as the best of those opportunities, building on last year's success in adding to our net asset value and long-term sustainability." Provident expects that average production for COGP in 2006 will be in the range of 19,000 to 21,000 barrels of oil equivalent per day. This estimate reflects the non-core property disposition of over 2,000 barrels of oil equivalent per day that Provident completed at the end of the third quarter of 2005. Proceeds from this divestment were used to fund the trust's 2005 capital program. Provident intends to spend a large portion - about 40 percent - of the COGP capital budget on developing shallow gas opportunities in Southwest Saskatchewan, where the trust has recently been enjoying considerable success. This development will include drilling approximately 34 new wells. Provident expects to spend a further 22 percent of the COGP budget on a variety of oil and gas prospects in Southern Alberta Southern Alberta is a region located in the Canadian province of Alberta. As of the year 2004, the region's population was approximately 272,017[1][2]. . Of the 35 wells the trust expects to drill, over half of them will be shallow gas plays. The remaining half will be split between deep gas development and oil projects. 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. in West Central Alberta Central Alberta (also named Alberta's Heartland) is a region located in the Canadian province of Alberta. Central Alberta is the most densely populated rural area in the province. Agriculture and energy make up an important part of the economy. is expected to be about 18 percent of the total COGP budget, while capital spending in the Lloydminster heavy oil area and in Southeast Saskatchewan will each be below 10 percent of the COGP budget. Provident's budget will result in lower average daily COGP production in 2006 than in 2005, due both to the 2005 divestment, as well as to natural declines. Declines in 2005 were higher than expected due to an increase in water production in Provident's heavy oil field, Kitscoty. Oil and water production rates in Kitscoty have now stabilized. Provident expects its other Canadian properties to experience production decline rates typical of those found in the Western Canada
Western Canada, commonly referred to as the West Sedimentary Basin The term sedimentary basin is used to refer to any geographical feature exhibiting subsidence and consequent infilling by sedimentation. As the sediments are buried, they are subjected to increasing pressure and begin the process of lithification. . As such, COGP anticipates a net production decline for 2006 of about 19 percent. Provident expects the 2006 average daily production for USOGP to be in the range of 7,500 to 8,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. . Of the total $51 million USOGP capital budget, approximately 18 percent is intended for drilling eight new wells that will be spread among the Wyoming, Santa Fe Springs Santa Fe Springs, city (1990 pop. 15,520), Los Angeles co., SW Calif., inc. 1957. The city lies in an oil and natural gas region and has diversified manufacturing. and West Pico areas. In West Pico, the focus for 2006 will be on increasing water injection to boost the field pressure in support of future production. A further 17 percent of the USOGP budget is planned to support optimization projects on more than 60 existing wells. Provident expects that maintenance and facility work will account for 27 percent of USOGP budget, and that corporate capital will be in the range of six percent. In addition to the above spending in existing core areas, BreitBurn intends to spend $16 million, or 31 percent of the USOGP budget, on a 30-well thermal pilot project in a previously non-productive formation of the Orcutt oil field. BreitBurn began initial work on this pilot project in 2005, and will begin its installation in the second half of 2006. It is expected that the project will begin production in 2007. The 2006 USOGP expenditures will result in a net production increase of seven percent over the 2005 average, after base declines of about eight percent. Most of the U.S. production is in regions with very low decline rates. On a combined corporate basis, Provident expects a net decline rate of approximately 13 percent after capital investment. In the Midstream Services business, the bulk of the capital budget will go toward completing the previously-announced condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. rail offloading and terminalling project at the Redwater redwater red urine; see hemoglobinuria, hematuria, myoglobinuria, phenothiazine, phenolphthalein, xanthorrhoea. redwater fever see babesiosis. Natural Gas Liquids (NGL NGL - A dialect of IGL. ) Processing Facility. The project provides Provident with a fee-based business, and more than 5,000 barrels per day of proprietary capacity. It is tied to a five-year, take-or-pay contract with a major company. Capital expenditure requirements for the new NGL business that Provident acquired in late 2005 are expected to be less than $3 million in 2006. For a trust, one of the great attractions of the acquired assets is that they require very little sustaining capital. The 2004 pro-forma EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. was in the range of $96 million). Provident expects to average at least this EBITDA level over time, although specific annual results will depend on the business environment, and will fluctuate with commodity price cycles. Early in 2006, the strong crude oil price and falling natural gas price have worked in favor of the new NGL business. The focus for the Midstream Services business in 2006 will be to integrate the new and existing operations to develop common systems and processes, and to realize the business potential inherent in combining these two very complementary sets of assets.
Planned Capital Expenditures by Type 2004 2005 2006
($ millions) (Actual) (Expected) (Budget)
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Drilling, Recompletions & Workovers $ 44.1 $ 93.7 $ 73.8
Facilities $ 19.8 $ 24.9 $ 16.9
Land and Seismic $ 8.5 $ 16.1 $ 8.2
Other $ 1.4 $ 3.3 $ 7.0
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Total Oil and Gas Expenditures $ 73.8 $138.0 $105.9
Midstream $ 2.5 $ 18.4 $ 32.7
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Total Consolidated Capital Expenditures $ 76.3 $156.4 $138.6
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Planned Capital Expenditures by Area - Cdn Oil and Gas Operations
($ millions)
Southwest Saskatchewan $ 21.9 $ 37.0 $ 22.2
Southern Alberta $ 14.8 $ 19.4 $ 11.9
West Central Alberta $ 9.5 $ 11.5 $ 9.7
Lloydminster $ 10.2 $ 11.1 $ 4.3
Southeast Saskatchewan $ 3.9 $ 3.4 $ 1.9
Other $ 1.1 $ 2.1 $ 5.0
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Total $ 61.4 $ 84.5 $ 55.0
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Planned Capital Expenditures by Area - U.S. Oil and Gas Operations
($ millions)
Orcutt $ 0.6 $ 8.0 $ 19.6
Wyoming $ - $ 5.6 $ 8.7
West Pico $ 6.9 $ 14.5 $ 6.7
Santa Fe Springs $ 4.6 $ 13.4 $ 6.6
Other $ 0.3 $ 12.0 $ 9.4
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Total $ 12.4 $ 53.5 $ 51.0
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Drilling Activity
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Total (Net Wells) 90 176 133
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Provident's capital budget could be increased by as much as $30 million over the year, depending on operational success and the business environment. There are additional economically-viable projects available in all three of the core businesses, but completing these projects will depend on resource availability as the year progresses. Provident expects to fund over 75 percent of the 2006 capital program through excess cash flow and proceeds from the dividend reinvestment program A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive quarterly dividends directly as cash; instead, the investor's dividends are directly reinvested in . The remainder will be funded through bank debt. "As in prior years, Provident's goal is to offset production decline with a combination of capital spending and accretive acquisitions," said Mr. Buchanan. "We continue to seek value-driven acquisition opportunities within all three of our business units." Provident Energy Trust is a Calgary-based, open-ended energy income trust that owns and manages an oil and gas production business and a natural gas liquids midstream services and marketing business. Provident's energy portfolio is located in some of the most stable and predictable producing regions in Western Canada, Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, and Wyoming. Provident provides monthly cash distributions to its unitholders and trades on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbols PVE.UN and PVX, respectively. This document contains certain forward-looking estimates that involve substantial known and unknown risks and uncertainties, certain of which are beyond Provident's control, including the impact of general economic conditions in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. , industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, pipeline design and construction, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. Provident's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds that Provident will derive there from. Provident Energy Trust (TSX:PVE.UN) (NYSE:PVX) |
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