The Exploration Company Announces Record 2006 CAPEX, Updates Current Texas Operating Activities.SAN ANTONIO San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. -- The Exploration Company (Nasdaq:TXCO TXCO The Exploration Company TXCO Temperature-Compensated Crystal Oscillator ) today announced its 2006 capital expenditure budget and provided an update on its Southwest Texas operations. CAPEX TXCO's board of directors has approved an initial CAPEX program for 2006 -- the largest in the Company's history -- in a range of $40 million to $50 million, up approximately 40 percent from 2005's initial CAPEX estimate of $29 million to $33 million. The budget is projected to be funded from internal cash flow and TXCO's existing bank credit facility. More than 90 percent of the budget will be invested in a proposed 57 gross wells. TXCO's ambitious drilling programs may be revised, based on rig availability; drilling results of the Company and its Maverick Basin partner, EnCana Oil & Gas (USA) Inc.; operational developments; unanticipated transaction opportunities; market conditions and commodity price fluctuations. The largest share of the new budget, $23.3 million, will go to 28 proposed Glen Rose Glen Rose was the head basketball coach at the University of Arkansas at various times during the 1930s through the 1960s, as well as the head football coach for two seasons during World War II. wells (75-100 percent working interest), including $21.2 million for 24 Glen Rose Porosity porosity /po·ros·i·ty/ (por-os´it-e) the condition of being porous; a pore. po·ros·i·ty n. 1. The state or property of being porous. 2. wells as TXCO continues the successful development of its core oil play. The budget earmarks $8.0 million for eight EnCana-operated Pearsall wells (50% WI), part of a joint operating agreement Any contract, agreement, Joint Venture, or other arrangement entered into by two or more businesses in which the operations and the physical facilities of a failing business are merged, although each business retains its status as a separate entity in terms of profits and announced in September. Some $6.6 million has been allocated for 10 wells targeting Georgetown formation oil and gas (100% WI). In the Pena Creek San Miguel San Miguel (sän mēgĕl`), city (1993 pop. 118,214), E El Salvador, at the foot of San Miguel volcano (6,996 ft/2,132 m). It has textile, rope, and dairy-products industries. The region produces cotton, henequen, and vegetable oil. oil play, the budget sets aside $3.0 million for 10 new wells (100% WI), continuing expansion of the waterflood project. Also included are expenditures for additional pilot wells testing the San Miguel tar sand tar sand or bituminous sand Deposit of loose sand or partially consolidated sandstone that is saturated with highly viscous bitumen. Oil recovered from tar sands, commonly referred to as synthetic crude, is a potentially significant form of fossil fuel. play, a 3-D seismic survey on the Maverick Basin's Burr burr (bur) bur. burr n. Variant of bur. burr 1. a plant seed capsule carrying many hooked structures which catch in animal coats thus promoting dissemination of the plant. lease, improvements to the Pena Creek waterflood system and leasehold extensions.
TXCO Initial CAPEX Budget Comparison(a)
----------------------------------------------------------------------
2006 2005
Formation/ 2006 CAPEX Gross 2006 2005 CAPEX Gross 2005
Project ($ Millions) Wells % WI ($ Millions) Wells % WI
----------- ------------ ------- ------- ------------ ------- ------
Glen Rose
Porosity
(oil) $21.2 24 75-100 $2.5 7 47-50
----------- ------------ ------- ------- ------------ ------- ------
Other Glen
Rose
(oil/gas) 2.1 4 75-100 2.8 7 47-63
----------- ------------ ------- ------- ------------ ------- ------
Pearsall
(gas) 8.0 8 50 -- -- --
----------- ------------ ------- ------- ------------ ------- ------
Georgetown
(gas/oil) 6.6 10 100 18.8 43 50
----------- ------------ ------- ------- ------------ ------- ------
Pena Creek
San Miguel
(oil) 3.0 10 100 2.9 10 100
----------- ------------ ------- ------- ------------ ------- ------
Marfa Basin
(Barnett
Shale) TBD(b) TBD 50-100 -- -- --
----------- ------------ ------- ------- ------------ ------- ------
San Miguel
tar sand
(oil) 0.3 1 50-100 -- -- --
----------- ------------ ------- ------- ------------ ------- ------
Other 2.1 -- -- 2.0 -- --
----------- ------------ ------- ------- ------------ ------- ------
(a) Initial capital expenditures may be revised based on rig
availability, drilling results, operational developments,
unanticipated transaction opportunities, market conditions or
commodity price fluctuations.
(b) To be determined
Management's Perspective "For 2006, our working interest will be higher in certain projects, especially the Glen Rose Porosity play, that will expose the Company to sharply higher production and reserve growth," said 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. James E. Sigmon. "We will heighten our focus on the successful Porosity oil play, indicative of our technical staff's growing confidence after nearly four years of drilling. We continue to refine our drilling and completion techniques in this geologically complex reservoir to maximize production from this oil-charged zone. We're also excited about the potential for new production from the gas-prone Pearsall as we undertake a new drilling program with EnCana as our operating partner. "Financially, we enter the new year in a great position with a virtually debt-free, deleveraged balance sheet going forward, allowing us greater flexibility to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale our CAPEX budget as EnCana pursues its stated goal of developing Maverick Basin resource plays on our jointly owned positions. In 2006, the Company also will begin exploration and development of our new Marfa Basin acreage. We are now in the process of planning a CAPEX expansion that will target the Barnett and Woodford shale shale, sedimentary rock formed by the consolidation of mud or clay, having the property of splitting into thin layers parallel to its bedding planes. Shale tends to be fissile, i.e., it tends to split along planar surfaces between the layers of stratified rock. plays." Operations Update For the quarter ended Sept. 30, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis adjusted for the sales volumes for properties sold to EnCana, TXCO's average daily sales volumes were 1,149 barrels of oil per day (BOPD BOPD Barrels of Oil Per Day BOPD Bataan Ocean Petroleum Depot ) and 3.9 million cubic feet of gas per day (MMcfd), a combined rate of 10.8 million cubic feet equivalent per day (MMcfed). TXCO's net production in the current quarter's first two months averaged approximately 1,346 BOPD and 3.5 MMcfd of gas, a combined rate of 11.6 MMcfed, reflecting a 7 percent increase since the EnCana transaction effective date of Sept. 1. New Glen Rose Porosity oil production in October and November offset much of the production from the properties sold to EnCana. Through mid December, TXCO had spudded or re-entered 51 Maverick Basin wells this year, including eight wells begun in the current quarter, attaining the Company's 2005 target of 50-plus wells. Thirteen wells drilled this year were assigned to EnCana as part of TXCO's $80 million asset sale. Of the remaining 38 wells, 24 have been placed on production while 12 wells are in various stages of completion. Two wells are drilling currently. Through mid December, TXCO had started 21 Glen Rose wells this year, comprised of 18 Porosity wells plus three Glen Rose Reef or Shoal wells. Twelve of the Porosity wells have been placed on production, including two drilled in the fourth quarter. One is drilling and five are in completion. One Shoal well currently is drilling, one Reef well is in completion and a second Reef well was re-completed to the Georgetown and placed on production. About The Exploration Company The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. The Company has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. Its business strategy is to build shareholder value by acquiring undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal . The Company accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on the Nasdaq Capital Market Originally called the NASDAQ Small Cap Market, NASDAQ announced a name change to the NASDAQ Capital Market on September 27, 2005. [1] The NASDAQ Capital Market exists for securities of smaller, less-capitalized companies (small caps) that do not qualify for under the symbol "TXCO." 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. Statements in this press release which are not historical, including statements regarding TXCO's or management's intentions, hopes, beliefs, expectations, representations, projections, estimations, plans or predictions of the future, are forward-looking statements and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements include those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc budget and drilling plans, interest rates, capital expenditures, ongoing access to capital, oil and gas prices, production levels, the timing, number and cost of wells to be drilled, new projects and expected response, and establishment of reserves. It is important to note that actual results may differ materially from the results predicted in any such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the costs of exploring and developing new oil and natural gas reserves, the price for which such reserves can be sold, environmental concerns affecting the drilling of oil and natural gas wells, as well as general market conditions, competition and pricing. More information about potential factors that could affect the Company's operating and financial results is included in TXCO's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2004, and its Form 10-Q Form 10-Q See 10-Q. for the quarter and year-to-date period ended Sept. 30, 2005. These and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's website at www.txco.com. Copies are available without charge upon request from the Company. |
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