The company added 1,534 Bcfe of reserves from drilling. The drilling CapEx was $3.548 million at a reserve replacement cost of $2.31 per Mcfe prior to revisions. The total production replaced was 241%.
In the U.S., the company added 1,580 Bcfe of reserves from drilling and acquisitions, net of revisions with CapEx of $3.010 million bar gathering systems, processing plant and other expenditures, at a reserve replacement cost of $1.90 per Mcfe.
As at December 31, 2007, the company’s total debt outstanding was $1.185 million.
The cash on the balance sheet was $54 million for net debt of $1.131 million. As a result of the expected proceeds from the Appalachian divestiture, the company forecasts the net debt at year-end fiscal 2008 to be fairly flat relative to December 31, 2007.
- The year-end debt-to-total capitalization ratio was 14% and an effective annual tax rate of 33%.
- The management repurchased the balance of $43 million worth of outstanding Series B preferred stock in December 2007 and January 2008.
The Board of Directors increased the full year cash dividend on common stock by 33% compared with 50% in the past year.
The indicated cash dividend annual rate of 48 cents per share is the eighth increase in nine years.
The management has advised that Trinidad will be characterized by flat contract volumes until 2009 where production will increase by 15 million cubic feet a day net from a methanol plant contract.
- Trinidad production will increase by an additional 60 million cubic feet a day in 2010 from the sales of a gas contract.
- The domestic supply regarding the North American gas macro is expected to grow by 2% this year.
- Canadian imports are forecast to decline by one Bcfe a day relative to the past year.
The management has hedged its fiscal 2008 financial position.
The company is 33% hedged regarding the North American natural gas at an average price of $8.61 per MMBtu. An estimated 14% of the total company’s oil is hedged at a price of $90.78. For fiscal year 2009, there is a total of 200 million Btu per day of natural gas hedged at an average price of $8.50.
The CapEx for the year is pegged at $4.1 billion and relates to exploration and development expenditures.
The bulk of this expenditure will be deployed in a high reinvestment rate of return as the management lays greater emphasis on ROCE. The Bakken Barnett and Uinta Basin Plays will receive material expenditures. The gathering, processing and other expenditures are estimated to be $218 million.
- The Appalachian property sale is expected to be concluded in the first quarter of the next fiscal year.
Fiscal Year 2008 Outlook
The company plans to continue expanding the North American drilling program and significant production gains are expected from Fort Worth Barnett Shale and North Dakota Bakken. The total company production growth is targeted at 15% for 2008 versus 11% for fiscal year 2007.
The majority of production growth for 2008 will be from the U.S. operations, which will grow by about 23% year-on-year. Production in Canada, Trinidad and the U.K. is expected to be relatively unchanged against the 2007 levels.
The management has revised upwards its total crude oil and condensate production growth target from 33% to 36%. This is on the back of the expanded drilling operations in North Dakota Bakken.
The natural gas liquids are forecast to increase by 40% relative to 2007 levels fueled by higher drilling activity and greater processing of the rich natural gas from the Bakken Shale.
- The fiscal year 2008 effective tax is expected to be in the range 33% to 37%.
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