EXHIBIT 99.1
For
Information
Brent A. Collins
303-861-8140
FOR
IMMEDIATE RELEASE
ST.
MARY ANNOUNCES 2010 CAPITAL BUDGET AND PRODUCTION FORECAST
·
|
Total
capital budget of $725 million approved by Board of Directors; exploration
and drilling budget set at $561
million
|
·
|
Investment
planned to be funded through operating cash flow and anticipated proceeds
from divestitures; capacity available under existing credit facility to
maintain or accelerate program
|
·
|
Roughly
40% of exploration & drilling budget allocated to Eagle Ford shale
program; approximately 30% of budget dedicated to oil programs in the
Permian and Williston basins
|
·
|
Over
20% production growth, adjusted for divestitures, from December 2009 to
December 2010
|
DENVER, December 16, 2009 –
St. Mary Land & Exploration Company (NYSE: SM) today announces its initial
capital budget and production guidance for 2010.
MANAGEMENT
COMMENTARY
Tony
Best, CEO and President, remarked, “Our 2010 capital program reflects the
expansion and improvement in our inventory over the past couple of years and
gets us back on a track of growing production. We will be deploying a
meaningful amount of investment in our emerging resource plays, particularly in
the Eagle Ford and Haynesville shales, as we work to promote those potential
resources to proved reserves. We will also be making significant
investment in our oil and rich gas properties, which are generating very strong
returns in the current commodity environment. We have the ability to
comfortably fund next year’s program, and our strong financial position provides
us the ability to accelerate activity with continued success. St.
Mary continues to make progress toward our goal of being a leading North
American resource play company.”
2010
CAPITAL INVESTMENT BUDGET
The
Company’s initial capital investment budget for 2010 is detailed in the
following table:
2010
Capital Investment Budget
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
Exploration & drilling
capital
|
|
|
|
Eagle
Ford shale
|
|
$ |
216 |
|
Haynesville
shale
|
|
|
89 |
|
Permian
oil
|
|
|
89 |
|
Bakken/Three
Forks
|
|
|
80 |
|
Other
(incl. Marcellus, Granite
Wash & Woodford shale)
|
|
|
87 |
|
Subtotal
|
|
$ |
561 |
|
|
|
|
|
|
Non-drilling capital
|
|
|
|
|
Land
& seismic
|
|
$ |
86 |
|
Facilities
|
|
|
41 |
|
Overhead
|
|
|
37 |
|
Subtotal
|
|
$ |
164 |
|
|
|
|
|
|
Grand
Total
|
|
$ |
725 |
|
The 2010
capital investment program is anticipated to be funded through cash flow from
operations, anticipated proceeds from the previously announced divestiture of
non-core oil properties in the Rocky Mountains, and, if necessary, the Company’s
existing credit facility. St. Mary’s strong financial position
also provides it the ability to expand its capital investment program through
borrowings under the credit facility should the Company elect to accelerate
drilling activity. As of December 16, 2010, approximately $437
million was available to borrow under that facility.
St. Mary
will operate approximately 75% of the exploration and development capital it
deploys in 2010. Details regarding significant programs are provided
below.
Eagle Ford
shale – St. Mary plans to operate two drilling rigs continuously on its
high working interest acreage in Webb, Dimmitt, and La Salle counties in South
Texas in 2010. The Company has seen drilling efficiency gains in the
Eagle Ford program, allowing it to increase planned activity without increasing
rig count. The first operated well was drilled in 45 days, while its
most recent well was drilled in under 14 days. The operated program
will account for roughly 78% of the Company’s investment in the Eagle Ford shale
in 2010 and will consist of 34 gross operated wells, the majority in which St.
Mary will have a 100% working interest. Efforts will be focused on
de-risking untested portions of leasehold and developing parts of the program
known to have richer natural gas and condensate.
In the
joint venture with Anadarko Petroleum, the 2010 plan is to invest approximately
$47 million to participate in wells located in the liquids-rich area of the play
north of the Company’s high working interest acreage. The budget for
this non-operated portion of the
Eagle Ford program could vary depending on the pace and scale of the operator’s
program on the joint venture leasehold.
Approximately
$24 million of the noted facilities budget will be deployed in the Eagle Ford
shale program to expand infrastructure in the play.
Oil property
development –
St. Mary plans to invest roughly $169 million, or approximately 30% of
its exploration and development budget, on oil properties in the Permian and
Williston basins.
In the
Permian Basin, the Company will operate 89% of its capital investment, over half
of which will be focused on Wolfberry tight oil projects. The 2010
program includes 32 wells at the operated Sweetie Peck asset and is designed to
continue Wolfberry development on 80- and 40-acre spacing. It also
includes six (6) 20-acre wells to test the viability of increased density
drilling in portions of the play.
St.
Mary’s efforts in the Rocky Mountains will be focused primarily on targets in
the Bakken and Three Forks formation in the Williston Basin. The
Company plans to invest approximately $80 million in these programs, 67% of
which will be operated by St. Mary. A total of 17 wells are
planned in the Bakken and Three Forks program, including 11 wells in the
Company’s Bear Den prospect. A number of non-operated wells have also
been included in the budget for this area. The initial results from
St. Mary’s Three Forks testing in Divide County will be evaluated in 2010 and
capital has been budgeted to continue developing this acreage should results in
the program be positive.
Haynesville
shale – The Company plans to drill six (6) horizontal wells and one (1)
vertical well in 2010, all of which will be drilled in San Augustine and Shelby
counties, Texas. The drilling program has been designed to utilize
recently acquired 3D seismic data while preserving core
leasehold. This operated portion of the program constitutes roughly
64% of the Haynesville program’s capital investment in 2010. The
majority of the remaining budget will support partner-operated drilling in East
Texas and at Elm Grove Field in northern Louisiana.
Other
Activity – St. Mary plans to spend approximately $87 million in other
exploration and development drilling activity in 2010, including operated
activity in the Marcellus shale, the Granite Wash, and the Woodford
shale. In the Marcellus shale in Pennsylvania, the Company plans to
drill a total of four (4) wells – two (2) in Potter County and two (2) in McKean
County. Additionally, the gathering line connecting St. Mary’s
initial test well will be turned to sales in the first quarter of 2010, with the
trunk line to the second test well to be constructed immediately
thereafter. In the Granite Wash program in Western Oklahoma, the
Company plans to drill four (4) operated wells in its Mayfield prospect and
anticipates participating in a number of partner-operated wells across the
play. The Company’s first operated horizontal Granite Wash well in
the Mayfield area, the Wester 2-34H (SM 38% WI), began drilling at the beginning
of December 2009. In the Woodford Shale program, six (6) wells are
budgeted to preserve expiring acreage.
Quarterly
Production Outlook
The
following table details St. Mary’s budgeted quarterly production profile for
2010, including adjustments for the previously announced divestitures of coalbed
methane properties at Hanging Woman Basin and the Rocky Mountain oil
package.
(in
MMCFE/d)
|
4Q09
|
1Q10
|
2Q10
|
3Q10
|
4Q10
|
Reported
Production
|
270
– 285
|
255
– 278
|
242
– 264
|
250
– 272
|
266
– 288
|
Rockies
oil package*
|
(18)
|
(18)
|
|
|
|
Hanging
Woman Basin package**
|
(10)
|
|
|
|
|
Pro
Forma Production
|
242
– 257
|
237
– 260
|
242
– 264
|
250
– 272
|
266
– 288
|
|
|
|
|
|
|
* Rockies oil package
divestiture assumes 18 MMCFE/d of production; assumed closing of March 31, 2010
for forecasting purposes
**
Hanging Woman Basin divestiture assumes roughly 10 MMCFE/d of production;
assumed closing of December 31, 2009 for forecasting purposes
The
Company anticipates that pro forma production will bottom in the first quarter
of 2010 and will grow on a sequential quarterly basis
thereafter. Adjusting for divestiture activity, this translates to
over 20% production growth from December 2009 to December 2010.
INFORMATION
ABOUT FORWARD LOOKING STATEMENTS
This
release contains forward looking statements within the meaning of securities
laws, including forecasts and projections. The words “will,”
“believe,” “budget,” “anticipate,” “plan,” “intend,” “estimate,” “forecast,”
“expect,” “encourage,” and similar expressions are intended to identify forward
looking statements. These statements involve known and unknown risks,
which may cause St. Mary’s actual results to differ materially from results
expressed or implied by the forward looking statements. These risks
include such factors as the volatility and level of oil and natural gas prices,
the uncertain nature of the expected benefits from the acquisition and
divestiture of oil and gas properties, the pending nature of reported
divestiture plans for certain non-core oil and gas properties as well as the
ability to complete divestiture transactions and the uncertain nature of the
amount of proceeds that may be received from divestitures, uncertainties
inherent in projecting future rates of production from drilling activities and
acquisitions, the ability of purchasers of production to pay for those sales,
the availability of debt and equity financing, the ability of the banks in the
Company’s credit facility to fund requested borrowings, the ability of hedge
counterparties to settle hedges in favor of the Company, the imprecise nature of
estimating oil and gas reserves, the availability of additional economically
attractive exploration, development, and property acquisition opportunities for
future growth and any necessary financings, unexpected drilling conditions and
results, unsuccessful exploration and development drilling, drilling and
operating service availability, the risks associated with the Company’s hedging
strategy, and other such matters discussed in the “Risk Factors” section of St.
Mary’s 2008 Annual Report on Form 10-K and subsequent quarterly reports on Form
10-Q which are filed with the SEC. Although St. Mary may from time to
time voluntarily update its prior forward looking statements, it disclaims any
commitment to do so except as required by securities laws.
ABOUT
THE COMPANY
St. Mary
Land & Exploration Company is an independent energy company engaged in the
exploration, exploitation, development, acquisition, and production of natural
gas and crude oil. St. Mary routinely posts important information
about the Company on its website. For more information about St.
Mary, please visit its website at stmaryland.com.