For full year 2008, the Company has made discoveries and successfully completed 18 of 24 exploration wells, for a success rate of 75%, which included 16 out of 19 conventional shelf wells, and two of five wells on the deep shelf. Additionally, the Company successfully drilled and completed two of two development wells, both of which were on the conventional shelf. For the 26 wells drilled in 2008, the Company achieved a success rate of 77%. Furthermore, at year-end 2008 we were in the early stages of drilling three exploration wells and two development wells.
During the fourth quarter, the Company drilled or participated in the drilling of the following successful wells:
Lease Name/Well Category Working Interest % Eugene Island 261 A-5ST Exploration / Shelf 33% Main Pass 108 E-1 Exploration / Shelf 75% Ship Shoal 224 E-20 Exploration / Shelf 100% Vermilion 225 B-7 Exploration / Shelf 94%
The Company also drilled or participated in the drilling of two non-commercial wells, as follows:
Lease Name/Well Category Working Interest % Eugene Island 186 1 Exploration / Deep Shelf 100% Main Pass 279 A-6ST Exploration / Shelf 75%
2009 Capital Expenditure Guidance: Because of continued market uncertainty, the Company has not yet established a full-year capital budget for 2009. However, as is normally the case, we anticipate fully funding our 2009 capital expenditures with internally generated cash flow, which will result in reduced drilling activity compared to 2008 levels. We intend to remain flexible as the year progresses and, should economic conditions improve, we will be well positioned to take advantage of our drilling opportunities.
Production: We expect to meet our full-year production guidance for 2008.
Our exit rate of production on
Ceiling Test Impairment and Reserve Guidance: As a result of severely depressed commodity price levels at year-end 2008, the Company expects to record a significant non-cash ceiling test impairment to its full-cost pool. Such non-cash charge will not have any impact on our bank or senior note covenants.
Although the Company's year-end reserves are still under evaluation by its independent third-party petroleum consultant, the Company expects proved reserves to be significantly lower than year-end 2007. This decrease in estimated proved reserves is largely due to the steep decline in year-end oil and gas prices.
Founded in 1983,
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements reflect our current
views with respect to future events, based on what we believe are reasonable
assumptions. No assurance can be given, however, that these events will
occur. These statements are subject to risks and uncertainties that could
cause actual results to differ materially including, among other things,
market conditions, oil and gas price volatility, uncertainties inherent in oil
and gas production operations and estimating reserves, unexpected future
capital expenditures, competition, the success of our risk management
activities, governmental regulations, uncertainties and other factors
discussed in our Annual Report on 10-K for the year ended