Capex Data
Berry Petroleum has set a 2008 capital budget of $295 million. At this level of investment in 2008, the Company expects to drill over 390 producing wells and is targeting 2008 production to average approximately 30,000 BOE/d. Total proved reserve additions are projected to be approximately 30 million BOE which will result in an estimated finding and development cost of under $10.00 per BOE.
Highlights of the 2008 budget include:
• $173 million for heavy oil projects including the full-scale development of the North Midway diatomite, continued expansions at Poso Creek, South Midway and Brundage Canyon as well as appraisal drilling at Lake Canyon in the Uinta basin.
• $122 million targeting natural gas production growth in the Piceance and DJ assets, including infrastructure investments to aid in the long-term development of these assets.
Future Plans
2008 Plans
Oil Investments
In its North Midway diatomite asset, Berry will drill approximately 115 of the remaining 600 well locations and will invest in the steam generation and other infrastructure necessary for its five-year development plan. The Company will continue development at Poso Creek by drilling over 30 new wells and expanding the facilities needed for subsequent production increases. Berry is now exploiting the deeper down-dip flanks at South Midway and plans to drill 15 horizontal producing wells and 10 vertical wells for continuous steam injection into these flanks. At Brundage Canyon, the Company will drill its remaining 40-acre locations, assess the potential of additional downspacing and extend the southern development of the field into the Ashley Forest. Berry also intends to do additional appraisal drilling of the Green River oil trend in the adjacent Lake Canyon area to better define its development potential.
Gas Investments
Berry has significantly improved its drilling performance in its Piceance assets over the course of 2007 and is currently adding a fourth rig for year-round operations. In 2008, the Company plans to drill and complete 60 wells at depths ranging from 9,500 to 12,000 feet on its Garden Gulch and N. Parachute Ranch acreage. Berry will also continue to invest in infrastructure here to improve access and to capture operational efficiencies. In its DJ assets Berry will add approximately 70 new wells and install 150 pumping units to maintain production near the current level of 19 MMcf/d.
As the Company has previously noted, its 2008 net income is relatively insensitive to natural gas prices company-wide, given its significant natural gas consumption for steaming operations in California and the existing 2008 natural gas hedges. In 2008, the Company estimates that a $1.00 per MMBtu change in NYMEX Henry Hub natural gas price would result in less than a $3 million change in annual net income.