Energen Resources’ 2009 capital budget has been reduced from $295 million to $225 million. This $70 million reduction reflects some $50 million in drilling cuts and approximately $20 million of cost-related cuts.
Given the current pricing environment, Energen management decided to delay the drilling of selected wells (which are on acreage held by current production) and, instead, opted to increase the company’s cash flows available for investment. The other cuts made reflect declining capital costs in response to the substantial decline in natural gas and oil prices.
The drilling capital cuts are expected to reduce 2009 production by 1 billion cubic feet (Bcf) equivalent to 106.5 Bcf equivalent (Bcfe).
Energen Resources continued the accelerated development of its probable and possible reserves in the San Juan and Permian basins in 2008. Total capital investment of $457 million included $438 million of development, exploration and related activities on Energen Resources’ existing properties and $13 million of leasehold acquisition in Alabama shales.