Dune Provides 2009 Operational and Capital Forecast
April 06 2009 - 3:50PM
PR Newswire (US)
HOUSTON, April 6 /PRNewswire-FirstCall/ -- Dune Energy, Inc. (NYSE
AMEX: DNE) details first quarter and full year operational plans by
field area. This update is a revision of prior guidance based on
current commodity prices and available capital. Comite Field, Baton
Rouge Parish, Louisiana Dune recently successfully recompleted the
Cobb #1, flowing at approximately 3.1 Mmcfe/day from the Tuscaloosa
sand below 17,456 feet. Dune has a 100% interest in this project.
Chocolate Bayou, Brazoria County, Texas The Wieting #30 well was
successfully completed in the Andrau sand in March of 2008 at rates
above 8 Mmcfe/day. Dune operates the well with a 100% working
interest. The well is currently flowing approximately 1 Mmcfe/day,
with significant water cut coming from a lower wet sand. In April
we plan to shut the well in and rework the zone to shut off the
extraneous water production. The operation should take
approximately 20 days at a cost of $750,000. Production after the
workover is anticipated to approximate 5 Mmcfe/day. In the second
quarter, we anticipate commencing drilling the Wieting #32,
targeting the 12,000 S sand at 12,200 feet. Potential reserves
attributable to this well are approximately 5.6 Bcfe. Total
drilling and completion costs are estimated at $6.7 million with
anticipated initial production rates of approximately 6 Mmcfe/day,
commencing in the fourth quarter. Additionally, during the fourth
quarter Dune plans to commence drilling the Wieting #33 to test the
Andrau sand updip to prior production and deepen the well to the IP
Farms interval at 14,700 feet. Gross reserves for the Andrau target
are 3.1 Bcfe and 30 Bcfe for the deeper IP farms zone. Dune
estimates a dry hole cost of $7.7 million and will retain a 50%
working interest. Alvin Townsite Chambers County, Texas Dune
participated with a 15% working interest in this non-operated
sidetrack attempt with gross reserve potential of 5 Bcfe. The
operator abandoned its efforts on the sidetrack once drill pipe
became stuck below 9,300 feet. Dune has proposed taking over
operations on this project to deepen the well to approximately
10,500 feet. Gross costs to complete the sidetrack are $1.3 million
and Dune anticipates maintaining approximately a 50% working
interest. The new operation is anticipated to spud in the second
quarter with production commencing by the fourth quarter of 2009.
Garden Island Bay, Plaquemines Parish, Louisiana In the fourth
quarter, we anticipate reactivating the development/exploitation
program with one or two new wells prior to year end and continuing
with 3-4 additional wells in 2010. Typically these wells cost $3-$6
million each and initial production is 2-4 Mmcfe/day. Dune has
formed a 4,900 acre AMI with a private entity to market a 20,000
foot sub-salt well to industry participants. The 3-D seismic data
over the dome has been reprocessed and converted to depth via a
reverse time migration algorithm in support of this prospect.
Drilling would not be anticipated until late 2009 or 2010,
depending on obtaining an industry partner. Dune would retain a
minimum of a 15% working interest in this high potential sub-salt
prospect. Bateman Lake, St. Mary Parish, Louisiana Dune has entered
a partnership with private parties whereby at least one well per
year will be drilled on this acreage. On wells proposed by such
parties, Dune can either maintain a carried working interest of 20%
or participate for up to a 33% working interest. Dune maintains its
full 100% working interest in all existing well bores and PUD
locations. Should Dune propose a well outside existing PUD
locations, such parties can participate for up to a 33% working
interest. We anticipate 2-3 wells to be drilled under this program
in 2009 based on recent evaluations of 3-D seismic data and the
ongoing area wide field reservoir analysis. Leeville Field,
Lafourche Parish, Louisiana Similar to Bateman Lake, Dune has an
exploration/development agreement with a private entity whereby
Dune can participate in proposed wells or maintain a carried
working interest. We anticipate 1-2 new wells to be drilled under
this program in 2009. Bayou Couba, St. Charles Parish, Louisiana
Since September of 2007, Dune has been operator of the production
at the Bayou Couba field. The production is on the 1,319 acre DSCI
lease, located in the center of an approximately 11,500 acre joint
development area with an integrated major oil company partner. This
joint development area agreement has been allowed to expire by its
terms. As a result of this, Dune has temporarily suspended its
efforts to find a partner for drilling the Bella Luna prospect.
Dune maintains its interests in the DSCI lease and related
production, along with an additional 2,498 acres under lease.
Management believes this area is highly prospective; we plan to
complete our prospect evaluations in and around the dome and
anticipate that we will propose additional activity in the area as
appropriate. Other Fields Depending on available capital and
commodity price forecasts, we have additional proved undeveloped
(PUD) locations to drill at Live Oak Field (Vermilion Parish,
Louisiana), Murphy Lake Field (Iberville Parish, Louisiana) and
Toro Grande Field (Jackson County, Texas). Production Volumes and
Capital Program Current production is approximately 28 Mmcfe/day.
First quarter production is anticipated to average between 24 and
26 Mmcfe/day. First quarter was negatively impacted by the
increased water production at Chocolate Bayou, a shut in of a
saltwater disposal well at Bateman Lake Field, and normal reservoir
declines. The workover of the Wieting #30, a new salt water
disposal well at Bateman Lake, along with several workovers within
various fields, should result in second and third quarter
production averaging 27-31 Mmcfe/day. In the fourth quarter, we
anticipate production to increase to between 34 and 38 Mmcfe/day.
This would result in production essentially flat with 2008's 11.4
Bcfe or 31 Mmcfe/day. The capital program for the listed wells
would be approximately $22-$25 million. This capital and resultant
production should allow the Company to maintain its required
liquidity under our various credit agreements and make all interest
payments. The upside potential of all of our projects is being
preserved. As we see improvements in commodity prices, we have
numerous projects that can be accelerated to increase production
volumes and reserves. James A. Watt, President and Chief Executive
Officer stated, "The 2009 program is designed to maximize cash flow
while preserving all upside opportunities. At a minimum, the
program is also designed to replace production. Additional projects
can be added depending upon available cash and commodity prices. We
remain committed to managing our available cash flow and upside
opportunities to create long term value for all our stakeholders."
Click here for more information:
http://www.duneenergy.com/news.html?b=1683&1=1 FORWARD-LOOKING
STATEMENTS: This document includes forward-looking statements.
Forward-looking statements include, but are not limited to,
statements concerning estimates of expected drilling and
development wells and associated costs, statements relating to
estimates of, and increases in, production, cash flows and values,
statements relating to the continued advancement of Dune Energy,
Inc.'s projects and other statements which are not historical
facts. When used in this document, the words such as "could,"
"plan," "estimate," "expect," "intend," "may," "potential,"
"should," and similar expressions are forward-looking statements.
Although Dune Energy, Inc. believes that its expectations reflected
in these forward-looking statements are reasonable, such statements
involve risks and uncertainties and no assurance can be given that
actual results will be consistent with these forward-looking
statements. Important factors that could cause actual results to
differ from these forward-looking statements include the potential
that the Company's projects will experience technological and
mechanical problems, geological conditions in the reservoir may not
result in commercial levels of oil and gas production, changes in
product prices and other risks disclosed in Dune's Annual report on
Form 10-K filed with the U.S. Securities and Exchange Commission.
DATASOURCE: Dune Energy, Inc. CONTACT: Investors, Steven J. Craig,
Sr. Vice President Investor Relations and Administration of Dune
Energy, Inc., +1-713-229-6300 Web Site: http://www.duneenergy.com/
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