NEW YORK, Oct 13, 2008 (GlobeNewswire via COMTEX News Network) -- Warren Resources, Inc. (Nasdaq:WRES) announced that on October 2, 2008, the City of Los Angeles Zoning Administrator rendered her decision upholding the existing 2006 Zoning Order and Warren's construction and operations in the Wilmington Townlot Unit ("WTU") oil field in California. The decision states that Warren has complied or substantially complied with all of the conditions in the 2006 Zoning Order and other related documents.
On May 2, 2008, the City of Los Angeles Zoning Administrator conducted a public hearing to review compliance with and the adequacy of conditions in its July 2006 Zoning Order, which allows the Company to drill up to 540 wells from the WTU central facility. Approximately 150 community members, employees, contractors, and royalty owners attended the hearing to support Warren's project, which significantly exceeded the number of people opposing the project. Warren presented its position to the Zoning Administrator and stated it believes most of the concerns raised by neighbors were related to the construction phase of the project, which is now substantially complete.
In her October 2, 2008 decision, the Zoning Administrator: (1) examined each of the numerous conditions in the 2006 Zoning Order; (2) found that Warren substantially complied with each and all of the conditions; (3) made minor modifications and clarifications to existing conditions and added non-material changes to certain conditions; (4) determined that concerns from the surrounding community were primarily related to construction activities, which have now been concluded; and (5) found that Warren had implemented additional mitigation measures that were not required by and went beyond the existing 2006 Zoning Order. The Zoning Administrator's decision is subject to appeal to the Los Angeles City Planning Department.
Finally, the Zoning Administrator stated that "At a time when dependence on foreign oil comes at an increasingly higher social, economic, political and human cost, it can be found that this approval, by encouraging and facilitating local oil production, under strict controls as to the possible impacts it may have on the immediate vicinity of the production site, will be of direct benefit to the general public convenience and welfare."
In announcing the Zoning Administrator's decision, Warren Resources Chairman and CEO, Norman Swanton stated: "I am pleased that after an extensive review, the City of Los Angeles Zoning Administrator found our operations to be in compliance with the terms and conditions of the Zoning Order and that only minor changes to those conditions are warranted. I am also very appreciative of all the support the majority of community of Wilmington has shown for our project, which we believe is creating the model for urban oilfield development which eliminates wells that have existed in residential neighborhoods for decades."
2008 Capital Expenditures
During 2008, Warren continued its strategy of funding its 2008 drilling operations with existing cash, cash flow from operations and drawing on its $250 million senior secured credit facility with GE Energy Finance, which has a current borrowing base and availability of $135 million.
However, in response to the recent steep decline in oil and gas prices combined with the ongoing credit market crisis, the Company intends to reduce its capital expenditures program for the remainder of 2008 to a level that can be supported by internally generated cash flow from operations. The Company will continue to complete and connect wells that were drilled during 2008, but were unable to be completed due to the limitation on the gas flare in the WTU and availability of compression and gathering systems in the Atlantic Rim in Wyoming.
Warren will also examine other areas of its operations to further reduce expenditures. Additionally, the Company intends to accelerate its geological and petro-physical activities to develop comprehensive property models to identify additional high-quality future drilling prospects and enhanced oil recovery projects in both of its Units in the Wilmington field in California and the Atlantic Rim coalbed methane project in Southwest Wyoming.
Mr. Swanton commented: "Our cash flow from operations remain strong, but we are reducing our capital expenditure program now to make certain that we have adequate internally generated liquidity for our operations and activities in these unprecedented difficult worldwide financial times."
About Warren Resources
Warren Resources, Inc. is a growth oriented independent energy company engaged in the exploration and production of domestic oil and natural gas reserves. Warren's activities are primarily focused on producing oil in the Wilmington field in California and coalbed methane natural gas in the Washakie Basin in Wyoming. The Company is headquartered in New York, New York, and its exploration and development subsidiary, Warren E&P, Inc., has offices in Casper, Wyoming and Long Beach, California.
This news 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. Warren believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company's Annual Report on Form 10-K and other public filings with the Securities and Exchange Commission (www.sec.gov).
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Warren Resources, Inc.
Warren Resources, Inc.
David E. Fleming