NEW YORK, Nov. 6, 2009 (GLOBE NEWSWIRE) -- Warren Resources, Inc. (Nasdaq:WRES) today announced that it has expanded its commodity hedge program by entering into a zero cost collar on 1,000 barrels of crude oil per day for all of 2010. Under the terms of this transaction, the Company places a floor of $65.00 per barrel and a ceiling of $106.50 per barrel. The costless collar is used to establish a floor price by purchasing a put and a ceiling price by selling a call on anticipated future crude oil production.
Timothy A. Larkin, Executive Vice President and Chief Financial Officer, stated that, "Our additional oil hedging for an aggregate of 365,000 barrels of crude oil, through costless collars, assures Warren with a commodity price floor for 2010 while retaining a level of participation in any potential future price increases."
These new hedges are in addition to Warren's natural gas price swaps in place for the remainder of 2009 and continuing through 2010 for 6,000 MMBtu per day at a weighted average price of $6.45 per MMBtu. The Company also has 3,000 MMBtu per day natural gas price swaps for January and February 2011 at $6.02 per MMBtu. Additionally, for the remainder of 2009, the Company has crude oil price swaps for 1,325 barrels of oil per day at an average swap price of $49.70 per barrel. Warren also has price swaps in pace for 1,225 barrels of oil per day at an average swap price of $61.80 per barrel for 2011.
The swap prices are based on the NYMEX price. The NYMEX natural gas price is based on first-of-the-month Henry Hub price as published monthly by Inside FERC. The NYMEX oil price is the monthly average of settled prices on each trading day for West Texas Intermediate Crude oil delivered at Cushing, Oklahoma. If the NYMEX price is above or below the swap prices, Warren and the counterparty to the swap will settle the difference monthly.
Natural gas and oil hedging is intended to reduce the risks associated with unpredictable future natural gas and oil prices and to provide predictability for a portion of cash flows to support the Company's capital expenditure program. All of the outstanding hedge positions are with participants in the Company's senior secured credit facility.
About Warren Resources
Warren Resources, Inc. is an independent energy company engaged in the exploration and development of domestic oil and natural gas reserves. Warren's activities are primarily focused on oil properties in the Wilmington field in California and coalbed methane properties 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 Long Beach, California and Casper, Wyoming.
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, our Quarterly Reports on Forms 10-Q and other public filings with the Securities and Exchange Commission (www.sec.gov).
CONTACT: Warren Resources, Inc.