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Warren Resources Announces 2007 Capital Expenditure Budget and Guidance and Provides Interim Operational Update
NEW YORK, Dec 14, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Warren Resources, Inc. (Nasdaq: WRES) today announced a 2007 capital expenditure budget of $121 million, representing an approximate increase of 32% from 2006. Additionally, Warren issued production guidance for the 2007 fiscal year. Warren plans to fund the 2007 capital expenditure budget using existing cash on hand, internally generated cash flow from operations and its senior line of credit.

CAPITAL SPENDING PLAN FOR 2007

The Company plans to drill or recomplete 142 gross wells (99 net) in 2007. The capital expenditure budget for 2007 is $90 million for drilling expenditures. Also, infrastructure costs such as drilling cellars and pipeline construction represent approximately $23 million of the budget. Lastly, Warren has budgeted $8 million for acquisitions which includes oil and gas properties owned by certain Company sponsored drilling programs.

The amount and allocation of actual capital expenditures will depend upon a number of factors, including the impact of oil and gas prices, variances in drilling and service costs, the timing of drilling wells, variances in forecasted production and acquisition opportunities.

ATLANTIC RIM PROJECT

As previously reported, on December 1, 2006 the U.S. Bureau of Land Management (BLM) issued the proposed Final Environmental Impact Statement (EIS) for the Company's Atlantic Rim coalbed methane (CBM) project in the Washakie Basin in south central Wyoming. Warren expects the issuance of a favorable Record of Decision for the EIS by the BLM during the first quarter of 2007. Once issued, this will allow for the future drilling of up to 2,000 gross wells, including 1,800 CBM wells, in the Atlantic Rim project.

Warren anticipates spending approximately $38 million or 31% of the total 2007 budgeted capital expenditures in the Atlantic Rim project. The majority of the Atlantic Rim drilling budget represents drilling 75 gross (36 net) producing and injection wells in the Sun Dog unit, where the Company has an approximate working interest of 48%. Also, the budget includes $3 million for other various development activities including pipeline construction.

As of the current date, Warren has drilled 15 gross (5 net) wells (which includes 2 water injection wells) in the Doty Mountain unit during the latter part of 2006. The Company expects to drill an additional of 11 gross (4 net) wells in Doty Mountain before the end of 2006. These wells are expected to commence production during the first quarter of 2007.

WILMINGTON TOWNLOT UNIT

Warren has budgeted approximately $50 million or 41% of the total 2007 capital expenditure plan for drilling and infrastructure expenditures in the Wilmington Townlot Unit (WTU) in the Los Angeles Basin in California. The capital expenditure budget includes the drilling of 34 producing and injection wells with an average working interest of 98.5%. The WTU budget is comprised of $32 million for drilling expenditures and $18 million for drilling cellar construction, pipelines and other infrastructure costs.

The Company has drilled four horizontal Tar wells since July 2006 with the Ensign rig. The first four Tar wells are currently producing an average of approximately 135 barrels of oil per day per well with an average water oil ratio of 1. The Tar production amounts represent limited production history. The Company plans to continue to drill Tar horizontal wells using the Ensign rig. Warren has identified an additional 10 horizontal drilling locations in the Tar formation to be drilled during the balance of 2006 and 2007.

Eight previously completed Upper Terminal producing wells are not producing due to downhole problems. These wells are currently inaccessible due to cellar construction activities. The Company plans to utilize a snubbing unit to repair two of the better performing wells during cellar construction. These two additional wells are expected to be back on line during the next two weeks. Also, five Upper Terminal producer wells have been drilled and not yet completed. Currently, the Company is utilizing the Nabors rig to complete these wells. After completing these wells, the Nabors rig will resume drilling new wells in the Upper Terminal and Ranger formations.

NORTH WILMINGTON UNIT

Warren plans to spend approximately $18 million or 15% of the total 2007 budgeted drilling and infrastructure expenditures in the North Wilmington Unit (NWU), which is adjacent to the WTU in the Los Angeles Basin in California. The Company's capital expenditure budget includes drilling 14 new wells, recompleting 12 pre-existing wells and infrastructure costs. Warren owns a 100% working interest in the NWU.

PACIFIC RIM PROJECT

The Company owns approximately 5,600 net acres in the Chicken Springs unit and the Vermillion Basin of the Pacific Rim project in south central Wyoming. The Company believes this acreage may be prospective for developing natural gas in the Baxter Shale and other formations at depths up to 12,000 feet. Warren plans to drill 2 gross (1 net) well targeting the Baxter Shale formation during 2007. The Company has budgeted $5 million or 4% of the total 2007 capital expenditure plan for this project.

SOUTH SEMINOLE EXPLORATORY PROJECT

The Company owns 7,000 net acres in the Hanna Basin which is approximately 25 miles northeast of the Atlantic Rim project. Warren is drilling an exploratory well to test the potential producing zones to the Nugget formation at 14,000 feet. After encountering drilling and rig problems, the Company has resumed drilling to approximately 7,800 feet. The Company's dry hole cost estimate has been increased to $3.5 million net.

LX BAR FIELD

The Company has scheduled maintenance during March 2007 on the LX Bar gas field in Wyoming. As a result, Warren expects to shut in the field for three weeks during this procedure.

Norman F. Swanton, Warren's Chairman & CEO, commented, "2007 will be a year of significant growth for the Company. With the Record of Decision expected in the first quarter of 2007, we can commence full scale development of our Atlantic Rim project with Anadarko Petroleum. Additionally, with the approval of the Los Angeles zoning commission to drill up to 540 new wells on our WTU property, we will continue to develop the four potential horizons within the WTU. Our challenge in 2007 and beyond will be to execute our drilling plan on our large, high quality acreage in the Washakie Basin in Wyoming and the Wilmington field in California."

2007 Guidance

Warren provides the following updated forecast for production and capital expenditures based upon the information available at the time of this release. Please see the forward-looking statement at the end of this release for more discussion of the inherent limitations of this information.


                                             First Quarter ending  Year ending
                                                   March 31,      December 31,
                                                     2007             2007
    Production:

    Oil (MBbl)                                     140 - 150       750 - 850
    Gas (MMcf)                                     200 - 215     900 - 1,100
    Gas Equivalent (MMcfe)                     1,040 - 1,115   5,400 - 6,200
    Capital Expenditure Budget (in thousands)        $30,000        $121,000

Warren also stated that it has no change to its previously issued 2006 guidance for production and capital expenditures.

About Warren Resources

Warren Resources, Inc. is a growing independent energy company engaged in the exploration and development of domestic natural gas and oil reserves. Warren is primarily focused on the exploration and development of coalbed methane properties located in the Rocky Mountain region and its primary and secondary water flood oil recovery programs in the Wilmington Units located in the Los Angeles Basin of California. 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.

Forward-Looking Statements

This press 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. Statements regarding projections of revenues or income or reserves or similar items, such as statements pertaining to future revenues, future capital expenditures, future cash flows, future operations or results, and other statements that are not historical facts, are examples of forward looking statements. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including without limitation risks of declining oil and gas prices, competition for prospects, accuracy of reserve estimates, estimated rates of production, increases in drilling and lifting costs, increases in equipment and supply costs and other factors detailed in the Company's filings with the Securities and Exchange Commission (www.sec.gov).

SOURCE Warren Resources, Inc.

David Fleming of Warren Resources, Inc., +1-212-697-9660

http://www.warrenresourcesinc.com/