HOUSTON, Jan. 4, 2012 /PRNewswire/ -- Goodrich Petroleum Corporation (NYSE: GDP) today announced its preliminary capital expenditure budget for 2012, along with production and cash flow guidance for the year.
2012 CAPITAL EXPENDITURE BUDGET
The Company today announced a preliminary capital expenditure budget for 2012 of $250 – $275 million, which includes $235 – $260 million in drilling and completion expenditures and $15 million allocated to leasehold and infrastructure expenses. The Company anticipates drilling 49 gross (29 net) to 54 gross (32 net) wells for the year, with approximately 75% of the anticipated drilling and completion capital expenditures allocated to oil directed activity.
Oil directed activity will be concentrated in the Eagle Ford Shale trend with $155 million allocated to 29 gross (19 net) wells (which assumes a combination of 6,000 to 9,000 foot laterals), and the Tuscaloosa Marine Shale trend, with $20 – $45 million allocated to 4 gross (2 net) to 6 gross (4 net) wells.
Of its natural gas directed activity, the Company anticipates completing 14 gross (6 net) non-operated Haynesville Shale wells previously drilled in the core of the play for $35 million, along with $25 million associated with 2 gross (2 net) Angelina River Trend wells.
Capital expenditures in 2012 in the Eagle Ford Shale trend will be positively impacted by the elimination of the drilling carry associated with the Company's leasehold acquisition equal to a 20.8% working interest in the vast majority of the wells drilled in 2011, along with a reduction in drilling and completion costs of an estimated $2.5 million per well as a result of pad drilling, zipper fracs and lower pressure pumping prices.
The Company estimates oil volumes to grow by 130 – 160% in 2012 versus 2011, which will drive very strong cash flow growth. Natural gas volumes are expected to be flat to slightly down, while overall production on a Mcfe basis is expected to increase by 10 – 15% over 2011. Oil volumes are estimated to grow to approximately 5,000 barrels per day as the Company exits 2012.
Earnings before interest, taxes, DD&A, non-cash general and administrative expenses and exploration ("EBITDAX") is expected to grow by 45 – 65% to $255 – $290 million for the year factoring in the Company's hedges and based on $95.00 oil and $3.25 natural gas prices.
Discretionary cash flow, defined as net cash provided by operating activities before changes in working capital is expected to grow by 55 – 75% to $215 – $240 million under the same commodity price assumptions.
The Company currently has 2,500 barrels of oil per day, or approximately 55 – 60% of 2012 estimated volumes hedged at $100.56 per barrel, and 60,000 Mcf per day of natural gas, or approximately 60% of 2012 estimated volumes hedged at a floor price of $5.78 per Mcf.
The Company entered 2012 with approximately $175 million of liquidity on its $275 million borrowing base, which is expected to grow with the Company's increasing oil production and cash flow. The Company plans to fund its 2012 capital expenditure budget with cash flow from operations and modest borrowings on the senior credit facility.
Goodrich's Chief Executive Officer, Walter G. "Gil" Goodrich stated, "A little over a year ago, we initiated a significant transformation from a capital program dominated by gas-directed drilling activity to one dominated by crude oil-directed drilling. The strategic shift to oil-directed activity has already produced very positive results in 2011 with cash flow on pace to grow by approximately 65% compared to 2010. Our plans for 2012 will accelerate this transformation with oil-directed activity comprising approximately 75% of our 2012 drilling and completion budget and gas-directed activity representing the minimum necessary to complete a number of gas wells drilled in 2011 and maintain our acreage position in the Angelina River Trend.
While natural gas production is projected to remain roughly flat to slightly down, we are projecting crude oil production to more than double in 2012 versus 2011. As a result, we are tremendously excited about our ability to achieve record setting levels of growth in cash flow in 2012 while maintaining a strong balance sheet with high levels of liquidity. All of this can be achieved, we believe, on significantly reduced capital expenditures due to the extinguishment of our Eagle Ford drilling carry obligation and materially reduced estimated well costs. While the majority of our oil-directed activity will be earmarked for the Eagle Ford Shale play, we have also allocated incremental capital which will allow us to begin development of the emerging Tuscaloosa Marine Shale oil play.
Our 2012 capital program will remain flexible and capable of adjustments as dictated by changing market conditions and individual well performance in our emerging plays. In addition, our excellent hedge position provides us great protection for both natural gas and crude oil prices and cash flow growth. Our 2012 capital expenditures are expected to be funded by cash flow from operations and modest incremental borrowings under our senior credit facility."
Certain statements in this news release regarding future expectations and plans for future activities may be regarded as "forward looking statements" within the meaning of the Securities Litigation Reform Act. They are subject to various risks, such as financial market conditions, operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels.
Goodrich Petroleum is an independent oil and gas exploration and production company listed on the New York Stock Exchange. The majority of its properties are in Louisiana and Texas.
SOURCE Goodrich Petroleum Corporation
Robert C. Turnham, President; or Jan L. Schott, Chief Financial Officer, both of Goodrich Petroleum Corporation+1-713-780-9494, or fax, +1-713-780-9254