FORT WORTH, Texas, Dec. 17, 2008 (GLOBE NEWSWIRE) -- Approach Resources Inc. (Nasdaq:AREX) (the "Company") today provided a fourth quarter and year end 2008 production outlook, 2009 capital expenditure budget and 2009 guidance.
Fourth Quarter and Year End 2008 Production Outlook
Production for the fourth quarter of 2008 is expected to be approximately 2.6 Bcfe (28.3 MMcfe/d). The Company's 2008 full year production is expected to be 8.7 Bcfe (23.8 MMcfe/d), representing a 64% increase over prior year production of 5.3 Bcfe (14.5 MMcfe/d).
2009 Capital Expenditure Budget
The Company's Board of Directors has approved a capital expenditure budget for 2009 of $43.8 million, a 45% reduction from the 2008 capital expenditure budget of $80.0 million. The 2009 capital budget provides for a four-rig program, with two rigs running in Cinco Terry beginning in January of 2009, one rig running in Ozona Northeast beginning in July of 2009 and one rig running in North Bald Prairie beginning in July of 2009. The Company noted that its joint venture partner has exercised the partner's right to operate the North Bald Prairie acreage under the Carry and Earning Agreement.
The Company anticipates allocating the current 2009 capital expenditure budget as follows:
Estimated
Estimated Number of
Projected Number of Recomplet-
Area of Operation Allocation Drilling and ions or
(Target Formations) (in thousands) Percent Completions Deepenings
-------------------- ------------------------------------------------
West Texas
----------
Cinco Terry
(Wolfcamp, Canyon
Sands and
Ellenburger) $ 26,578 61% 48 18
Ozona Northeast
(Wolfcamp, Canyon
Sands, Strawn and
Ellenburger) $ 11,750 27% 12 13
East Texas
----------
North Bald Prairie
(Cotton Valley
Sands, Bossier
and Cotton Valley
Lime) $ 4,500 10% 4 --
Exploratory
-----------
Western Kentucky
(New Albany Shale) $ 360 1% 3 --
British Columbia
(Montney tight gas
and Doig Shale) $ 633 1% -- 1
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Total $ 43,821 100% 67 32
Management Comments
J. Ross Craft, the Company's President and Chief Executive Officer, commented that, "The 2009 capital budget reflects the current commodity price environment and financial market conditions, as well as our commitment to preserving financial and operational flexibility. Under our current commodity price assumptions of $5.50/Mcf (NYMEX) and $57.50/Bbl (NYMEX), we expect to fully fund the current 2009 capital expenditure budget out of internally generated cash flow, with any excess cash flow directed towards reducing debt, other working capital or strategic acquisitions. Even with a substantially reduced capital budget, we are anticipating 2009 production growth to range from 8% to 14% over estimated 2008 production volumes. 2009 could present compelling opportunities, and we will want the flexibility to capitalize on these opportunities. We also will continue to pay close attention to commodity prices and operating expenses to determine any future adjustments to the capital budget and 2009 estimated production volumes."
2009 Guidance
The table below sets forth the Company's 2009 financial and operational guidance. The 2009 guidance is forward-looking information that is subject to a number of risks and uncertainties, many of which are beyond the Company's control, as further described later in this press release.
Projected
---------------
2009
---------------
Production:
Total (MMcfe) 9,400 - 9,900
Operating costs and expenses:
Lease operating expense (per Mcfe) $ 0.85 - 0.95
Severance and production taxes (percent of oil
and gas sales) 5%
General and administrative (per Mcfe) $ 0.90 - 1.00
Depletion, depreciation and amortization
(per Mcfe) $ 2.50 - 3.00
Forward-Looking Statements and Cautionary 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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and estimated fourth quarter and full year 2008 production, expected capital expenditures (including, without limitation, the amount, location and category of such expenditures), the Company's drilling program, internally generated cash flow, production growth and financial and operational guidance. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to risks relating to financial performance and results, price volatility, supply and demand for oil and gas, global economic and financial market conditions, availability of drilling equipment and personnel, availability of sufficient capital to execute the Company's business plan, risks associated with drilling of oil and gas wells, the Company's ability to replace reserves and efficiently develop its current reserves, inaccuracies in the Company's assumptions regarding items of income and expense and the level of capital expenditures, production downtime due to maintenance, weather or other factors outside the Company's control, and other important factors that could cause actual results to differ materially from projected results. Additional information on these and other risks and uncertainties are described in the Company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 28, 2008 and November 6, 2008, respectively, and available on the Company's web site at www.approachresources.com. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Approach Resources Inc.
Approach Resources Inc. is an independent energy company engaged in the exploration, development, production and acquisition of unconventional natural gas and oil properties in the United States and British Columbia. The Company focuses on natural gas and oil reserves in tight sands and shale. The Company operates or holds leases in Texas, Kentucky and New Mexico and has a non-operating interest in British Columbia. For more information about the Company, please visit www.approachresources.com. Please note that the Company routinely posts important information about the Company under the "Investor Relations" section of its web site.