BEN - TSX
CALGARY, May 24 /CNW/ - Berens Energy Ltd. ("Berens" or the "Company")
today announced a reduction in its 2006 capital expenditure plan to
$51 million from the previously announced level of $61 million.
In light of lower than expected natural gas prices in the first five
months of 2006 and higher industry service costs, Berens has elected to reduce
its capital expenditure plans for the remainder of the year to maintain a
sound balance sheet and defer spending to bring on new production when natural
gas prices are expected to be stronger. The capital plan for the balance of
2006 will focus on drilling in the prospective Pembina and Lanfine areas with
deferred spending on land and seismic, and drilling in the Deep Basin. Reduced
drilling in the revised budget, together with production delays in the first
quarter and production results below expectation on four new wells and four
completed wells associated with the Berland acquisition combine to reduce
expected average 2006 production to an estimated 3,800 boepd with exit
production projected at approximately 4,450 boepd.
The second quarter Lanfine drilling program of seven wells commenced in
mid-May with the first two wells being cased pending completion. Post-break up
drilling activity in Pembina has also commenced with one well (0.5 net)
drilled and cased and one (0.5 net) drilling with an ongoing drilling program
planned for the balance of the year. For the remainder of 2006 Berens plans to
drill 12 (six net) Pembina wells, an additional seven Lanfine wells at 100% in
October/November and one (0.25 net) Deep Basin well in third quarter. Capital
is also allocated for completion and tie-in of five (2.5 net) and 10 (4.6 net)
wells in Pembina and the Deep Basin respectively. The 10 Pembina and Deep
Basin wells pending tie in have an estimated net production capability of over
300 boepd. In addition, 100 boepd of production pending tie in has been tested
at Marten Hills that will come on stream in January, 2007 when the cold
weather returns. The 2006 capital program is expected to be funded by cash
flows and the Company's operating bank facility.
"For a company of our size we continue to have an enviable land base and
a wealth of drilling opportunities. However, it is prudent at this time to be
conservative and defer certain capital activity to a time when natural gas
prices have strengthened and are more supportive. Although management will
proactively monitor capital expenditures in the current pricing environment,
we firmly believe in the long-term opportunities for excellent growth at
Berens." said Bob Steele, CEO.
Forward looking statements: This press release may contain forward-
looking statements including expectations of future production, cash flow and
earnings. These statements are based on current expectations that involve a
number of risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not limited
to: the risks associated with the oil and gas industry (e.g. operational risks
in development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses and health, safety and
environmental risks), commodity price and exchange rate fluctuation.
%SEDAR: 00020114E
