EPL Oil & Gas Inc. intends to spend $360 million on oil-dominated, lower-risk development activities in 2014, focusing on the exploitation of the shallow sections within EPL's Ship Shoal, West Delta, South Timbalier, and Main Pass core field areas.
The company expects its capital spending to be front-loaded to drive production growth and organic reserve replacement.
“This front-loaded plan should deliver oil production for 2014 above our organic growth target of a minimum of 10%/year, while providing us the flexibility to modify the spend up or down depending upon market conditions,” said Gary Hanna, EPL president and chief executive officer.
“It is also important to keep in mind that this initial budget of $360 million is in addition to our recently announced $70 million acquisition within the prolific Eugene Island 258/259 field,” Hanna added.
The company plans the continuation of an active drilling program from fourth-quarter 2013, as there are 5 rigs working within the company’s core field areas. It intends to ramp up to 8 rigs working in 2014, primarily consisting of jack up and hydraulic workover units.
Drill wells and sidetrack operation will comprise 70% of EPL’s capital budget. The remaining 30% will be divided to 17% on major rig workovers and waterflood opportunities intended to drive oil production increases for select reservoirs within core field areas, and 13% for facility projects.
EPL said its midpoint oil guidance in 2014 is expected at 19,500 b/d, with the ability to grow to 20,500 b/d, 6% higher than 2013.
Natural gas is expected to be flat compared with 2013 at 30 Mmcfd at the midpoint of guidance. Total company production is expected to range from 23,000-26,000 boe/d.
The company also intends to spend $50 million on plugging and abandonment and other decommissioning activities.
EPL’s earnings before interest, taxes, depreciation, depletion, amortization, and exploration expenses, accounting for the company’s full-year guidance and current hedge position along with current prices of $100/bbl, are expected to range from $465-500 million, using the midpoint and high side of current guidance, respectively.