MITCHELL CUTS SPENDING IN RESPONSE TO WEAK PRICES

Puny prices for crude oil and natural gas liquids have caused one of the largest independent operators in the U.S. to cut its spending program. Mitchell Energy & Development Corp., The Woodlands, Tex., set its fiscal 1995 capital budget at $230.8 million, down from $290.7 million in comparable spending last year. The company's fiscal years end each Jan. 31. George P. Mitchell, chairman and chief executive officer, called the budget cut "prudent" in light of the deterioration in crude oil

March 14, 1994

2 min read

Puny prices for crude oil and natural gas liquids have caused one of the largest independent operators in the U.S. to cut its spending program.

Mitchell Energy & Development Corp., The Woodlands, Tex., set its fiscal 1995 capital budget at $230.8 million, down from $290.7 million in comparable spending last year. The company's fiscal years end each Jan. 31.

George P. Mitchell, chairman and chief executive officer, called the budget cut "prudent" in light of the deterioration in crude oil and NGL prices. NGL production is one of the company's most important lines of business.

Spending plans will be reviewed periodically during the year, and changes up or down may be desirable in light of industry conditions.

The $290.7 million outlay of fiscal 1994 does not include $78.3 million spent last May to buy MEC Development Ltd., a development drilling partnership for which Mitchell was the general partner. It does include $13.2 million of MEC Development outlays made before the acquisition.

In the $230.8 million budget for the year ending Jan. 31, 1995, the company plans spending in the exploration and production division of $129.7 million, down from comparable prior-year expenditures of $173.1 million; in the gas transmission and processing division, $29.6 million, down from $48.6 million; and in the real estate division, $65.5 million, about even with the prior year's $65.1 million.

Corporate and miscellaneous areas will spend $6 million, up from prior-year expenditures of $3.9 million.

Energy related capital outlays for the year will be directed mainly toward adding natural gas reserves and production through low risk exploration and development drilling, improvements in gas processing and transmission capabilities, and several major projects that are under way.

Among those projects are construction of a methyl tertiary butyl ether plant in which the company has a one-third interest, expansion of an NGL fractionation plant in which it owns a 38.75% interest, and expansion of a 100% owned gas storage site.

The MTBE and fractionation plant projects are largely funded through loan agreements of partnerships in which Mitchell is a participant. So most of the expenditures are in addition to the company's consolidated capital budget.