Wednesday, St. Mary Land & Exploration Co. (SM) announced its 2010 initial capital budget of $725 million and provided production guidance for the fiscal 2010.
The company allocated a capital of $561 million for exploration and drilling of which $216 million will be set for work at Eagle Ford shale, followed by Haynesville shale and Permian oil of $89 million. Bakken and Three Forks has been provided with a budget of $80 million and the rest $87 million will be used for exploration and drilling at other places like Marcellus, Granite Wash & Woodford shale.
The company noted that it will operate approximately 75% of the exploration and development capital it deploys in 2010.
In Eagle Ford shale the company plans to operate two drilling rigs continuously on its high working interest acreage in Webb, Dimmitt, and La Salle counties in south Texas in 2010.
The first operated well in the Eagle Ford program was drilled in 45 days, while its most recent well was drilled in under 14 days. The operated program will account for roughly 78% of its investment in the Eagle Ford shale in 2010 and will consist of 34 gross operated wells, the majority in which the company will have a 100% working interest.
In the joint venture with Anadarko Petroleum, the 2010 plan is to invest approximately $47 million to participate in wells located in the liquids-rich area of the play north of the company's high working interest acreage.
Approximately $24 million of the noted facilities budget will be deployed in the Eagle Ford shale program to expand infrastructure.
Haynesville shale plans to drill six horizontal wells and one vertical well in 2010, all of which will be drilled in San Augustine and Shelby counties, Texas. The drilling program has been designed to utilize recently acquired 3D seismic data while preserving core leasehold that constitutes roughly 64% of the capital budget allocated. The majority of the remaining budget will support partner-operated drilling in east Texas and at Elm Grove Field in northern Louisiana.
In the Permian Basin, the company will operate 89% of its capital investment, over half of which will be focused on Wolfberry tight oil projects. The 2010 program includes 32 wells at the operated Sweetie Peck asset and is designed to continue Wolfberry development. It also includes six 20-acre wells to test the viability of increased density drilling in portions of the play. 67% of the investment for Bakken and Three Forks formation will be operated by the company St.Mary's said that $164 million has been assigned for non-drilling purpose out of which $86 million will be used for land and seismic.
The company noted that the investment program is planned to be funded through operating cash flow and anticipated proceeds from the previously announced divestiture of non-core oil properties in the Rocky Mountains.
St. Mary noted that its strong financial position also provides the ability to expand its capital investment program through borrowings under the credit facility should it elect to accelerate drilling activity. As of December 16, 2010, approximately $437 million was available to borrow under that facility.
The Denver, Colorado-based company anticipates that pro forma production will bottom in the first quarter of 2010 and thereafter will grow on a sequential quarterly basis. Adjusting for divestiture activity, the company foresees over 20% production growth from December 2009 to December 2010.
Looking ahead, the company expects fourth quarter production in the range of 270 to 285 MMCFE per day, and pro forma production of 242 to 257 MMCFE per day.
SM closed Wednesday's regular trading at $35.34, down $0.02 or 0.06% on a volume of 1.01 million shares on the NYSE.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.