Upstream energy firm, Warren Resources, Inc. (WRES) provided an outlook on its 2015 production and capital budget plans.
Production Guidance
Warren Resources expects 2015 production between 41 billion cubic feet equivalent (Bcfe) to 43 Bcfe, a jump of over 95% from this year’s expected midpoint production level. The company added that this massive improvement is due to the acquisition of Marcellus assets earlier this year. Natural gas is expected to comprise about 85% of 2015 production. The weak crude oil price has compelled the company to focus on natural gas-related growth.
Also, Warren Resources restated the 2014 full-year guidance of 1.10–1.12 million barrels of oil and 14.50–15.25 bcf of natural gas.
Capital Budget & Operational Update
Warren Resources projects 2015 capital spending of about $80 million. The company plans to focus on development of its Marcellus assets and keep capital spending in line with cash flows due to the current weakness in crude prices.
The company mentioned that though its Wilmington field is capable of breaking even with oil prices as low as $45 per barrel, it is holding off development activity in the field till prices improve.
The company has allocated about $16 million of its 2015 capex for Wilmington field that will be used for construction of the Satellite 8 facility in the North Wilmington Unit and a gas sales line from the Wilmington Townlot Unit. However, a major portion of these developments could be delayed if crude prices continue to slide.
The major portion of the budget, about $44 million, has been allocated for the development of Marcellus assets where the company plans to drill 7 wells and complete 8 wells in 2015.
For its Wyoming operations, Warren Resources has allocated about $20 million. These funds would be used to drill 17 producing wells and 4 injector wells, which have been deferred from its 2014 plans.
Zacks Rank & Other Stock Picks
Currently, Warren Resources carries a Zacks Rank #3 (Hold).
Better-ranked stocks from the exploration and production space include Sandridge Mississippian Trust II (SDR), Cheniere Energy, Inc. (LNG) and Atlas Resource Partners, L.P. (ARP). While Sandridge sports a Zacks Rank #1 (Strong Buy), Cheniere Energy and Atlas Resource hold a Zacks Rank #2 (Buy).
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