CNX Gas Announces 2007 Capital Expenditures of $312 Million
09 January 2007 - 12:00AM
PR Newswire (US)
PITTSBURGH, Jan. 8 /PRNewswire-FirstCall/ -- CNX Gas Corporation
(NYSE:CXG) has set 2007 Capital Expenditures at $312 million. This
represents an 84% increase from the $170 million in expected
capital spending for 2006. CNX Gas will have two development and
two exploration plays in 2007. The drilling, processing, and
gathering capital for Virginia Operations, a coalbed methane (CBM)
play in Central Appalachia, will be $148 million; Mountaineer, a
CBM play in Northern Appalachia, will be $84 million; Nittany, an
exploration CBM play in central Pennsylvania, will be $6 million;
and Cardinal, an exploration New Albany shale play in western
Kentucky, will be $12 million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20051213/CNXLOGO ) An
additional $32 million has been budgeted for a more aggressive land
effort. Much of the remaining $30 million, aside from $9 million
for Knox Energy in Tennessee, will be devoted to initial
exploration work as other plays are assessed. CNX Gas expects to
drill 278 development wells in Virginia, 57 development wells in
Mountaineer, eight exploration wells in Nittany, and three
exploration wells in Cardinal, for a total of 346 in its four major
active areas. CNX Gas holds a 100% working interest in these areas.
Other areas could see as many as 55 net wells, for a company total
of 401 wells. Virginia Operations will also perform 30
recompletions. The drilling of all of these wells, and the
recompletions, is expected to cost $160 million. Gathering and
processing capital is estimated at $106 million, which includes $12
million for the Bull Creek gathering system in Virginia, a
13.5-mile line that will allow for the collection of gas from the
western portion of the Oakwood and Middle Ridge fields, as well as
third- party production. Company production is expected to be 64
billion cubic feet (Bcf) in 2007, and at least 15% higher in both
2008 and 2009. Nicholas J. DeIuliis, president and chief executive
officer, said, "The 2007 Capital Budget represents a major step
forward for us in exploring and developing our 2.44 million gross
acres. In August 2005, we set a 2006 production growth target of
55.7 Bcf. For 2007 and beyond, we continue to expect at least 15%
annual growth in organic production. Success in Nittany and
Cardinal will move us closer to our strategic vision of eclipsing
100 Bcf of production in 2010. Achieving this would mean that CNX
Gas would have more than doubled its 2005 production of 48.4 Bcf in
five years without having made an acquisition." Mr. DeIuliis
continued, "When we sold shares in a private placement in August
2005, we were basically a Virginia CBM play. In 2006, we increased
Virginia drilling, proved the viability of our Mountaineer play and
identified two new plays -- Nittany and Cardinal -- that have the
potential to create significant shareholder value. Our goal in 2007
is to prove the viability of Nittany and Cardinal, while continuing
to test our other acreage for additional opportunities. Our
ultimate goal is to continue to achieve a return on capital
employed in excess of 20%. We expect to achieve that with this
Capital Budget." CNX GAS CORPORATION is an independent natural gas
exploration, development, production and gathering company
operating in the Appalachian Basin of the United States. In May
2006, Business Week cited CNX Gas in its survey of Hot Growth
Companies. Effective June 30, 2006, CNX Gas was added to the
membership of companies included in the Russell 3000(R) Index and
the Russell Midcap(R) Index. Recently, CNX Gas was named as a
finalist by Platts for its "Hydrocarbon Producer of the Year"
award. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Various statements in this release, including those that express a
belief, expectation, or intention, as well as those that are not
statements of historical fact, are forward-looking statements (as
defined in Section 21E of the Securities Exchange Act of 1934).
These statements involve risks and uncertainties that could cause
actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. We
have based these forward-looking statements on our current
expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and
uncertainties relate to, among other matters, the following: our
business strategy; our financial position; our cash flow and
liquidity; declines in the prices we receive for our gas affecting
our operating results and cash flow; uncertainties in estimating
our gas reserves; replacing our gas reserves; uncertainties in
exploring for and producing gas; our inability to obtain additional
financing necessary in order to fund our operations, capital
expenditures and to meet our other obligations; disruptions,
capacity constraints in or other limitations on the pipeline
systems which deliver our gas; competition in the gas industry; the
availability of personnel and equipment; increased costs; the
effects of government regulation and permitting and other legal
requirements; legal uncertainties regarding the ownership of the
coalbed methane estate; costs associated with perfecting title for
gas rights in some of our properties; our need to use unproven
technologies to extract coalbed methane in some properties; our
relationships and arrangements with CONSOL Energy; and other
factors discussed under "Risk Factors" in the 10-K for the year
ended December 31, 2005. We are including this cautionary statement
in this release to make applicable and take advantage of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 for any forward-looking statements made by, or on behalf,
of us. Contact: Dan Zajdel Vice President - Investor and Public
Relations (412) 854-6719 http://www.cnxgas.com/
http://www.newscom.com/cgi-bin/prnh/20051213/CNXLOGODATASOURCE: CNX
Gas Corporation CONTACT: Dan Zajdel, Vice President - Investor and
Public Relations, +1-412-854-6719, Web site: http://www.cnxgas.com/
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