Stable cash business is on Texas and California – about 75% of reserves - low capex required.
Permian Basin – core of company business – continue to make small acquisitions – good time to make acquisitions now because banks have stopped lending to levered players – and MLP’s are getting their “well deserved demise.”
California – underexploited area but difficult to drill. More growth here than in Permian.
Middle East – North Africa – Dolphin Project in Qatar is completed.
Oman – steam flood project in Oman – 173 wells in 2006 and 2007.
Libya – 30 year agreement signed – good growth expected here.
Latin America – Colombia and Argentina. Colombia Cano Limon field is legacy field near the end of its life.
Capital allocation policy – projects must meet minimum returns and be competitive with stock buy backs.
Company takes very little reserve risk – most areas they know reserves are there. They are unhedged.
Spent $1.13 billion to buy back stock in 2007 – Company authorized another 20 million shares in 2008.
Company not happy with G and A expense per barrel so put in cost reduction program.
Long term production growth rate of 5-8% - maintain at least an A rating to compete against larger oil companies.
Tuesday, April 8, 2008