FIELD ACTIVITIES / Chieftain International reports Successful Drilling
Stock Symbol: CID
Chieftain International, Inc. reports that its 1997 exploration and
development activities achieved record proved reserve additions of 47.4
billion cubic feet equivalent (bcfe) before production, and record proved and
probable additions of 63.7 bcfe.
Chieftain's 1997 U.S. activities replaced 162% of US production and 140%
of total Company production with proved reserves on a gas equivalent basis.
Proved plus probable reserve additions replaced 216% of US and 187% of total
Company gas equivalent production. This is the fourth consecutive year in
which Company exploration and development activities have more than replaced
production. In the three years ended December 31, 1997, including a major
reserve purchase in 1995, Chieftain replaced 242% of its total production with
proved reserves. During that period, the Company received an average price of
US$2.39 per mcf equivalent for US production which generated net cash flow of
US$1.51 per mcfe after payment of royalties, operating costs and production
taxes. During this three year period, the Company's finding and development
costs for proved reserves in the U.S. were US$1.07 per mcfe. These
expenditures created an additional tax pool of US$209 million, which at the
present U.S. tax rate results in potential tax savings of US$73 million. The
theoretical effect of this is to reduce the Company's U.S. finding and
development costs to approximately US$0.70 per mcfe. All U.S. exploration and
development costs incurred during the period are included in the determination
of U.S. finding and development costs.
The Company achieved an overall drilling success rate of 84% in 1997. The
Company's success rate for development wells was 98% and for exploratory wells
was 47%. The Company participated in a total of 61 wells of which 51 were
successful, including 34 oil development wells in Utah. In the Gulf of
Mexico, the Company drilled 26 exploratory and development wells, 17 of which
were successful.
During the three years ended December 31, 1997, Chieftain reduced direct
operating costs by 29% to US$0.34 per mcfe and general and administrative
costs by 35% to US$0.13 per mcfe. Chieftain increased its exploration base in
the US Gulf of Mexico to 149 blocks, including 121 in federal waters on the
Continental Shelf, which ranks Chieftain among the 15 largest leaseholders on
the shelf.
At December 31, 1997 proved gas reserves were 149 bcf (125 bcf net) with
proved and probable gas reserves totaling 186 bcf (155 bcf net). Proved
reserves of oil and natural gas liquids (ngls) were 13,006,000 (11,313,000
net) barrels and proved and probable reserves totaled 18,429,000 (15,952,000
net) barrels. Total proved reserves, expressed in gas equivalent terms, were
227 bcfe (193 bcfe net of royalties) and total proved plus probable reserves
were 296 bcfe (251 bcfe net of royalties). The reserve estimates do not
include oil reserves in Libya where Chieftain is participating in a long-term
production test.
The Company's gas reserves are located primarily in the US Gulf of Mexico
and the southern basin of the North Sea's UK sector. Light oil reserves are
located in Utah and the Gulf of Mexico.
In 1998 Chieftain will continue its aggressive exploration program with
the drilling of approximately 70 wells. Approximately 35 of these wells will
be in the offshore Gulf of Mexico. Several are presently drilling including 3
wells of potentially high impact. |
