Thursday, August 6, 2009

Natural Gas Cost of Operations Down

BANGALORE, Aug 5 (Reuters) - Oil and gas companies Goodrich Petroleum Corp (GDP.N), Brigham Exploration and Production Co (BEXP.O) and Penn Virginia Corp (PVA.N) reported quarterly losses, as commodity prices fell, but forecast a strong second half citing lower costs and rising production.

Demand for oil and natural gas has been hurt by the global economic slowdown. Growing stockpiles pulled down crude prices more than 50 percent in the second quarter from year-ago levels, while natural gas prices fell 65 percent.

Lower commodity prices have also brought down the cost to drill wells, allowing producers to get more for their money, boosting many exploration and production companies' quarterly results.

Earlier on Wednesday, Petroquest Energy Corp (PQ.N), Devon Energy Corp (DVN.N) and XTO Energy Inc (XTO.N) reported better-than-expected results and said they benefited from lower costs.

"One of the overarching themes that we have seen pretty much across the board as companies have reported is that they are simply getting more for less," Natixis Bleichroeder analyst Curtis Trimble said.

"Not only do you have a cost function that's stretching your dollars further, but also on the production side, the companies are simply getting more out of their wells due to refined completion programs, as compared to previous periods," he added.

Trimble said costs would decline further and might not pick up with the increased drilling activity.

"Outside a couple of localised instances, we won't see increases in service or equipment costs anytime soon," he said.


Penn Virginia, which reported an adjusted loss of 14 cents a share, compared with analysts' view of a loss of 13 cents a share, said its quarterly expenses fell 21 percent to $200.4 million. Net production volumes increased by 19 percent. [ID:nWNBB9962]

"As a result of our strong second quarter and first half results, we have kept our production guidance unchanged, with slight year-over-year production growth in 2009," company Chief Executive James Dearlove said in a statement. Goodrich Petroleum posted a narrower second quarter loss of $1.02 per share, as production volumes rose 22 percent and lease operating expenses per thousand cubic feet equivalent (mcfe) fell 25 percent. [ID:nWNBB9989].

The company forecast third-quarter average daily production of between 78,000 and 82,000 mcfe.

Brigham Exploration forecast third-quarter average production of 4,667 barrels of oil equivalent per day (boed) to 5,167 boed.

The company, which reported a 28 percent rise in quarterly oil production, expects oil to comprise about half of total third-quarter production.

For the latest second quarter, the company posted an adjusted loss of 5 cents a share, a cent narrower than Street estimates. [ID:nWNBB0104]

Shares of Brigham Exploration closed down 3 percent at $5.28 Wednesday on Nasdaq. Goodrich shares closed down 4 percent at $26.38, while Penn Virginia stock closed down 14 cents at $20.27 on the New York Stock Exchange. (Editing by Pradeep Kurup)

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