As previously reported, an estimated 17.3 million cubic feet equivalent per day ("MMcfe/d"), net to the Company, was shut in from Ozona Northeast as of September 11, 2008, as a result of the impact of Hurricane Ike on downstream natural gas processing facilities. During the past several days, the downstream plant operator has intermittently accepted net production from the Company ranging from 3 MMcfe/d up to 8 MMcfe/d. Although the Company has resumed production to pre-storm levels in Ozona Northeast, the Company noted that it could experience some continued negative effects of the shut-in, including increased operating costs, as compression facilities are restarted and individual wells are returned to production.
As a result of the shut-in of production caused by Hurricane Ike, as well as a previously-reported shut-in of Ozona Northeast related to the rupture of a third-party pipeline, the Company has lowered its annual production growth forecast for 2008 to 51% - 60%, or 8,000 MMcfe - 8,500 MMcfe, over 2007 production of 5,305 MMcfe. In addition, the Company preliminarily estimates that third quarter 2008 production will average approximately 21.2 MMcfe/d.
The Company's revised 2008 production forecast and estimated third quarter average daily production are forward-looking and subject to a number of risks and uncertainties, many of which are beyond the Company's control, as further described below in this press release. In particular, the Company could experience additional production delays, curtailments or shut-ins from Ozona Northeast or its other producing fields resulting from repairs, maintenance or volume limitations from third party, downstream infrastructure providers.
British Columbia Asset Divestiture
On July 15, 2008, the Company announced that the operator and non-operating participants in the Company's British Columbia lease acquisition and drilling project engaged a financial advisor to explore the sale of the project's oil and gas interests in northeast British Columbia. The project covers approximately 29,954 (gross) and 7,077 (net) acres in the Monias/Charlie Lake areas. The project primarily targets Montney tight gas and Doig phosphate shale formations. The Company holds a 25% non-operating interest in the project.
Given the current commodity price and capital market environment, the parties have determined not to sell their interests in the British Columbia project at this time. The Company plans to work with the other participants in the project to create the most value possible for all parties, including further development of the project's acreage.
Forward-Looking Statements and Cautionary Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include expectations related to the volume and potential impact of shut-in production, annual production volumes, quarterly production volumes and further development of the British Columbia project. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Other risks inherent in the Company's business are detailed in its Forms 10-K and 10-Q and other filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Approach Resources Inc.
Approach Resources Inc. is an independent energy company engaged in the exploration, development, production and acquisition of unconventional natural gas and oil properties in the United States and British Columbia. The Company focuses on natural gas and oil reserves in tight sands and shale. The Company operates or holds leases in Texas, Kentucky and New Mexico and has a non-operating interest in British Columbia. For more information about the Company, please visit the Company's web site www.approachresources.com. Please note that the Company routinely posts important information about the Company under the "Investor Relations" section of its web site.
The Approach Resources Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4320
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Approach Resources Inc.
Approach Resources Inc.
J. Ross Craft, President and CEO
Steven P. Smart, Executive Vice President and CFO
J. Curtis Henderson, Executive Vice President and General Counsel
Megan P. Brown, Analyst - Investor Relations & Corporate Communications (817) 989-9000