ME » Topics » Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program

These excerpts taken from the ME 10-K filed Mar 6, 2009.
Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program
 
In recent years, oil and gas commodity prices generally trended upwards in response to robust demand and constrained supplies, with oil and gas prices peaking at more than $140.00 per barrel and $13.00 per Mcf, respectively, in July 2008. In response to the sustained increase in commodity prices, the oil and gas industry experienced significant increases in activity and in demand for oil field services. The increased demand for these services resulted in significant inflation in the cost of drilling rigs, services, equipment and labor.
 
In the second half of 2008, a world-wide economic recession and oversupply of natural gas in North America led to an unprecedented decline in oil and gas prices, with oil falling by more than $100.00 per barrel from its peak earlier in 2008. However, the inflated cost of oil field services resulting from sustained historically high commodity prices did not decrease in line with the decline in commodity prices. The prospect of continued low commodity prices and disproportionately high service costs has constrained the industry’s capital reinvestment and undermined rates of return in new projects, particularly those in areas characterized by high costs or long reserve lives. In order to manage our capital program within expected cash flows, we tentatively have reduced our 2009 capital budget by more than 50% from 2008.
 
Our 2009 activities in the Permian Basin will focus primarily on expanding beyond our typical Spraberry infill drilling operation into new exploration plays, such as the Wolfberry and Wolfcamp Detrital trends. We plan to delineate prospects and determine their economic viability. Our goal is to expand our prospect inventory and generate opportunities to drill when commodity prices or service costs adjust to levels expected to yield more attractive returns. Until then, we are scaling down our infill drilling and development activities to primarily lease-saving operations and contractual drilling commitments. We also anticipate substantially reduced recompletion and development activities in our Gulf of Mexico shelf operation until commodity price and service cost dynamics adjust to allow a more attractive rate of return. In addition, we are allocating a disproportionate portion of our 2009 capital budget to our Gulf of Mexico deepwater exploration program due primarily to contractual drilling commitments.
 
Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program
 
In recent years, oil and gas commodity prices generally trended upwards in response to robust demand and constrained supplies, with oil and gas prices peaking at more than $140.00 per barrel and $13.00 per Mcf, respectively, in July 2008. In response to the sustained increase in commodity prices, the oil and gas industry experienced significant increases in activity and in demand for oil field services. The increased demand for these services resulted in significant inflation in the cost of drilling rigs, services, equipment and labor.
 
In the second half of 2008, a world-wide economic recession and oversupply of natural gas in North America led to an unprecedented decline in oil and gas prices, with oil falling by more than $100.00 per barrel from its peak earlier in 2008. However, the inflated cost of oil field services resulting from sustained historically high commodity prices did not decrease in line with the decline in commodity prices. The prospect of continued low commodity prices and disproportionately high service costs has constrained the industry’s capital reinvestment and undermined rates of return in new projects, particularly those in areas characterized by high costs or long reserve lives. In order to manage our capital program within expected cash flows, we tentatively have reduced our 2009 capital budget by more than 50% from 2008.
 
Our 2009 activities in the Permian Basin will focus primarily on expanding beyond our typical Spraberry infill drilling operation into new exploration plays, such as the Wolfberry and Wolfcamp Detrital trends. We plan to delineate prospects and determine their economic viability. Our goal is to expand our prospect inventory and generate opportunities to drill when commodity prices or service costs adjust to levels expected to yield more attractive returns. Until then, we are scaling down our infill drilling and development activities to primarily lease-saving operations and contractual drilling commitments. We also anticipate substantially reduced recompletion and development activities in our Gulf of Mexico shelf operation until commodity price and service cost dynamics adjust to allow a more attractive rate of return. In addition, we are allocating a disproportionate portion of our 2009 capital budget to our Gulf of Mexico deepwater exploration program due primarily to contractual drilling commitments.
 
Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program
 
In recent years, oil and gas commodity prices generally trended upwards in response to robust demand and constrained supplies, with oil and gas prices peaking at more than $140.00 per barrel and $13.00 per Mcf, respectively, in July 2008. In response to the sustained increase in commodity prices, the oil and gas industry experienced significant increases in activity and in demand for oil field services. The increased demand for these services resulted in significant inflation in the cost of drilling rigs, services, equipment and labor.
 
In the second half of 2008, a world-wide economic recession and oversupply of natural gas in North America led to an unprecedented decline in oil and gas prices, with oil falling by more than $100.00 per barrel from its peak earlier in 2008. However, the inflated cost of oil field services resulting from sustained historically high commodity prices did not decrease in line with the decline in commodity prices. The prospect of continued low commodity prices and disproportionately high service costs has constrained the industry’s capital reinvestment and undermined rates of return in new projects, particularly those in areas characterized by high costs or long reserve lives. In order to manage our capital program within expected cash flows, we tentatively have reduced our 2009 capital budget by more than 50% from 2008.
 
Our 2009 activities in the Permian Basin will focus primarily on expanding beyond our typical Spraberry infill drilling operation into new exploration plays, such as the Wolfberry and Wolfcamp Detrital trends. We plan to delineate prospects and determine their economic viability. Our goal is to expand our prospect inventory and generate opportunities to drill when commodity prices or service costs adjust to levels expected to yield more attractive returns. Until then, we are scaling down our infill drilling and development activities to primarily lease-saving operations and contractual drilling commitments. We also anticipate substantially reduced recompletion and development activities in our Gulf of Mexico shelf operation until commodity price and service cost dynamics adjust to allow a more attractive rate of return. In addition, we are allocating a disproportionate portion of our 2009 capital budget to our Gulf of Mexico deepwater exploration program due primarily to contractual drilling commitments.
 
Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program
 
In recent years, oil and gas commodity prices generally trended upwards in response to robust demand and constrained supplies, with oil and gas prices peaking at more than $140.00 per barrel and $13.00 per Mcf, respectively, in July 2008. In response to the sustained increase in commodity prices, the oil and gas industry experienced significant increases in activity and in demand for oil field services. The increased demand for these services resulted in significant inflation in the cost of drilling rigs, services, equipment and labor.
 
In the second half of 2008, a world-wide economic recession and oversupply of natural gas in North America led to an unprecedented decline in oil and gas prices, with oil falling by more than $100.00 per barrel from its peak earlier in 2008. However, the inflated cost of oil field services resulting from sustained historically high commodity prices did not decrease in line with the decline in commodity prices. The prospect of continued low commodity prices and disproportionately high service costs has constrained the industry’s capital reinvestment and undermined rates of return in new projects, particularly those in areas characterized by high costs or long reserve lives. In order to manage our capital program within expected cash flows, we tentatively have reduced our 2009 capital budget by more than 50% from 2008.
 
Our 2009 activities in the Permian Basin will focus primarily on expanding beyond our typical Spraberry infill drilling operation into new exploration plays, such as the Wolfberry and Wolfcamp Detrital trends. We plan to delineate prospects and determine their economic viability. Our goal is to expand our prospect inventory and generate opportunities to drill when commodity prices or service costs adjust to levels expected to yield more attractive returns. Until then, we are scaling down our infill drilling and development activities to primarily lease-saving operations and contractual drilling commitments. We also anticipate substantially reduced recompletion and development activities in our Gulf of Mexico shelf operation until commodity price and service cost dynamics adjust to allow a more attractive rate of return. In addition, we are allocating a disproportionate portion of our 2009 capital budget to our Gulf of Mexico deepwater exploration program due primarily to contractual drilling commitments.
 
Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




These excerpts taken from the ME 10-K filed Mar 2, 2009.
Impact of Worldwide Financial Crisis and Lower Commodity Prices on Capital Program
 
In recent years, oil and gas commodity prices generally trended upwards in response to robust demand and constrained supplies, with oil and gas prices peaking at more than $140.00 per barrel and $13.00 per Mcf, respectively, in July 2008. In response to the sustained increase in commodity prices, the oil and gas industry experienced significant increases in activity and in demand for oil field services. The increased demand for these services resulted in significant inflation in the cost of drilling rigs, services, equipment and labor.
 
In the second half of 2008, a world-wide economic recession and oversupply of natural gas in North America led to an unprecedented decline in oil and gas prices, with oil falling by more than $100.00 per barrel from its peak earlier in 2008. However, the inflated cost of oil field services resulting from sustained historically high commodity prices did not decrease in line with the decline in commodity prices. The prospect of continued low commodity prices and disproportionately high service costs has constrained the industry’s capital reinvestment and undermined rates of return in new projects, particularly those in areas characterized by high costs or long reserve lives. In order to manage our capital program within expected cash flows, we tentatively have reduced our 2009 capital budget by more than 50% from 2008.
 
Our 2009 activities in the Permian Basin will focus primarily on expanding beyond our typical Spraberry infill drilling operation into new exploration plays, such as the Wolfberry and Wolfcamp Detrital trends. We plan to delineate prospects and determine their economic viability. Our goal is to expand our prospect inventory and generate opportunities to drill when commodity prices or service costs adjust to levels expected to yield more attractive returns. Until then, we are scaling down our infill drilling and development activities to primarily lease-saving operations and contractual drilling commitments. We also anticipate substantially reduced recompletion and development activities in our Gulf of Mexico shelf operation until commodity price and service cost dynamics adjust to allow a more attractive rate of return. In addition, we are allocating a disproportionate portion of our 2009 capital budget to our Gulf of Mexico deepwater exploration program due primarily to contractual drilling commitments.
 
Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




Impact of
Worldwide Financial Crisis and Lower Commodity Prices on Capital
Program



 



In recent years, oil and gas commodity prices generally trended
upwards in response to robust demand and constrained supplies,
with oil and gas prices peaking at more than $140.00 per barrel
and $13.00 per Mcf, respectively, in July 2008. In response to
the sustained increase in commodity prices, the oil and gas
industry experienced significant increases in activity and in
demand for oil field services. The increased demand for these
services resulted in significant inflation in the cost of
drilling rigs, services, equipment and labor.


 



In the second half of 2008, a world-wide economic recession and
oversupply of natural gas in North America led to an
unprecedented decline in oil and gas prices, with oil falling by
more than $100.00 per barrel from its peak earlier in 2008.
However, the inflated cost of oil field services resulting from
sustained historically high commodity prices did not decrease in
line with the decline in commodity prices. The prospect of
continued low commodity prices and disproportionately high
service costs has constrained the industry’s capital
reinvestment and undermined rates of return in new projects,
particularly those in areas characterized by high costs or long
reserve lives. In order to manage our capital program within
expected cash flows, we tentatively have reduced our 2009
capital budget by more than 50% from 2008.


 



Our 2009 activities in the Permian Basin will focus primarily on
expanding beyond our typical Spraberry infill drilling operation
into new exploration plays, such as the Wolfberry and Wolfcamp
Detrital trends. We plan to delineate prospects and determine
their economic viability. Our goal is to expand our prospect
inventory and generate opportunities to drill when commodity
prices or service costs adjust to levels expected to yield more
attractive returns. Until then, we are scaling down our infill
drilling and development activities to primarily lease-saving
operations and contractual drilling commitments. We also
anticipate substantially reduced recompletion and development
activities in our Gulf of Mexico shelf operation until commodity
price and service cost dynamics adjust to allow a more
attractive rate of return. In addition, we are allocating a
disproportionate portion of our 2009 capital budget to our Gulf
of Mexico deepwater exploration program due primarily to
contractual drilling commitments.


 




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