(SM) St. Mary Land & Exploration Hikes 2010 Capital Spending

December 18th, 2009

St. Mary Land & Exploration Co. (SM) released its initial capital expenditure (capex) budget and production guidance for 2010. The Board of Directors has approved a total capex of $725 million. Of this, approximately 77% or $561 million is earmarked for exploration and drilling program.

Of the total capex budget for exploration and drilling program, the company will deploy a significant portion (more than 54%) for its emerging resource plays such as Eagle Ford and Haynesville Shale.

The company has chosen mainly internally generated cash flows and proceeds from the anticipated divestiture of non-core Rocky Mountain properties to fund its 2010 capex. If necessary, the company can also avail of its existing credit facility.

St. Mary anticipates a 20% growth in December 2010 production volumes versus December 2009 volumes, after adjusting for expected divestitures. It expects 242–257 million cubic feet equivalent per day (MMcfe/d) and 266–288 MMcfe/d of production in the fourth quarter of 2009 and 2010, respectively.

The company has been working over the past several years to build a significant position in emerging shale plays in order to transition it to more of a resource play focused company, with a deep inventory of repeatable drilling prospects and a high rate of return. The aggressive capex program for these shale plays is a step in that direction.

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