Warren Resources says production fell in 3Q

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NEW YORK -Oil and gas operator Warren Resources Inc. says its third-quarter oil production was 5 percent lower than a year ago and flat with second-quarter levels as low energy prices have reduced the company's spending on drilling and infrastructure.

The company said Tuesday it produced the equivalent of 2.4 billion cubic feet of natural gas, down from 2.5 billion cubic feet a year ago. Oil production was 226,000 barrels, down from 263,000 barrels a year earlier, with declines in the Wilmington oil field near Los Angeles.

The company said it doesn't expect to drill new wells in its two developments there the rest of this year, however, with oil prices recently edging higher, it has been gradually returning some off-line wells to production.

Warren said its third-quarter natural gas production rose 12 percent year-over-year to 1 billion cubic feet. That's up 9 percent from the second quarter, but the company said production was curtailed due to low natural gas pricing which limited infrastructure spending.

Warren said it expects to produce the equivalent of 2.25 billion to 2.51 billion cubic feet of natural gas in the fourth quarter. That includes 225,000 to 235,000 barrels of oil and 900 million to 1.1 billion cubic feet of natural gas.

At this time, Warren said it doesn't expect to drill more wells in the Atlantic Rim area this year. Also, in order to preserve cash and lower operating expenses in 2009, Warren and its partners have temporarily shut in three pilot areas that were producing gas at less than commercial rates.

Benchmark crude for November delivery gained 88 cents to settle Tuesday at $74.15 on the New York Mercantile Exchange. That's still about half of where prices traded in the summer of 2008, but prices for a barrel of oil have risen for four straight days as the dollar has slipped against other major currencies.

Natural gas inventories, meanwhile, have built up as factories shut down and major energy users cut back. Natural gas prices — which are not as sensitive to the dollar — tumbled 29.2 cents, nearly 6 percent, to settle Tuesday at $4.588 per 1,000 cubic feet on Nymex.

Warren shares fell 4 cents to close earlier at $3.22.

2009-10-13 17:55:24