WGR Western Gas Res

Western Gas Resources, Inc. Announces 2005 Capital Spending DENVER, Jan. 20 /PRNewswire-FirstCall/ -- Western Gas Resources, Inc. ("Western") (NYSE:WGR) announced today its capital spending budget for 2005. 2005 Capital Spending. The Company anticipates capital expenditures of $338.8 million in 2005, primarily for growth and expansion projects in its Rocky Mountain upstream and midstream operations. The estimated $338.8 million includes the previously announced $28.0 million pending acquisition of midstream assets in the eastern Greater Green River Basin. Excluding acquisitions, the 2005 budget represents a 21 percent increase from the estimated $257.0 million expended in 2004. Approximately 87 percent or $295.6 million of the 2005 budget will be spent in the Rocky Mountain region, where the Company owns interests in approximately 1.4 million net acres in eight gas-producing basins. The Company plans to participate in a total of 1,019 wells, all in Rocky Mountain unconventional gas resource plays, an 18 percent increase from 2004 drilling. Western plans to invest $118.4 million, or 35 percent of its total program, in the Powder River Basin coal bed methane (CBM) development. Approximately $81.2 million will be spent on drilling 850 gross wells, production facilities for lease acquisitions and $37.2 million for gathering and compression systems. Western expects to invest $126.5 million, or 37 percent of the total budget in the Greater Green River Basin. The Company intends to invest $23.4 million to drill 64 gross wells and enhance its midstream infrastructure in the San Juan Basin. Additionally, Western plans to spend $27.3 million for exploration drilling, leasing and gathering in new areas, including the Niobrara biogenic gas project in northeast Colorado and new unconventional gas resource plays in the Rockies. The remaining $43.2 million of Western's 2005 capital expenditure program is expected to be spent as follows: $31.9 million for well connections, expansions, maintenance and upgrade projects on its midstream assets in the Anadarko and Permian Basins of Oklahoma and West Texas respectively, $8.3 million for capitalized interest and overhead and $3.0 million for administrative expenditures. Powder River Basin. The Company and its partner plan to drill 730 gross wells in the Big George and related coals and the remaining 120 wells in the Wyodak and related coals. An estimated 640 wells of the 850-well program will be on federal minerals and require drilling permits from the Bureau of Land Management (BLM). The remaining 210 wells are on fee or state lands. The Company with its partner has drilling permits approved and in hand for approximately 90 of the federal wells planned for 2005. Federal drilling permit applications for another 812 locations were submitted to the BLM by the end of 2004, which more than covers the anticipated federal wells for 2005. Federal drilling permit applications for an additional estimated 1,000 wells are in preparation for submittal over the next six months by Western and its partner. In addition to drilling permits, the Company and its partner independently work with the Wyoming Department of Environmental Quality (DEQ) to obtain water discharge permits for their respective drilling programs for 2005 on behalf of the partnership. An estimated 300 of the total gross wells will require permits to treat the water and the remaining 550 wells will require more conventional types of water discharge permits. To date, the Company and its partner have received water discharge permits from the DEQ to handle water from an estimated 291 wells or 34 percent of the Company's 2005 drilling program. Additionally, 18 water discharge permit applications for 435 wells in the 2005 drilling program have been submitted to the Wyoming DEQ and are in various stages of processing. In total, the water discharge permits for 726 wells have been approved or were submitted by year-end 2004, representing approximately 85 percent of the Company's 2005 drilling program. It is anticipated that all necessary remaining permits will be submitted by the end of the first quarter of 2005. As a point of reference, water discharge permits are submitted to the DEQ for their review and, when deemed complete, sent to public notice. Permits are on file with the public for 30 days and comments from all parties are reviewed and responded to by the DEQ for resolution as necessary followed by final issuance of the permit. The Company expects the DEQ permit process to take approximately 120 to 150 days from initial submittal to final approval. Green River Basin. The Company expects to spend $59.0 million to participate in 85 gross wells in the Green River Basin, of which 68 are slated for the rapidly developing Pinedale Anticline area, and $67.5 million to expand gathering and compression systems. The Company also plans to drill nine exploration wells on its 28,000 net acre leasehold in the Washakie and Red Desert Basins, which will tie into the Company's growing gathering and processing assets in the Wamsutter area. Additionally the Company will drill one exploratory well and seven development wells in the Sand Wash Basin. Exploration Activity. The Company has drilled six wells to date in the Niobrara biogenic gas play and plans to drill an additional six wells in the first half of 2005. The Company will build a 12-mile gathering line with production expected to commence in the second quarter of 2005 from the initial six wells. The six additional wells will be connected if successfully completed. The Company has identified 50 to 65 additional prospective drilling locations on its existing 59 square miles of 3-D seismic, which will be contingent on the extended production results of the initial wells. The Company expects to acquire a new 3-D seismic program covering 27 square miles in the first quarter of 2005. Western also plans to drill up to 14 gross exploration wells in other unconventional gas resource plays in the Rockies where it has recently acquired over 325,000 net acres. The budget includes leasing additional acreage in these plays in 2005. Gathering and Processing. In total, the Company plans to spend $140.8 million for gathering and processing activities in all of its operating areas. Approximately $23.7 million will be spent for new well connections, $71.3 million for new compression and gathering system expansions, $4.1 million for processing plant expansions and improvements, $13.7 million for maintenance, and approximately $28.0 million for the pending acquisition of midstream assets in the eastern Greater Green River Basin in 2005. The Company is expecting approximately 200 new well connections in each of the Anadarko and Permian Basins. CEO Comments. Peter Dea, President and Chief Executive Officer, stated, "The excellent commodity price environment, the resulting expected cash flow and abundant high return upstream and midstream growth opportunities has allowed us to increase our capital spending for 2005 compared to a year ago. We continue to see significant opportunity to invest in the exploration, development, gathering and processing of unconventional gas projects, particularly in the Rocky Mountain region. Near record third party drilling activity is also driving significant organic gathering and processing growth opportunities in our high margin Oklahoma and West Texas business units. In the Powder River coal bed methane development, we are very encouraged by the continued production growth in the Big George coal fairway where most of our 2005 drilling is focused. "We will continue to participate in the highly successful development drilling in the Pinedale Anticline, where we have exposure to an estimated 1,650 potential gross wells over the next 10 to 15 years based on 20-acre spacing. We also have an approximate 11 percent working interest in an estimated 125 gross well locations in the Jonah Field based on 10 and 20-acre locations once fully developed. We are committed to expanding new core areas in the San Juan and eastern Green River Basins. We are also moving forward with the hookup, testing and drilling of existing and new wells in the Niobrara play in northeast Colorado and hope to determine the long-term viability of this area during the course of the year. We are also making steady progress in new exploratory plays, leveraged off our expertise in unconventional gas and growing leasehold positions." Company Description. Western is an independent natural gas explorer, producer, gatherer, processor, transporter and energy marketer providing a broad range of services to its customers from the wellhead to the sales delivery point. The Company's producing properties are located primarily in Wyoming, including the developing Powder River Basin coal bed methane play, where Western is a leading acreage holder and producer, and the rapidly growing Pinedale Anticline. The Company also designs, constructs, owns and operates natural gas gathering, processing and treating facilities in major gas-producing basins in the Rocky Mountain, Mid-Continent and West Texas regions of the United States. For additional Company information, visit Western's web site at http://www.westerngas.com/. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding capital expenditure and permitting and drilling activity for 2005. Although the Company believes that its expectations are based on reasonable assumptions, Western can give no assurances that its goals will be achieved. These statements are subject to a number of risks and uncertainties, which may cause actual results to differ materially. These risks and uncertainties include, among other things, the timeliness of federal and state permitting activity, expenditure of capital, changes in natural gas and NGL prices, government regulation or action, litigation, environmental risk, geological risk, weather, rig availability, transportation capacity and other factors as discussed in the Company's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission. DATASOURCE: Western Gas Resources, Inc. CONTACT: Investors, Ron Wirth, Director of Investor Relations, +1-800-933-5603, or +1-303-252-6090, Web site: http://www.westerngas.com/

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