Dune Energy limiting capital spending to available liquidity in 2009

By Jennifer Lanning Drey

Portland, Ore., March 6 - Dune Energy, Inc. will limit capital spending to available liquidity in 2009, keeping a focus on projects with the quickest cash flow and payouts on investment, Dune chief executive officer James A. Watt said Friday during the company's fourth-quarter earnings conference call.

The company's board of directors initially approved a $50 million capital budget, but Dune plans to limit spending to between $35 million and $40 million in light of low commodity prices in the first quarter, he said.

The company will maintain most of its high potential exploration opportunities in inventory for a better pricing environment.

"During this year, we will very carefully watch our costs, invest in projects that based on our best technical assessment produce a rapid cash flow return, and continue to develop the very high potential upside in our portfolio for drilling in 2010 and beyond," Watt said.

Dune ended 2008 with cash of $15.5 million and no borrowings drawn on its $40 million revolving credit facility. The company is in discussions with its bank and anticipates availability on the revolver going forward will be between $35 million and $50 million based on its year-end reserve report.

When asked whether Dune is looking at ways to enhance its liquidity and balance sheet, Watt said the company is always looking and continues to have discussions regarding the possibility.

Dune's fourth-quarter revenue was $22.1 million, compared with $35.4 million in the fourth quarter of 2007.

Watt called 2008 a "year of challenges," driven by a collapse of commodity prices in the fourth quarter and overall negative market conditions.

The CEO said he expects 2009 to be another challenging year but is confident the company will see an improvement in the pricing environment later in the year and into 2010 and beyond.

"Oil and gas are cyclical commodities, and we're prepared to deal with both the high and low price environments," Watt said.

Dune Energy is a Houston-based oil and gas exploration company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.