* Cuts 2010 view by 3 pct, sees producing 18,600 boe/d
* Sees producing 19,500 boe/d in 2011
* Says first Monterey shale well could be uneconomic
* 2010 capex budget remains at $220 mln; $200 mln for 2011
* Shares hit 7-week low
(Recasts, adds details and analysts' comments; updates share)
By Krishna N Das
BANGALORE, Oct 11 Oil & natural gas company
Venoco Inc VQ.N said its first horizontal well in the
oil-rich Monterey shale could be uneconomical, and trimmed its
full-year production view, dragging its shares to a seven-week
Shares of the Denver-based company fell 16 percent to a low
of $16.53 Monday on the New York Stock Exchange. The stock had
rallied in the last year on speculation surrounding the result
from the California shale play.
"The company's first horizontal well -- which was drilled
in the San Joaquin Valley to a total measured depth of 14,000
feet -- is testing with a very high water cut and will probably
be uneconomic," Venoco said in a statement.
Jefferies analyst Biju Perincheril, who has a "hold" rating
on the stock, said the disappointing results from the shale
could weigh on it for a while.
Venoco cut its production outlook to account for reduced
activity in the Sacramento basin in northern California due to
weak gas prices NGc1, which have fallen more than 30 percent
year to date. Gas makes up the bulk of Venoco's production.
For the full year, the company now expects production to
come in at 18,600 barrels of oil equivalent per day.
"As a result of continued depressed natural gas prices,
along with our activity in the onshore Monterey shale, we have
reduced our focus in the area (Sacramento basin) for the time
being," Chief Executive Tim Marquez said.
Venoco plans to spend about 28 percent of its 2010 capital
budget of $220 million and half of its 2011 budget in the
For 2011, the company expects to produce 19,500 boe/d, with
the Monterey program contributing about 10 percent.
"The guidance (2011) is about as expected. Little is
included for potential Monterey results, so there is the
possibility that Venoco tops it if the wells start to produce
well," Wunderlich Securities analyst Neal Dingmann said.
Separately, Venoco said it will sell up to $75 million of
its common shares. [ID:nASA00SVT]
(Reporting by Krishna N. Das in Bangalore; Editing by Anne
Pallivathuckal and Don Sebastian)