* 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 (Reuters) - 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 low.
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 Monterey shale.
For 2011, the company expects to produce 19,500 boe/d, with the Monterey program contributing about 10 percent. [ID:nASA00SVR]
“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)