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Operator
Good day.
Welcome to Vintage Petroleum's third quarter conference call.
This call is for the benefit of Vintage shareholders and other interested parties.
Any rebroadcast of this call for commercial purposes is prohibited without the permission of Vintage.
As we indicated earlier to you, people such as the press and Bloomberg can listen to the conference call, but cannot ask questions.
I would now like to turn the program over to Julie Smith.
Please go ahead.
Julie Smith - Investor Relations
Good afternoon and thanks for joining us today.
Present on our call today are Craig George, our CEO;
Bill Abernathy, our COO;
Bill Barnes our CFO and other members of our management team.
Our call will begin with prepared remarks from Bill Barnes, Bill Abernathy and Craig George.
Then we will open it up to questions.
The slides to accompany our presentation are available at our website www.vintagepetroleum.com via the conference call icon or on the presentation section of our website. (technical difficulty) Private Securities Litigation Reform Act of 1995.
Statements other than historical facts are forward-looking statements.
Such statements are not guarantees of future performance and actual results or developments may differ materially.
Factors that can cause actual results to differ materially are listed in our [Audio difficulties] Form 10K and other documents filed with the SEC.
During the call we may refer to non-GAAP financial measures, such as cash flow from continuing operations, earnings before certain major items or EBITDAX.
Please refer to the tables in our current press release in the appended section of our webcast presentation, both of which are available on our website for reconciliation of these measures to the comparable GAAP measure and for other information regarding these measures.
At this time, I turn your attention to Bill Barnes.
William Barnes - CFO
Thank you, Julie.
Today I will begin by briefly summarizing the financial results for the quarter.
For those of you viewing the webcast my comments are related to pages 2-4 of the slides presented there.
We reported cash flow from continuing operations of $66.4 million for the quarter exceeding the first call consensus expectation of $65.3 million based on our 66 million shares diluted outstanding.
This is a non-GAAP financial measure and on a GAAP basis our cash provided by operating activities for the quarter was $78 million, and a reconciliation between these measures appears on Page 17 of the webcast slides and is also included in our earnings release.
Our net income for the quarter was $11.8 million or 18 cents a share, this compares to income from continuing operations of $14.7 million or 23 cents a share in the year-earlier quarter.
Oil and gas revenues for the quarter were up slightly to $156.9 million.
As higher realized prices for gas more than offset the expected lower production level from year-ago levels.
Our realized price for oil was relatively flat with the yearly level at $24.94 a barrel and our gas price was up 56% to $3.13 per MCF.
Higher costs when compared to year earlier levels for LOE, expiration costs and G&A resulted in lower earnings in the quarter.
Bill Abernathy will address LOE costs a bit later in the presentation but from the standpoint of our exploration costs, they were up from the year earlier level due to an increase in seismic, geological and geophysical activities which benefit our exploration efforts that are required to be expensed as they are incurred.
G&A increases resulted from non-cash expenses related to restricted stock awards, an asset tax in Argentina and cash bonuses with no comparable amount in the year earlier quarter.
Our oil and gas production for the quarter was 6.9 million BOE which was flat with the second quarter of 2003 but below our expected level of 7.2 million BOE.
Again, Bill will address the shortfall from our internal target in just a moment.
Production from continuing operations in the year earlier quarter was 7.7 million BOE and the lower production level this quarter primarily reflects anticipated declines related to oil and gas property divestitures, natural production declines and the impact of starting 2003 at a lower production level due to the greatly curtailed capital spending budget we had in 2002 when we are focused on reducing our debt levels.
By the end of the third quarter our net-debt's book capitalization ratio stood at 48.8%, and we have about $300 million of unused availability under our existing bank facilities which provides us with substantial liquidity going forward.
That concludes my prepared remarks on the financial results for the quarter.
At this point, I will turn the preparation over to Bill Abernathy, our Chief Operating Officer who will review our operating activities and future plans.
William Abernathy - EVP and COO
Thank you, Bill.
I would like to spend the next several minutes discussing our operating results for the quarter and then reflect those results onto our targets for the year.
I will follow that with a first look at our 2004 capital budget and our targets that correspond to that budget.
For those of you on the webcast, you can move on to page number 5.
The third quarter was our most active quarter so far this year.
In the U.S. we had as many as five drilling rigs active at once with exploitation drilling in East, South and Gulf Coast areas of Texas, Western Oklahoma and Ventura County, California.
As well as exploration wells being drilled in West Texas and Southeastern New Mexico and we will be active in all of those areas in the fourth quarter.
In Argentina we continued our four drilling rig program at the San Jorge basin which will also continue in the fourth quarter as well as start another round of 3-D seismic.
In Canada, we drilled exploitation wells in the Sturgeon Lake and West Central areas and continued our exploration activity in the Cypress area of the foothills trend in Northeastern British Columbia.
We will continue these programs in the fourth quarter, as well as begin evaluating some seismic and geochemical data obtained in the third quarter on our exploration blocks in Nova Scotia.
We are happy to have recently received approval of our plan of development for the S1 Domus block in Yemen and are now moving forward with planning to start development drilling and early production of existing wells as soon as possible in 2004.
One final operational item that was not a third quarter event, but nevertheless, did happen prior to this release that will affect the fourth quarter.
That is the Simi Valley fire in Ventura County, California that caused the shutin of about 3,500 BOEs per day production starting weekend before last.
And although there is no harm to any of our employees or contractors and very little damage to well equipment and facilities, a very large number of power poles were burned and production was shut in there because of loss of power.
We have returned about 150 barrels a day of that to production, but we're projecting that the remainder will be off the rest of this year and be phased back in over the course of the first quarter of '04.
Production for our third quarter was 4.5 million-barrels and 14.1 BCF or 6.9 billion BOEs and that is about 300,000 BOEs below what we were expecting.
Timing delays and results from domestic exploration and slower than expected buildup from drilling in Argentina were the two most significant sources of the shortfall.
And both of (technical difficulty) contributors to volume-target adjustments for the year.
We have included risk volumes for exploration drilling in our forecast and to the extent that an individual prospect is productive or dry than the actual volumes, will either be higher or lower than the risk volumes.
But over a large enough number of wells and time the composite results should be reflected by linear support.
As of the end of the third quarter only two wells had had risk volumes in the forecast had actually been drilled and their results were disappointing.
And the drilling of the other three prospects that are in the forecast began later than were initially projected, so the volumes resulting from the success of any of those wells will not be realized until 2004.
In Argentina, where we drilled 45 wells through the third quarter, the average well has been marginally below our expectations.
This is driven particularly by some below average wells that were drilled early in the year, as well as the drilling of several stepout wells intended to open up new areas for additional drilling.
This drilling program is clearly statistical and in a typical year we will drill several successful stepouts that will generate quite a number of good offset locations to drill and it just hasn't happened to us as much this year, although we have been having more success in the last couple of the months.
We've had some lean periods in the past there and I would expect shortly we will be past this lean streak and then back to our more statistical historical results.
Operating expenses for the quarter were $55.9 million or $8.14 per BOE.
That is $2.6 million or 71 cents per BOE above our expectation.
Significant drivers there were: One, high cost expense workover in Galveston Bay; increased electrical cost in certain domestic fields; and in Argentina a combination of the effects of inflation and exchange rate variations along with some higher transportation and power costs.
And these items combined with lower volumes had the effect of raising LOE per BOE.
So with these items in mind, let's look at revised targets for 2003 and that will be on page 6 of the webcast.
First of all, we have some small adjustments to oil and gas prices which you can see in the table.
The nonacquisition capital budget is unchanged at $185 million.
Production is revised downward to 27.3 million BOEs.
The most significant contribution there is exploration volumes that I referred to earlier at 400,000 BOEs, followed by the Argentina oil volumes at 200,000 BOEs.
And finally, by a 200,000 BOE adjustment caused by the recent fires in California.
There's an LOE adjustment driven by the items I discussed earlier and the result of cash flow is unchanged at $265 million and EBITDAX is reduced largely to $380 million.
So at this point let's move on to discuss the 2004 capital budget and for those of you on the webcast, that will be on page 7.
We have set that budget at $225 million, 22% increase over 2003.
And it specifically represents nonacquisition capital spending.
This budget is a bit different from our capital spending in any year that I can recall, because of the relatively high level of spending that will contribute to volume buildup in 2005 but not in 2004.
Although there is some of that in every year, the 2004 budget has approximately $78 million or 35% of the budget for which there is no forecasted volume in 2004.
Of the $225 million total, $165 million or 73% is allocated to exploitation or development projects and $60 million or 27% is allocated to exploration.
In the U.S., $46 million is for exploitation in which we expect to drill 31 wells in California, Louisiana, Oklahoma, and Texas, as well as workovers in all areas and $38 million is for exploration in eight prospect areas in West Texas, the Texas Gulf Coast and South Louisiana.
In Canada, exploitation spending of $9 million will be concentrated on drilling and workovers in the Sturgeon Lake, West Central and Peace River Arch areas, and exploration spending of $13 million will largely be spent in the foot hills of Northeast British Columbia and the Peace River Arch area.
In Argentina, we've increased the spending level to $84 million, all of which is exploitation.
We had begun ramping up our activity level in Argentina in 2001 to further exploit the large number of drilling locations and water floods in our reserve base there, but as you know we interrupted that ramp up during 2002.
At this point, though, given the indicators that we see, of greater stability in Argentina, we are ready to continue up that ramp up in activity.
We expect to have four drilling rigs and 6-7 workover rigs running in the San Jorge basin all year long.
And we'll be spending some significant dollars on new and existing water floods, as well as an increased level of spending on 3-D seismic as we take another step towards complete 3-D coverage of all of our holdings there.
In Yemen, we expect to spend $27 million of which $26 is for development of the Anagia discovery and $1 million is for an appraisal well in the Harmel area.
We expect to start drilling during the first quarter of '04 to install an early production facility that will allow us to produce oil from the existing wells and truck that oil to a pipeline connection in the vicinity and begin installation of permanent production facilities which would expect to be completed by April of '05.
The remaining $8 million will be spent on exploration and new venues as we drill two wells in the Poe Valley of Northern Italy and continue our geologic evaluation of our high impact frontier project in Bulgaria.
Our capital spending plan is focused on putting capital to work where it yields the best returns.
And as I mentioned earlier, we are spending a higher percentage of our budget on some things that will not generate volume in 2004, but instead will generate higher volumes for 2005 and later years.
For 2004, this means that we allocate extra dollars to Yemen and Argentina and fewer dollars to the U.S. and Canada.
This does not mean that there aren't sufficiently attractive opportunities in the U.S. and Canada, but by us placing a restraint on our budget to not significantly overspend our projected cash flow, it means that not every attractive project or program is funded in any one particular year.
The result is that the attractive opportunities that we see to allocate additional dollars to some longer term projects in Yemen and Argentina in 2004 cost us a few barrels of production that we otherwise would have produced in Canada and the U.S. in 2004.
With all of this in mind, let's look at our targets for 2004.
And for those of you on the webcast that will be page 8.
We are projecting 2004 volumes to be 18.1 million barrels of oil. 52.2 BCF or 26.9 million BOEs.
We're projecting the U.S. to be 9.7 million BOEs, down very slightly from 2003's 9.9.
Canada is projected to be 3.2 million BOEs down about a quarter, but resulting from the overall steeper decline rate of the base production and a smaller allocation of exploitation spending for '04.
Argentina is projected at 12.6 million BOEs, up from 11.9 and resulting from a full year of drilling.
Bolivia is expected to be 1 million BOEs and Yemen is projected at 375,000 barrels based on the early production facility being online in April of '04.
With these volumes and the budget level mentioned earlier and assumed oil price of $27 and gas at $5 and with LOE at $8.75 per BOE, we would project cash flow for 2004 to be $214 million with EBITDAX at $315 million.
Again, I think it is important to reiterate that we are consciously foregoing some volume contribution from the U.S. and Canada in 2004 in order to fund opportunities in Yemen and Argentina that will provide even more volumes in 2005 and in the later years.
With that I'll turn the mike over to Craig for a wrap up.
Craig George - President and CEO
Thank you, Bill.
I don't need to tell any of you that we are in a challenging business.
Since our last quarterly call we've endured tropical storms, wild fires in California, and even a coupe of sorts in Bolivia.
Though we still managed to stay on task.
I've outlined the significant components of our program on slide number 9 for those watching the webcast.
On the finance side, we made good on our promise to reduce debt by $200 million.
Our debt to book cap now stands below 50% for the first time in a long time and we are making progress carving away at our cost of debt.
Another big challenge in the last couple of years has been weathering the political and economic storms in Argentina and as you all know, those storms have calmed substantially.
We are back on track now with good drilling success, with four rigs running and our production is starting to pick up as a result.
In international exploration, we are gratified that our efforts in Yemen are about to bear fruit with commercialization declared, early production on the Horizon and lots more potential on the S1 block for the future.
And also internationally, in Italy we plan to be drilling early in 2004 our two prospects there.
Also, as you’ve heard today, our exploitation programs in North America are meeting with success.
And in exploration we are at an important juncture in our North American program where we are drilling and testing prospects, we've been looking forward to for months.
In particular, we'll be testing our Austin prospect in our West Texas horizontal program this month.
We'll be spudding highland [ph] 55L in Texas coastal waters in a matter of days and we are currently drilling some of our higher potential prospects in Canada and British Columbia.
So, we have a lot of good things to look forward to with the drill bid in coming weeks.
Finally with our balance sheet healthier, we've renewed our focus on acquisitions using the disciplined and sometimes contrarian approach that has made us a leader in low finding costs in the past, and we're looking at some solid [Inaudible] properties with some upside potential.
So for the end of this year and into 2004 we look forward to hitting on all cylinders and creating value for our shareholders in all that we do.
And with that, I will turn it over to Matt, our conference coordinator for questions.
Operator
Thank you.
We will conduct question-and-answer session at this time.
If you would like to ask a question, please enter the queue by pressing the star one on your touch-tone Fon.
In the interest of allowing all questioners to have an opportunity to ask questions, Vintage has asked that each participant limit themselves to one question and one followup.
If you have additional questions you may return to the queue to ask them.
If a question you intend to ask has already been asked and you don't have another question, please press pound key on you touch-tone phone to remove yourself from the queue.
Once again, to ask a question, please press star one at this time.
We'll pause a moment before we take our first question.
We'll take our first question from the site of Joe Allman, RBC Capital Markets.
Go ahead please.
Joseph Allman - Analyst
Hi, everybody.
Craig George - President and CEO
Hi, Joe.
Joseph Allman - Analyst
Could you repeat what you said about the rig activity in Argentina?
What has it been this year and what do you see it going to next year?
William Barnes - CFO
As we came in to '03, we had one rig operating which started in November of '02.
We picked up a second rig in, I believe it was May.
Third and fourth rigs in June, so we have had four rigs drilling all of the second half of this year and the expectation is that we will have four drilling rigs operating in Argentina all of '04, as well as 6 or 7 workover rigs.
So the level of activity for '04 will be effectively the same as it has been in the second half of '03.
Joseph Allman - Analyst
Great, and then just a followup.
For your assumptions for '04 looks like you are using some pretty good oil and gas price forecasts and I guess if we don't get to the $27 oil and the $5 gas, would you still spend $225 million or would you cut that back some or?
Craig George - President and CEO
We will have to make some tough decisions if that happens and nobody knows what the right number is.
Some of your compadres are numbers that we think are way too low, but I guess time will tell.
Joseph Allman - Analyst
True.
All righty, thank you.
Operator
Once again, to ask a question, please signal us by pressing the star one on your touch-tone phone.
We'll take our next question from the site of Van Levy, CIBC.
Go ahead, please.
Van Levy - Analyst
Good afternoon, folks.
How are you?
Craig George - President and CEO
Hi, Van.
William Abernathy - EVP and COO
How are you?
Van Levy - Analyst
Good.
Question on Yemen.
When do you think you will be booking reserves there?
Again, as I understood each prospect was around 50 million barrels.
Kind of give us a little more color about how that progress would go in the terms of booking and also drilling again.
Larry Sheppard - VP, New Ventures
Van, This is Larry Sheppard.
We are working on that right now with our third-party reserve auditing firm, and I would anticipate that we'll have a portion of the reserves booked as proved hopefully by the end of the year.
The fact that we are pursuing a path that will allow us to put an early production facility online, I think gives us the ability to be able to book, again, at least a portion of the reserves that are in the structure.
Ultimately, though, before we can have all of the proved reserves show up, I think we will be close to the production time of the larger facilities and the way that would go is, we're moving forward with engineering design and that will move into procurement and then construction and that will take all of 2004 and it will probably be early in 2005 before we go full stream.
And then in the meantime, we will continue to not only drill development wells, but we're also going to be further delineating structures.
We don't believe we've maybe fully appraised the size of it, so where do I see it going?
I think certainly we'll have some proof reserves by the end of the year, as far as knowing the full reserve potential of it, it may be onto the middle of late next year before we know that.
Van Levy - Analyst
And when you say full stream on, I guess 2005 on production, what levels are we talking about net to Vintage?
Larry Sheppard - VP, New Ventures
We will start off with what we think with our early production facility early next year at a gross rate of about 2500 barrels.
We get about 52% of that.
And the facilities that we are designing, at least initially, would be designed for 10,000 barrels a day.
Craig George - President and CEO
And that would go on in April of 2005.
Larry Sheppard - VP, New Ventures
Very early 2005.
Probably late April, May.
Van Levy - Analyst
Okay.
And my followup question is, finding costs for the year, last year you were around $3.
The four-year average is around $3.90.
Could you give us a sense of what you are seeing, number one, in terms of performance from existing properties, whether there is an even notable chance of writeups or write downs?
And, number two, just kind of give us a bracket of where the range would be this year for finding costs?
Craig George - President and CEO
Van, given that our engineering studies are underway for reserves it is just a little bit too early to tell.
Another thing that might be a big impact as I mentioned earlier, some of our more significant exploration wells are just now either getting down or being tested and that could have a huge impact in the range of what our costs will be.
Van Levy - Analyst
Thank you very much, Craig.
Operator
We'll take our next question from Ken Beer, Johnson & Rice.
Go ahead, please.
Kenneth Beer - Analyst
Good afternoon, guys.
Craig George - President and CEO
Hi, Ken.
Craig, after kind of the fires and flooding and whatever, you’ve got to watch out for the locusts next. [laughter ]
Kenneth Beer - Analyst
And this it for more Larry, but over in Yemen, just from a security standpoint is that an issue that needs to be, I guess more weighted or is there a lot of maybe -- is the investor concern about Yemen somewhat overblown in that y'all feel like you have a very secure position in terms of your drilling activity out there and some of the development projects that you have online?
What is kind of, what is your view of your position out there from really from a security standpoint?
Larry Sheppard - VP, New Ventures
Ken, I think it hasn't changed much since we first entered Yemen.
It is a very tribal area and yet they functioned that way for millennia.
And we have not had problems through our two seismic campaigns and drilling campaigns, there is the occasional issue that you have to deal with but I think we've been able to manage it and we think it is a manageable environment.
And as any time you have places that are hot spots in the world, they get a lot of publicity and notoriety and I think a lot of speculation and rumors and most of which is probably not founded.
Kenneth Beer - Analyst
Good.
Larry Sheppard - VP, New Ventures
We find it a place that we can work in and in fact there are places around the world that we are not because we don't think we can work there and have our people safe.
Kenneth Beer - Analyst
Good, okay.
Craig George - President and CEO
Ken, let me add one thing to that.
We operate in a lot of places in the world as you know and we take extensive precautions to protect our people.
Our people are our most important resource and we do whatever it takes to keep them safe.
Kenneth Beer - Analyst
Fair enough.
This might also be for Larry, but just in Bolivia, obviously, kind of politically there has been a lot going on, but interestingly enough, one of the things that's also emerged is you've had some real pushes by the major oil companies to push forward on some gas to liquids type of projects, is that something that is even begun to emerge as a possibility for Bolivia?
Obviously, they were going to try and to do the LNG to the West Coast, but what about just the gas to liquids plants that I know the Shells and the Exxons and the gas have actually moved forward on.
Any thought of having that in Bolivia?
Larry Sheppard - VP, New Ventures
Well, it is something that we kind of keep our finger to the pulse of.
Most of the projects that would justify that type of facility or things that require TCFs of gas rather than just hundreds of BCFs of gas, and I think in all likelihood we would be add-ons to things like that as opposed to the driver of a project.
So we keep our pulse on them pretty closely and we are involved in those conversations but we are not the drivers of them.
Kenneth Beer - Analyst
Yeah, and please don't grab that steering wheel! [Laughter ] .
All right, guys.
Well, hang in there, I will touch base with you later.
Thank you.
Craig George - President and CEO
Thanks, Ken.
Operator
Once again, to ask a question, please press star one at this time.
We will go next to Brad Beago, Credit Lyonnais, Inc., go ahead, please.
Brad Beago - Analyst
Thanks.
Good afternoon, guys.
Craig George - President and CEO
Hi, Brad.
Brad Beago - Analyst
Several of my questions, I guess have been answered, but taking a look at your production guidance in '04 and I did have a couple of questions regarding that.
And also partially in line with Van's question, if we look at Canada you're seeing continued steady declines and based on your CAPEX budget you are not spending a lot of money there.
Didn't you even after or did you after the asset sales have a substantial amount of puds still booked in Canada?
William Barnes - CFO
There are some, yes.
Brad Beago - Analyst
Okay.
And basically you have just decided to pretty much forego those this year or '04 rather?
William Barnes - CFO
In '04, a number of them, yes, in the end, Brad what it boils down to is when we get to looking at the way we construct the budget, we look at what we think the cash flow is going to be.
We have some nondiscretionary items that we will spend money on.
We have quite a number of strategic items and then there is discretionary capital left over which we allocate on the basis of where we think we can get the highest returns.
And, obviously we are looking at Yemen here as something that is going to be pretty high return for us and also putting additional money into Argentina and those things just ended up a little bit higher on the list than some of the opportunities that we had in Canada and the U.S. for that matter.
So that is the thing that really drives the allocation.
It is not that there aren't good opportunities to do there.
They're just with this couple of new things that have been added to the list, we just want to do the best ones first.
Brad Beago - Analyst
Right.
So at this point you don't see significant negative reserve revisions in Canada?
William Barnes - CFO
Not that I'm aware of.
Brad Beago - Analyst
Okay.
William Barnes - CFO
Obviously we're in that process.
Brad Beago - Analyst
Yes.
You’re still doing your report.
William Barnes - CFO
Yes.
Brad Beago - Analyst
And how about on the lease operating cost?
I know we're looking at a fixed component on lower volumes is one of the reasons that it has gone up so sharply.
Do you want to take us through what else might be in there?
William Barnes - CFO
Yes, I can talk about maybe the U.S. and Canada and Argentina as it applies to '04.
In the U.S., just generally electrical costs are going up.
And in the case of a couple of fields where we have been investing some money this year, we have had a few projects areas where even though the oil volumes are good, the amount of water that comes with it is pretty high, and we're lifting those wells with submersible pumps so there is an additional level of power costs there.
So not only are we consuming more electricity in some of those fields but the rate has gone up in a couple of cases.
But given what oil and gas prices have been, those are still attractive projects.
Obviously, there is labor increases here and there.
There is a component that is related to rigs, goods and services, that type of thing.
Expense workovers we have added a few extra dollars in the U.S. maybe to a certain extent driven by saltwater disposal systems.
And in one case some platform maintenance that we will be spending money offshore in connection with some work we will be doing out there.
In Canada, exchange rate changes favoring the Canadian dollar affect the way that translates into U.S. dollars.
In Canada the absolute costs are fallen in Canadian dollars although they are not falling as rapidly as the volumes are falling.
But another thing that is important in Canada is there will be two very significant plant turn arounds that affect costs this year and when those turnarounds are in progress they also affect the volumes that are coming out, so that combination of things affects dollars and dollars per BOE.
And in Argentina, inflation in the peso based LOE which is not offset by a change in the exchange rate is a factor there, as well as some marginal increase in power costs in a couple of areas.
So those collectively are things that would be driving costs being up in '04.
Brad Beago - Analyst
Okay.
All right, and in terms of -- well, that does it for me.
I will let you guys go to the next one.
Operator
Thank you.
We will take our next question from Leo Mariani, Jefferies.
Go ahead, please.
Leo Mariani - Analyst
How are you guys doing?
Craig George - President and CEO
Hi, Leo.
William Barnes - CFO
Hi, Leo.
Leo Mariani - Analyst
A quick question here for you.
Curious as to why gas production in the U.S. in the third quarter tailed off quite a bit from the second quarter?
I want to see if there is anything extraordinary going on there.
William Barnes - CFO
You heard me make a reference to a major expense workover in the U.S. that was a contributor to operating costs going up in the U.S.
That was a major expense workover on a fairly high volume well in Galveston Bay and so a significant part of that volume was related to that.
There was another fairly high rate well that started making some water and the water rate leveled off but the gas rate fell at the same time.
I think you also saw reference in one of the releases about redrilling the well in Galveston Bay and that was the well that I just made a reference to that had gone up.
So that's the driver, those two things.
Craig George - President and CEO
And that particular well is TD and cased just today and we hope that those volumes will come back on pretty quick.
Leo Mariani - Analyst
Okay, thanks.
Operator
Once again to ask a question, press star one at this time.
At this time we have no further questions in the queue, I would like to turn the program back to the speakers for their closing comments.
Julie Smith - Investor Relations
Thank you for joining us today and if you have any additional questions I will be in my office for a period of time and don't hesitate to give me a call.
Craig George - President and CEO
Thank you all.