Maintain disciplined flexible capital spending
Crude oil prices have declined substantially since October 2014. As a result, we have reduced the number of rigs we are operating from eight in December 2014 to one currently. We plan to increase, or decrease, the number of rigs we operate depending upon the commodity price environment. In furtherance of this plan, we have entered into drilling and completion contracts with shorter terms, which afford us greater flexibility.
Focus on high return projects
We intend to invest principally in our highest return development projects - those that we believe have significant resource potential discoverable at a low cost. We plan to continue to improve drilling and completion efficiencies and costs and to increase well productivity.
Protect cash flow with hedges
To support our operating cash flows, we hedge a portion of our oil and natural gas production at pre‐determined prices or price ranges. Currently, we have hedged 11,000 barrels of daily crude oil production during the fourth quarter of 2015, or about 90% to 100% of our expected oil production, at a weighted average floor/swap price of $89.86 per barrel. We have sold put options for 5,000 barrels of daily crude oil production during the fourth quarter of 2015, with all put options sold at a strike price of $70.00 per barrel. For 2016, we have hedged 6,000 barrels of daily crude oil production at a weighted average floor/swap price of $80.41 per barrel. We currently do not have any natural gas hedges.
Maintain financial flexibility
As of September 30, 2015, we had total debt of $1,215 million, consisting of $300 million principal amount of 7.25% senior unsecured notes due 2019, $775 million principal amount of 8.50% senior unsecured notes due 2020 and $140 million drawn under our revolving credit facility. Together with cash and equivalents of $3 million and net of letters of credit of $2 million, our financial liquidity was $136 million at June 30, 2015. Our 2015 capital expenditures are expected to range between $316 and $324 million and will be funded by current liquidity and operating cash flows.
Preliminarily, and based on expected conditions in the crude oil market, specifically $48 to $52 per barrel WTI crude oil pricing, we expect to spend $140 to $160 million in capital expenditures during 2016, with fourth quarter 2016 oil production down by approximately from the midpoint of fourth quarter 2015 oil production guidance. The 2016 preliminary capital budget will be funded by anticipated year‐end 2015 liquidity and 2016 cash flows from operating activities. 2015 estimates and 2016 preliminary estimates are meant to provide guidance only and are subject to revision as our operating environment changes.