Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of David Kistler with Simmons & Company
David Kistler - Simmons & Company
Looking at your forward production guidance for '09.Can you talk.
Winston Talbert
Good morning, David.
David Kistler - Simmons & Company
Good morning. Can you guys hear me okay?
Winston Talbert
Yeah, it's fine now.
David Kistler - Simmons & Company
Okay, sorry about that. Looking at your production guidance for 2009, down a little bit of what you previously said. I was curious how much of that was T-Ridge being pulled out and then what the balance of that is?
Jim Flores
David, the big thing is we cut $200 billion out of our production spending. And that was main thing. We are being very sensitive we have some high volume wells in Gulf of Mexico and so forth offshore California. We trying to just be conservative we fell very good about that guides as a floor from a standpoint there is some upside to that if things go well, but we take a very conservative stance at this point.
David Kistler - Simmons & Company
Okay. That's helpful and can you clarify how much productions guidance you are baking in for T-Ridge?
Jim Flores
We aren't baking any.
David Kistler - Simmons & Company
Okay, I am sorry for the misunderstanding there. Then can you also give us kind of the returns of the California oil assets on $55 oil, just so that we can kind of think about that that's the floors you guys have setting through your hedges and it gives you a really easy way to model that out?
Jim Flores
Well let's talk about couple components here. LOE and so forth, when you look at California, the biggest variable there is a steam cost and with low gas prices, steam cost coming in per barrel, just give you some macro, I will give plenty of the details, because in the fourth quarter with all the Permian sales went to true-ups and LOEs, or looked high in the fourth quarter on a company-wide basis.
And that was because of that Permian sale were actually flat 2007 to 2008. On top of that The LOEs are inflated because of all the well work we were doing, when oil was $150 a barrel, we said get it out of the ground and we spent a lot of money inside the wellbore and so forth. They were classified as LOEs, that's not going to be straight going forward.
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