McMoRan Exploration Co. Updates Exploration and Development and Main Pass Energy Hub(TM) Activities
May 22 2006 - 8:00AM
Business Wire
McMoRan Exploration Co. (NYSE: MMR) today updated its exploration
activities including a discovery at Point Chevreuil, the status of
two additional exploration prospects in progress, and initial
production from the Hurricane No. 2 development well. The Point
Chevreuil exploratory well commenced drilling on November 18, 2005
and was drilled to a true vertical depth of 17,011 feet (17,274
feet measured depth). The well was evaluated with
log-while-drilling tools and wireline logs, which indicated 96 net
feet of hydrocarbon bearing sands over a 112 foot gross interval.
Production is expected to commence in the third quarter of 2006.
McMoRan has a 25 percent working interest and a 17.5 percent net
revenue interest in the Point Chevreuil prospect which is located
in less than 10 feet of water in the South Belle Isle Field
offshore St. Mary Parish, Louisiana. McMoRan also announced today
that McMoRan and its private partner acquired approximately 2,500
gross acres surrounding the discovery at a recent state lease sale.
-0- *T McMoRan currently has two exploratory wells drilling:
Proposed Net Total Working Revenue Current Vertical Spud Prospect
Interest Interest Depth Depth Date
----------------------------------------------------------------------
St. Mary Parish, LA April 8, "Laphroaig" 37.5% 27.8% 14,200'
19,000' 2006
----------------------------------------------------------------------
April Louisiana State Lease 18091 27, "Long Point Deep" 37.5% 26.8%
10,600' 23,000' 2006
----------------------------------------------------------------------
*T The Liberty Canal discovery well located onshore in Vermilion
Parish, Louisiana, has been drilled to 16,594 feet. McMoRan has set
a production liner and will complete the well with initial
production expected in the third quarter of 2006. As previously
reported the well was evaluated with log-while-drilling tools and
confirmed with wireline logs, which indicated two intervals
totaling 199 gross feet with 125 net feet of hydrocarbon bearing
sands. The wireline log indicated excellent porosity with the
potential for high flow rates. The Liberty Canal discovery is
located on a significant north-south ridge where McMoRan controls
13,000 acres and has several additional exploration prospects.
McMoRan is incorporating the results from this well with its 3-D
seismic data which could result in expansion of our drilling
opportunities in this area. Following completion activities at
Liberty Canal, McMoRan plans to commence drilling the Liberty Canal
Upthrown exploratory well located two miles northwest of the
Liberty Canal discovery. McMoRan and its private partner each have
a 37.5 percent working interest and a 27.7 percent net revenue
interest in the Liberty Canal prospect. The Liberty Canal well
commenced drilling on March 5, 2006. Since inception in 2004 of a
multi-year, $500 million exploration venture, McMoRan and its
private partner have participated in 12 discoveries on the 23
prospects that have been drilled and evaluated. Four additional
prospects are either in progress or not fully evaluated. McMoRan
expects to commence drilling several additional exploratory
prospects during 2006. McMoRan currently has rights to
approximately 400,000 gross acres, including over 100,000 gross
acres acquired in January 2006 through a farm-in transaction of
exploration rights in southern Louisiana and on the Gulf of Mexico
shelf. McMoRan is also actively pursuing opportunities through its
exploration venture to acquire additional acreage and prospects
through farm-in or other arrangements. In May 2006, initial
production commenced at the Hurricane No. 2 development well at
South Marsh Island Block 217. The Hurricane No. 2 well is currently
producing at a gross flow rate of approximately 34 Million cubic
feet of natural gas equivalents (MMcfe/d) (6.6 MMcfe/d net to
McMoRan), and the operator plans to gradually increase production
from this well. Gross production from the two wells in the
Hurricane field approximates 81 MMcfe/d (15.7 MMcfe/d net to
McMoRan). McMoRan and its private partner each own a 27.5 percent
working interest and a 19.4 percent net revenue interest in the
Hurricane field. The Hurricane No. 3 development well is expected
to commence drilling during the second quarter of 2006. McMoRan's
share of second quarter 2006 production is expected to average
55-65 MMcfe/d, including approximately 2,500 bbls/d (14 MMcfe/d)
for McMoRan's share of oil production from Main Pass Block 299.
McMoRan's current production rate exceeds 65 MMcfe/d and is
expected to increase during the quarter. McMoRan's share of
production is expected to reach 100 MMcfe/d in the third quarter of
2006, as new production from seven additional wells commences,
including Long Point No. 1 and 2, Dawson Deep, King of the Hill,
Liberty Canal, Pecos and Point Chevreuil. MAIN PASS ENERGY HUB(TM)
UPDATE As previously reported, McMoRan is amending its license
application with the U.S. Coast Guard and the Maritime
Administration (MARAD) to obtain approval of its Main Pass Energy
Hub(TM) (MPEH(TM)) project using Closed Loop technology while we
continue to address concerns raised by Louisiana's Governor in the
veto of the more efficient Open Rack Vaporizer (ORV) technology.
The significant studies completed to date should enable the
revisions to the MPEH(TM) permit application to incorporate Closed
Loop technology to be processed expeditiously. MARAD will establish
a new timeline for the project, including the publication of a
supplemental Environmental Impact Statement and a final public
hearing followed by a record of decision. The MPEH(TM) terminal
would be capable of regasifying LNG at a rate of 1 billion cubic
feet of natural gas (Bcf) per day. The use of existing facilities
provides significant cost advantages, and the proposed project
benefits from its offshore location near established shipping
lanes. McMoRan is continuing discussions with potential LNG
suppliers as well as gas marketers and consumers in the United
States to develop commercial arrangements for the facilities.
McMoRan is also considering investments to develop substantial
cavern storage for a pipeline header system that would allow
deliveries into liquid U. S. gas markets. Current plans for the
MPEH(TM) include 28 Bcf of initial cavern storage capacity and
aggregate peak deliverability from the proposed terminal, including
deliveries from storage of up to 2.5 Bcf per day. McMoRan received
approval from the Federal Energy Regulatory Commission to bring gas
onshore using its proposed 36-inch pipeline into Coden, Alabama.
McMoRan Exploration Co. is an independent public company engaged in
the exploration, development and production of oil and natural gas
offshore in the Gulf of Mexico and onshore in the Gulf Coast area.
McMoRan is also pursuing plans for the development of the MPEH(TM)
which will be used for the receipt and processing of liquefied
natural gas and the storage and distribution of natural gas.
Additional information about McMoRan and the MPEH(TM) project is
available on its internet website "www.mcmoran.com" and at
"www.mpeh.com". CAUTIONARY STATEMENT: This press release contains
certain forward-looking statements regarding various oil and gas
discoveries, oil and gas exploration, development and production
activities, anticipated and potential production and flow rates;
anticipated revenues; potential reversionary interests and the
potential payout of those reversionary interests; the economic
potential of properties; estimated exploration costs; the potential
Main Pass Energy Hub(TM) Project, the expected near-term funding of
the related permitting process and the estimated capital costs for
developing the project. Accuracy of the projections depends on
assumptions about events that change over time and is thus
susceptible to periodic change based on actual experience and new
developments. McMoRan cautions readers that it assumes no
obligation to update or publicly release any revisions to the
projections in this press release and, except to the extent
required by applicable law, does not intend to update or otherwise
revise the projections more frequently than quarterly. Important
factors that might cause future results to differ from these
projections include: variations in the market prices of oil and
natural gas; drilling results; unanticipated fluctuations in flow
rates of producing wells; oil and natural gas reserves
expectations; the ability to satisfy future cash obligations and
environmental costs; general exploration and development risks and
hazards; and the ability to obtain regulatory approvals and
significant project financing for the potential Main Pass Energy
Hub(TM) project. Such factors and others are more fully described
in more detail in McMoRan's 2005 Annual Report on Form 10-K on file
with the Securities and Exchange Commission.
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