McMoRan Exploration Co. Updates Exploration and Development and Main Pass Energy Hub(TM) Activities
June 15 2006 - 10:58AM
Business Wire
McMoRan Exploration Co. (NYSE:MMR) today updated its exploration
activities including results of successful production tests at the
Liberty Canal and King of the Hill discovery wells, the status of
two additional exploration prospects in progress, and an update on
development activities including the establishment of initial
production from the Long Point No. 1 and No. 2 wells. McMoRan
announced today a successful production test on the Liberty Canal
discovery well located onshore Vermilion, Parish Louisiana. The
flow test of the well indicated a gross flow rate of approximately
26 Million cubic feet of natural gas (MMcf/d) and 1,700 barrels of
condensate per day (approximately 36 MMcfe/d gross, 10 MMcfe/d net
to McMoRan) with flowing tubing pressure of approximately 6,100
pounds per square inch (psi) on a 38/64th choke. The well is
expected to commence production 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 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
and has developed the Zigler Canal exploratory prospect located two
miles northwest of the Liberty Canal discovery. McMoRan currently
has a rig on location and is preparing to commence drilling this
prospect. McMoRan is continuing its mapping in this area to
identify additional prospects. 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. McMoRan announced today a
successful production test on the King of the Hill No. 2 discovery
well at High Island Block 131. The well testing facility limited
the flow rate to 20 MMcf/d. The well tested at a gross rate of 11.5
MMcf/d and 60 barrels of condensate per day (approximately 12
MMcfe/d gross, 2.3 MMcfe/d net to McMoRan) on a 14/64th choke. The
well is expected to commence production in the third quarter of
2006. McMoRan and its private partner each own a 25.0 percent
working interest and a 19.6 percent net revenue interest in the
King of the Hill prospect. McMoRan currently has two exploratory
wells drilling and is preparing to commence exploration wells at
Zigler Canal, onshore Vermilion Parish, Louisiana, and Vermilion
Block 54 and has commenced a development well at Hurricane No. 3 at
South Marsh Island Block 217. -0- *T Proposed Net Total Working
Revenue Current Vertical Exploration In-Progress Interest Interest
Depth Depth Spud Date ----------------------- -------- --------
-------- -------- ---------- St. Mary Parish, LA April 8,
"Laphroaig" 37.5% 27.8% 15,300' 19,000' 2006 Louisiana State Lease
18091 April 27, "Long Point Deep" 37.5% 26.8% 13,900' 23,000' 2006
Near-Term Exploration --------------------- Onshore Vermilion
Parish, LA Rig on "Zigler Canal" 37.5% 26.8% Location 13,500' June
2006 Vermilion Block 54 30.0% 24.2% n/a 15,200' June 2006 Near-Term
Development --------------------- South Marsh Island Block 227 June
14, "Hurricane No. 3" 27.5% 19.4% 1,000' 16,000' 2006 *T 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. During the second
quarter of 2006, McMoRan commenced production on five wells,
including Cane Ridge, King Kong No. 3, Hurricane No. 2 and two
wells at Long Point. In May 2006, initial production commenced at
the Long Point No. 1 and No. 2 wells located at Louisiana State
Lease 18090. Recent production rates from the two wells
approximates 60 MMcfe/d (16 MMcfe/d net to McMoRan). McMoRan and
its private partner each own a 37.5 percent working interest and a
26.8 percent net revenue interest in the Long Point field. Four
additional wells are expected to commence production in the third
quarter of 2006, including Dawson Deep, Pecos, Liberty Canal, and
King of the Hill No. 2. The discovery well at Point Chevreuil in
St. Mary's Parish, Louisiana is expected to commence production by
year-end 2006. McMoRan's share of second quarter 2006 production is
expected to average near the upper end of the previously reported
second quarter average of 55-65 MMcfe/d, including approximately
2,400 bbls/d (14 MMcfe/d) for McMoRan's share of oil production
from Main Pass Block 299. McMoRan's current production rate exceeds
80 MMcfe/d and is expected to reach 100 MMcfe/d in the third
quarter of 2006. MAIN PASS ENERGY HUB(TM) UPDATE On May 31, 2006,
McMoRan amended 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. 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 significant studies completed to date should enable
the revisions to the MPEH(TM) permit application that incorporate
Closed Loop technology to be processed expeditiously. 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. As previously
announced, 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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