McMoRan Exploration Co. (NYSE: MMR) today updated its shallow
water Gulf of Mexico exploration and development activities,
including in-progress drilling at three ultra-deep prospects and
two deep gas prospects and other activities.
Shallow Water, Ultra-deep Exploration Activities
The Blackbeard East ultra-deep exploration well commenced
drilling on March 8, 2010 and is currently drilling below 29,000
feet. The well has a proposed total depth of 29,950 feet and
McMoRan has applied for a permit to deepen the well to a new
proposed total depth of 31,500 feet.
In addition to deepening the well to evaluate additional
targets, McMoRan is formulating plans to evaluate the 178 net feet
of hydrocarbon bearing sands encountered in the Blackbeard East
well to date. McMoRan’s opportunities at Blackbeard East include 84
net feet of hydrocarbon bearing sands between 19,500 and 19,700
feet in the Upper Miocene, 54 net feet of hydrocarbon bearing sands
on 15 feet of water at 24,200 feet in the Middle Miocene and 40 net
feet of hydrocarbon bearing sands on 22 feet of water at 24,600
feet in the Middle Miocene. Assuming the sands below 24,000 feet
have similar thicknesses higher on the structure, the up-dip
potential would approximate 69 feet and 62 feet, respectively. Net
pay counts were determined from additional petrophysical evaluation
of wireline logs, side wall cores and formation tests.
Blackbeard East is located in 80 feet of water on South
Timbalier Block 144. McMoRan holds a 38.5 percent working interest
and 30.7 percent net revenue interest in the well. Upon completion
of the previously announced acquisition of Plains Exploration &
Production Company’s (NYSE: PXP) shallow water Gulf of Mexico (GOM)
shelf assets, McMoRan would hold a 70.0 percent working interest
and 56.2 percent net revenue interest in Blackbeard East. The PXP
transaction is subject to McMoRan shareholder approval of the
issuance of common stock to PXP, as required by New York Stock
Exchange rules, the completion of financing transactions, receipt
of regulatory approvals and other customary closing conditions.
Other working interest owners in Blackbeard East include: Energy
XXI (NASDAQ: EXXI) (18.0%), W.A. "Tex" Moncrief, Jr. (10.0%) and a
private investor (2.0%).
On April 7, 2010, McMoRan commenced drilling the Davy Jones
offset appraisal well on South Marsh Island Block 234, two and
a half miles southwest of the Davy Jones discovery well. The well
is currently drilling below 24,300 feet towards a proposed total
depth of 29,950 feet. The offset appraisal well (Davy Jones #2) is
expected to test similar sections up-dip to the discovery well, as
well as deeper objectives, including potential additional Wilcox
and possibly Cretaceous (Tuscaloosa) sections.
Davy Jones involves a large ultra-deep structure encompassing
four OCS lease blocks (20,000 acres). McMoRan holds a 32.7 percent
working interest and 25.9 percent net revenue interest in Davy
Jones. Upon completion of the PXP transaction, McMoRan would hold a
60.4 percent working interest and 47.9 percent net revenue interest
in Davy Jones. Other working interest owners in Davy Jones include:
EXXI (15.8%), Nippon Oil Exploration USA Limited (12%), W.A. "Tex"
Moncrief, Jr. (8.8%) and a private investor (3%).
The Lafitte ultra-deep exploration well commenced
drilling on October 3, 2010 and is currently drilling below 9,700
feet towards a proposed total depth of 29,950 feet. Lafitte is
located on Eugene Island Block 223 in 140 feet of water. The well
is targeting Middle and Deep Miocene objectives below the salt
weld. McMoRan holds a 40.5 percent working interest and 32.8
percent net revenue interest in the prospect. Upon completion of
the PXP transaction, McMoRan would hold a 72.0 percent working
interest and 58.3 percent net revenue interest in Lafitte. Other
working interest owners in Lafitte include: EXXI (18.0%), and W.A.
"Tex" Moncrief, Jr. (10.0%).
Shallow Water, Deep Gas Exploration Activities
The Laphroaig No. 2 well in St. Mary Parish, Louisiana
commenced drilling on September 24, 2010, and is currently drilling
below 16,500 feet with a planned total depth of 20,000 feet. The
well is targeting proven undeveloped reserves identified by the
discovery well as well as additional exploration potential. The
Laphroaig discovery well was drilled in 2007. McMoRan has a 37.3
percent working interest and a 28.5 percent net revenue interest in
the Laphroaig prospect. EXXI holds an 18.6 percent working
interest.
The Platte deep gas exploration well in Vermilion Parish,
Louisiana commenced drilling on November 19, 2010 and is currently
drilling below 3,500 feet. The well has a proposed total depth of
17,000 feet and is targeting lower Miocene age sands. McMoRan holds
a 50.0 percent working interest in Platte. EXXI holds a 50 percent
working interest.
In November 2010, a production test was performed on the
previously reported 105 net feet of hydrocarbon bearing sands
encountered in the Blueberry Hill #9 STK1 well. Results from
the production test indicated a range of rates and pressures. The
well flowed at a gross rate as high as approximately 22 million
cubic feet of natural gas per day (MMcf/d) and 1,250 barrels of
condensate on a 22/64th choke with flowing tubing pressure of
13,090 pounds per square inch (PSI) and the rate at the end of the
testing period approximated 16 MMcf/d and 838 barrels of condensate
on a 23/64th choke with flowing tubing pressure of 7,750 PSI. The
well has been shut in while flow test results are being evaluated
to assess the decrease in flowing tubing pressure. Future
operations will include additional flow testing to further evaluate
the changes in reservoir pressures.
Blueberry Hill is located on Louisiana State Lease 340 in
approximately 10 feet of water. McMoRan currently owns a 42.9
percent working interest and a 29.7 percent net revenue interest in
the Blueberry Hill well. Upon completion of PXP transaction,
McMoRan would own a 90.8 percent working interest and a 62.8
percent net revenue interest in Blueberry Hill.
UPCOMING INVESTOR PRESENTATION INFORMATION
On Wednesday, December 8, 2010, James R. Moffett, Co-Chairman,
President and CEO of McMoRan, will be presenting at the Capital One
Southcoast Energy Conference in New Orleans, Louisiana. Mr. Moffett
will be providing an update on McMoRan’s current activities and
pending acquisition of PXP’s shallow water GOM shelf assets. His
presentation will be broadcast live on the Internet along with
slides. Interested parties may listen to the conference call and
view the slides at “www.mcmoran.com”. A replay of the webcast will
be available through Friday, December 31, 2010.
McMoRan Exploration Co. is an independent public company engaged
in the exploration, development and production of natural gas and
oil in the shallow waters of the GOM Shelf and onshore in the Gulf
Coast area. Additional information about McMoRan is available on
its internet website “www.mcmoran.com”.
CAUTIONARY STATEMENT: This press release contains
forward-looking statements that involve a number of assumptions,
risks and uncertainties that could cause actual results to differ
materially from those contained in the forward-looking statements.
We caution readers that those statements are not guarantees of
future performance or exploration and development success, and our
actual exploration experience and future financial results may
differ materially from those anticipated, projected or assumed in
the forward-looking statements. Such forward-looking statements
include, but are not limited to, statements regarding various oil
and gas discoveries, oil and gas exploration, development and
production activities, capital expenditures, reclamation costs,
anticipated and potential production and flow rates, statements
about the potential opportunities and benefits presented by the
proposed property acquisition, including expectations regarding
reserve estimates and production rates, statements about the
proposed financing transactions and other statements that are not
historical facts. No assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they will have on our
results of operations or financial condition. Important factors
that can cause actual results to differ materially from the results
anticipated by forward-looking statements include, but are not
limited to, those associated with general economic and business
conditions, variations in the market demand for, and prices of, oil
and natural gas, drilling results, unanticipated fluctuations in
flow rates of producing wells, oil and natural gas reserve
expectations, the potential adoption of new governmental
regulations, the ability to satisfy future cash obligations and
environmental costs, adverse conditions, such as high temperatures
and pressure that could lead to mechanical failures or increased
costs, as well as other general exploration and development risks
and hazards, the closing of the property acquisition, the exercise
of preferential rights by third parties, the closing of the
financing transactions, each of which depends on the satisfaction
of various closing conditions, including, but not limited to,
obtaining shareholder approval of the issuances of securities as
required under New York Stock Exchange rules and obtaining
regulatory approvals, and other factors described in more detail in
Part I, Item 1A. "Risk Factors" included in our 2009 Form 10-K, as
updated by our subsequent filings with the SEC. Investors are
cautioned that many of the assumptions upon which our
forward-looking statements are based are likely to change after our
forward-looking statements are made, including for example the
market prices of oil and natural gas, which we cannot control, and
production volumes and costs, some aspects of which we may or may
not be able to control. Further, during the quarter, we may make
changes to our business plans that could or will affect our results
for the quarter. We caution investors that we do not intend to
update our forward-looking statements more frequently than
quarterly, notwithstanding any changes in our assumptions, changes
in our business plans, our actual experience, or other changes, and
we undertake no obligation to update any forward-looking
statements.
IMPORTANT INFORMATION FOR INVESTORS AND STOCKHOLDERS: In
connection with the proposed transaction, McMoRan filed a
definitive proxy statement with the SEC on November 23, 2010.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT AND OTHER DOCUMENTS FILED IN CONNECTION WITH THE PROPOSED
TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. These materials (and all other documents
filed by McMoRan with the SEC) are available free of charge at
www.mcmoran.com. Investors and security holders may also obtain the
proxy statement and other documents filed with the SEC by McMoRan
free of charge at the SEC's web site, www.sec.gov.
McMoRan's directors and executive officers and other persons may
be deemed, under SEC rules, to be participants in the solicitation
of proxies in connection with the proposed transaction. Information
regarding McMoRan’s directors and officers can be found in its
proxy statement filed with the SEC on March 25, 2010. Additional
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests in the
transaction, by security holdings or otherwise, is contained in the
proxy statement filed with the SEC.
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