McMoRan Exploration Co. (NYSE: MMR) today updated its ultra-deep
exploration and development activities in the shallow waters of the
Gulf of Mexico (GOM) Shelf and onshore in the Gulf Coast area,
including completion operations at Davy Jones No. 1, in-progress
drilling at Blackbeard East, Lafitte and Blackbeard West #2 and the
commencement of drilling at the Lineham Creek sub-salt exploration
prospect located onshore in south Louisiana.
Since 2008, McMoRan’s drilling activities in the shallow waters
of the GOM below the salt weld (i.e. listric fault) have
successfully confirmed McMoRan’s geologic model and the highly
prospective nature of this emerging geologic trend. The data from
five wells drilled to date indicate the presence below the salt
weld of geologic formations including Middle/Lower Miocene, Wilcox,
Frio, Tuscaloosa and Cretaceous carbonate, which have been prolific
onshore, in the deepwater GOM and in international locations. The
results of these activities indicate the potential for a major new
geologic trend spanning 200 miles in the shallow waters of the GOM
and onshore in the Gulf Coast area. Further drilling and flow
testing will be required to determine the ultimate potential of
this new trend.
Completion activities of the Davy Jones No. 1 discovery
well at South Marsh Island Block 230 are in an advanced stage.
Installation of the central processing facility, production
platform for Davy Jones No. 1 well and sales pipelines have been
substantially completed. The production tree, blow out preventer
and safety valve, rated for pressures of 25,000 pounds per square
inch, are available for installation. While preparing the hole for
the installation of production tubulars in December 2011, a piece
of equipment became lodged in the wellbore. Operations are ongoing
to retrieve the equipment and McMoRan plans to proceed with the
completion and flow testing of the well once the wellbore has been
cleared. A successful flow test would have important implications
on potential future reserve additions at Davy Jones and McMoRan’s
other ultra-deep prospects. Following a successful flow test,
McMoRan expects first production from the well could be established
shortly thereafter.
As previously reported, McMoRan has drilled two successful
sub-salt wells in the Davy Jones field. The Davy Jones No.1 well
logged 200 net feet of pay in multiple Wilcox sands, which were all
full to base. The Davy Jones offset appraisal well (Davy
Jones No. 2), which is located two and a half miles southwest of
Davy Jones No. 1, confirmed 120 net feet of pay in multiple Wilcox
sands, indicating continuity across the major structural features
of the Davy Jones prospect, and also encountered 192 net feet of
potential hydrocarbons in the Tuscaloosa and Lower Cretaceous
carbonate sections. McMoRan expects to complete and flow test both
wells in 2012.
Davy Jones involves a large ultra-deep structure encompassing
four OCS lease blocks (20,000 acres). McMoRan holds a 63.4 percent
working interest and a 50.2 percent net revenue interest in Davy
Jones. Other working interest owners in Davy Jones include: Energy
XXI (NASDAQ: EXXI) (15.8%), JX Nippon Oil Exploration (U.S.A.)
Limited (12%) and Moncrief Offshore LLC (8.8%).
McMoRan commenced drilling the Blackbeard East ultra-deep
exploration by-pass well on August 25, 2011 at 30,630 feet. The
by-pass well, which is permitted to 34,000 feet, has been drilled
to 33,400 feet true vertical depth (TVD) (33,882 feet measured
depth) and logging operations for the section below 30,800 feet are
under way. As reported in January 2011, wireline logs indicated
that Blackbeard East encountered hydrocarbon bearing sands in the
Oligocene (Frio) with good porosity below 30,000 feet. The well
previously encountered 178 net feet of hydrocarbons in the Miocene
sands above 25,000 feet. Pressure and temperature data below the
salt weld between 19,500 feet and 24,600 feet at Blackbeard East
indicate that a completion at these depths could utilize
conventional equipment and technologies. Blackbeard East is located
in 80 feet of water on South Timbalier Block 144. McMoRan holds a
72.0 percent working interest and a 57.4 percent net revenue
interest in the well. Other working interest owners in Blackbeard
East include EXXI (18.0%) and Moncrief Offshore LLC (10.0%).
The Lafitte ultra-deep exploration well, which is located
on Eugene Island Block 223 in 140 feet of water, commenced drilling
on October 3, 2010. The Lafitte well is currently drilling below
32,200 feet. Recent wireline logs have indicated hydrocarbon
bearing sands in the Oligocene (Frio) section below 30,000 feet.
This is the second hydrocarbon bearing Frio sand section
encountered either on the GOM Shelf or in the deepwater offshore
Louisiana. The first Frio sand was seen approximately 80 miles east
in McMoRan’s Blackbeard East well below 30,000 feet. McMoRan is
considering additional drilling opportunities on the Lafitte
structure to evaluate this section further.
As previously reported, wireline logs from interim logging
operations have indicated 171 net feet of possible productive sands
in the Lafitte well, including 56 net feet of hydrocarbon bearing
sand over a 58 foot gross interval in the Cris-R section of the
Lower Miocene with good porosity. Flow testing will be required to
confirm the ultimate hydrocarbon flow rates from this zone, which
was full to base. Possible productive thicknesses from the Frio
sand section could be added after drilling and logging is
completed. McMoRan controls approximately 15,000 gross acres in the
immediate area of Lafitte. These results enhance the potential of
McMoRan’s other acreage in the Lafitte strategic area, including
McMoRan’s Barataria and Captain Blood ultra-deep prospects.
Barataria (10,000 gross acres) is located west-southwest of Lafitte
and Captain Blood (10,000 gross acres) is located immediately south
of Lafitte.
McMoRan plans to deepen the Lafitte well to a proposed total
depth of 33,000 feet to evaluate additional Oligocene objectives.
Lafitte is McMoRan’s third ultra-deep prospect to encounter Miocene
age sands below the salt weld on the GOM Shelf. McMoRan holds a
72.0 percent working interest and a 58.3 percent net revenue
interest in Lafitte. Other working interest owners in Lafitte
include EXXI (18.0%) and Moncrief Offshore LLC (10.0%).
The Blackbeard West #2 well ultra-deep exploration well
commenced drilling on November 25, 2011 and is currently drilling
below 11,700 feet towards a proposed total depth of 26,000 feet.
The well, which is located on Ship Shoal Block 188 within the
Blackbeard West unit, is targeting Miocene aged sands seen below
the salt weld approximately 13 miles east at Blackbeard East.
McMoRan holds a 69.4 percent working interest and a 53.1 percent
net revenue interest in Ship Shoal Block 188. Other working
interest owners include EXXI (22.9%) and Moncrief Offshore LLC
(7.7%).
McMoRan also announced today that operations have commenced at
the Lineham Creek exploration prospect. Lineham Creek is located
onshore in Cameron Parish, Louisiana and is targeting Eocene and
Paleocene objectives below the salt weld. Operations commenced on
December 31, 2011, and the initial exploratory well has a proposed
total depth of 29,000 feet. Chevron U.S.A Inc., as operator of the
well, holds a 50 percent working interest. McMoRan is participating
for a 36.0 percent working interest. Other working interest owners
include EXXI (9.0%) and W. A. “Tex” Moncrief Jr. (5.0%).
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 forward-looking 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, the potential for or expectation of successful
flow tests, anticipated and potential production and flow rates,
and other statements that are not historical facts. No assurance
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 may have on our results of operations
or financial condition. Important factors that may cause actual
results to differ materially from those anticipated by
forward-looking statements include, but are not limited to, those
associated with general economic and business conditions, failure
to realize expected value creation from acquired properties,
variations in the market demand for, and prices of, oil and natural
gas, drilling results, unanticipated fluctuations in flow rates of
producing wells due to mechanical or operational issues (including
those experienced at wells operated by third parties where we are a
participant), changes in oil and natural gas reserve expectations,
the potential adoption of new governmental regulations,
unanticipated hazards for which we have limited or no insurance
coverage, failure of third party partners to fulfill their capital
and other commitments, 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, the ability to retain current or
future lease acreage rights, the ability to satisfy future cash
obligations and environmental costs, access to capital to fund
drilling activities, as well as other general exploration and
development risks and hazards, and other factors described in more
detail in Part I, Item 1A. "Risk Factors" included in our Annual
Report on Form 10-K for the year ended December 31, 2010 filed with
the SEC 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, we may make changes to our
business plans that could or will affect our results. We caution
investors that we do not intend to update our forward-looking
statements, 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
more frequently than quarterly.
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