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, which are in
an advanced stage, new logging results from Blackbeard East and in
progress operations at Lafitte, Blackbeard West No. 2 and Lineham
Creek.
Completion activities of the Davy Jones No. 1 discovery
well at South Marsh Island Block 230 are in an advanced stage
with completion and flow testing expected in the first quarter of
2012. Since McMoRan’s last report on January 17, 2012, the wellbore
has been cleaned out to total depth and oil based drilling mud is
currently being displaced with completion fluid. Remaining steps
include running a pulsed neutron log, running perforating guns and
production tubing in the hole, removing the blowout preventers and
installing the production tree. McMoRan will then pressure up the
tubing to activate and fire the perforating guns in the hole to
flow test the well. A successful flow test would have important
implications on potential future reserve additions at Davy Jones
and McMoRan’s other ultra-deep prospects. McMoRan expects first
production from the well could be established shortly after a
successful flow test.
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 (Gulf)
Limited (12%) and Moncrief Offshore LLC (8.8%).
In January 2012, the Blackbeard East ultra-deep
exploration by-pass well was drilled to a total depth of 33,318
feet true vertical depth. Analysis of wireline logs, conventional
core samples and sonic logs in January 2012 indicated that the
Blackbeard East well encountered potential hydrocarbons in the
Sparta carbonate section of the Eocene and Vicksburg section of the
Oligocene. The Sparta interval measures 300 feet thick and appears
to be a hydrocarbon bearing fractured carbonate. The Vicksburg sand
is credited with 10 net feet of pay over a 40 foot gross interval.
Flow testing will be required to confirm the potential hydrocarbons
and flow rates from these limestone and sandstone formations.
These new intervals are in addition to the 178 net feet of
hydrocarbons previously announced above 25,000 feet in the Miocene
and the hydrocarbon bearing sands in the Oligocene (Frio) with good
porosity below 30,000 feet. A production liner will be set to total
depth and the well will be temporarily abandoned while development
options are evaluated. 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
32,900 feet TVD. In January 2012, McMoRan obtained pressure data
and rotary sidewall cores in the Cris R sand; this information is
being evaluated. Flow testing will be required to confirm the
potential hydrocarbons and flow rates from this Cris R sand. As
previously reported, the Lafitte well has encountered 211 net feet
of possible productive net sands, including 56 net feet in the
Cris-R section of the Lower Miocene and 40 net feet in the Frio
section of the Oligocene.
McMoRan is considering delineation drilling opportunities on the
Lafitte structure to evaluate this prospect further. McMoRan
controls approximately 15,000 gross acres in the immediate area of
Lafitte. Results to date from Lafitte 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 has applied for a permit to deepen Lafitte to 34,000
feet to evaluate additional Oligocene and potential Eocene
objectives. 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 No. 2 ultra-deep exploration well
commenced drilling on November 25, 2011 and is currently drilling
below 15,000 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%).
Operations have commenced at the Lineham Creek
exploration prospect, which is located onshore in Cameron Parish,
Louisiana. Lineham Creek 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 and costs, capital
expenditures, reclamation, indemnification and environmental
obligations and costs, the potential for or expectation of
successful flow tests, anticipated and potential quarterly and
annual production and flow rates, reserve estimates, projected
operating cash flows and liquidity 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 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.
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