ATP O&G announced an operations update for its properties in the Gulf of Mexico, the North Sea and Offshore Israel. Company-wide production continues to be 24-25 MMBoe/d.
ATP commenced well operations with the Diamond Ocean Victory drilling vessel at the Green Canyon (“GC”) Block 300 (“Clipper”) #2 ST#1 during the second quarter of 2011. In July 2011, ATP successfully completed and flow tested the well at 45.6 MMcf per day plus condensate of 4,656 Bbls per day. The well is scheduled to be placed on production in the middle of 2012 after completion of the pipeline and tie-back to existing infrastructure.
After completion of the GC #2 ST #1, the Diamond Ocean Victory will move to the GC #4 well, re-enter and sidetrack the well to the targeted oil zone. All required permit applications have been submitted to the BOEMRE.
ATP operates Clipper and presently owns a 100% working interest.
During June 2011, ATP completed and returned to production the Mississippi Canyon (“MC”) Block 711 #5 well bringing to six the number of wells producing at Gomez. The development drilling plan (“DOCD”) for MC 711 #9 and MC 711 #10 were deemed submitted to the BOEMRE on June 8, 2011. Upon approval of the DOCD and the well permits, ATP expects to commence drilling at MC 711 #9 and #10 with first production expected mid-2012. The exploration plan has also been submitted for MC Block 710, a block immediately adjacent to MC 711 which displays similar seismic and technical characteristics to MC Block 711. Original proved reserve estimates of the Gomez Hub accounted for 14.8 MMBoe. Since commencement of production through June 2011 the Gomez Hub has already produced gross volumes of 24.8 MMBoe (66% oil).
ATP operates the deepwater Gomez Hub, has a 100% working interest in MC 711, 710 and 755, a 75% working interest in MC 754 and owns 51% of the ATP Innovator through a partnership with GE.
The MC Block 941 A-1 (#3) continues to produce as expected from the commingled C and D sands. Since inception, October 2010 through June 2011, the well has produced gross volumes of 2.8 MMBoe (85% oil and 15% gas). Based on the strong performance of the #3 well to-date, ATP expects to recover from the #3 and #4 wells all of the reserves that were initially projected from the C and D sands. Current water production of approximately 950 barrels per day is from the D sand which is to be expected since the downdip well, originally drilled by Vastar, was wet. Water cut is expected to increase until the D sand in the well, which represents less than 2% of the total proved and probable reserves of the Telemark Hub, is depleted, at which time the D sand sleeve will be closed. The ATP Titan, the floating production facility that services the Telemark Hub, has the capacity to process 25,000 Bbls of oil/day, 50 MMcf of gas/day and 15,000 Bbls of water/day.
Currently the MC Block 941 A-2 (#4) well is being completed; productive intervals in the C and D sands have been perforated and independently frac-packed. All remaining permits to complete this well have been approved, and remaining operations include running tubing, reconfiguring to allow flow testing the well and turning the A-2 to sales. First sales from the MC Block 941 A-2 are expected in the third quarter.
The MC Block 942 #2 well, which is already drilled to approximately 12,000 feet, will be drilled to total depth upon approval of the drilling permit by the BOEMRE and following the completion of the MC Block 941 A-2 well. ATP plans to complete drilling the well in the fourth quarter and expects first production by year-end.
ATP operates the deepwater Telemark Hub with a 100% working interest and owns 100% of the ATP Titan and associated pipelines and infrastructure.
UK North Sea
During the second quarter, the work on the Octabuoy floating production facility continued in the shipyard. Hull construction is on schedule and completion is expected early in 2012. Platform topsides are under construction in China (the utility module) and the US (the processing module). Upon completion of the processing module it will be shipped to China to be joined with the utility module. The hull and topsides will then sail to Norway for final commissioning and on to the Cheviot field in the North Sea where production is expected to begin in 2014.
In addition to Cheviot, ATP is working on its Skipper and Blythe projects in the UK North Sea. At Skipper, an oil project, an appraisal well to test production rates is scheduled for next year. At Blythe, predominately a gas project, discussions are ongoing to determine the most economic offtake route for the gas from this field. Development at Blythe is expected to commence in 2013. Skipper is located in the central UK North Sea in water depths of approximately 300 feet. Blythe is located in the Southern Gas Basin in water depths of approximately 100 feet. ATP operates both Skipper and Blythe and has a 50% working interest ownership in each.
During June 2011, through its subsidiary ATP East Med B.V., ATP acquired interests in three deepwater licenses in the Mediterranean Sea offshore Israel. ATP will operate its licenses, Shimshon, Daniel East and Daniel West, with a working interest of 40%. In the Mediterranean Sea, ATP licenses relate to exploratory prospects where drilling has occurred nearby and hydrocarbons have been discovered by others. ATP capital investment in the Mediterranean Sea is expected to be minimal for the remainder of 2011 as ATP prepares its exploratory and development plans for drilling in 2012.
ATP East Med, as operator of the licenses, has assumed the drilling contract with Transocean Drilling Israel Ltd. for the Sedco Express drilling unit at the Shimshon location where it anticipates initial drilling during the second quarter 2012. ATP expects to spend between $24 and $29 million during 2012 related to the initial exploratory well on the Shimshon license for its 40% working interest.
ATP notes that Isramco Negev, its partner in Shimshon, on March 6, 2011 reported that it received an independent reservoir engineering evaluation from Lockwood & Associates estimating gross potential natural gas reserves at Shimshon. According to Isramco Negev, "Lockwood & Associates considers the calculated assessment of the total geological and geophysical exploration probability of success of 20 percent to be reasonable. Lockwood said its high estimate was for 3.4 TCF, the low estimate was 1.5 TCF and its best estimate was 2.3 TCF."
Additional information on the Daniel East and Daniel West licenses will be provided as drilling and exploration plans are approved. ATP East Med is also party to two other licenses in offshore Israel which are awaiting approval by the Israeli Ministry of National Infrastructure. ATP continues to evaluate acquiring other licenses in the Mediterranean Sea.
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