McMoRan Exploration Co. provided an update on the production test at its Davy Jones prospect in the shallow waters of the Gulf of Mexico and said it is working to clean out the perforations at the well.
Shares sank 16% to $10.48 in recent trading as the company said it will provide more updates as flow-testing operations progress and a measurable flow test is achieved. The stock has fallen 28% since the start of the year.
McMoRan had run into flow test trouble at the Davy Jones discovery earlier this year. The company had recently reported its Davy Jones No. 1 well was successfully cleaned out. McMoRan said the well was opened for test earlier this month and flowed natural gas into an unmetered atmospheric tank before being flared.
The company on Monday said it has recovered completion fluids with weights of about nine and 19 pounds per gallon in the well to date and has begun operations to inject a barite solvent into the formation in order to clean out the perforations to carry out a measurable flow test at the well.
McMoRan, which operates some of the deepest wells in the world, has seen declining revenue in recent quarters amid falling natural gas prices and lower volumes. The company has recently emphasized its Davy Jones project--a 20,000-acre ultradeep reservoir in the shallow waters of the Gulf of Mexico--which McMoRan has said could be one of the largest on the Gulf's shelf in decades. The company has successfully drilled two subsalt wells at the field and investors have been eagerly awaiting indications of how they will perform.
Last month, McMoRan reported its third-quarter loss widened as the natural-gas exploration company's average daily production fell short of its prior guidance, partly due to Hurricane Isaac.
Copyright (c) 2012 Dow Jones & Company, Inc.
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