Currently, GEM's net domestic production rate is at approximately 9 million cubic feet equivalent per day. Harken is committed to the continuing development of its domestic operations and has increased its 2004 budgeted capital expenditures by $3 million to approximately $12 million, to grow its Gulf Coast operations. The following field data updates the status of GEM's domestic operations through the end of October.
Lapeyrouse Field. Terrebonne Parish -- Louisiana
GEM has participated in an active field redevelopment program that has included an interest in 6 successful wells in the Lapeyrouse field since the fourth quarter of 2003. GEM holds an average non-operated working interest of 10% in each of the six wells that are together producing at a combined gross rate of 24 million cubic feet equivalent per day, for a net production to GEM of approximately 1.6 million cubic feet equivalent per day. Two additional wells have been proposed and approved for drilling as soon as rigs become available. Both are projected to have a total depth of about 15,000' TVD.
Main Pass, Plaquemines Parish -- Louisiana
GEM sustained minor damage to its offshore facility from Hurricane Ivan in September 2004 interrupting its Main Pass 35 operations. Repairs are now essentially complete, and production from Main Pass 35 has now fully resumed. GEM holds an average 90% working interest in the Main Pass field. GEM continues its geological and geophysical study, utilizing the recently acquired license to 21 square miles of 3D seismic data covering the area held by production leases.
Raymondville, Willacy and Kenedy Counties -- Texas
GEM is continuing to participate in an aggressive workover and recompletion program at Raymondville to bring on new reservoir production. This program has included 15 recompletions to date this year, of which 14 have been successful. GEM has an average 27% non-operated working interest in this field.
Lake Raccourci Field, Lafourche Parish -- Louisiana
As of October 2004, the Lake Raccourci field production rate, which had doubled during the first quarter of 2004, is now at approximately 8.5 million cubic feet per day, gross. GEM holds a 40% operated working interest in each of its Lake Raccourci wells. GEM is presently evaluating prospects in the field using its 60-square mile reprocessed 3D seismic database.
New 3D Seismic Licenses Acquired -- Louisiana
GEM has acquired a license covering approximately 155 square miles of 3D seismic data in three different surveys across south Louisiana. The largest database is in Terrebonne Parish and includes approximately 70 square miles. Approximately 56 square miles is in Cameron Parish, and approximately 29 square miles in Iberville Parish. A number of leads have developed in this continuing study. The process of cataloging and prioritizing is underway.
New Mineral Interest Acquired -- Texas and Louisiana
GEM has acquired mineral interest in 6 drill-ready prospects in Texas and Louisiana. These prospects are generally multi-well opportunities, exploitation in nature with an exploration component. The first two of these wells, in the South Beach and Branville Bay Fields, as described below, have been drilled and logged.
South Beach Field, Chambers County -- Texas
GEM has a non-operated working interest of 9.375% in this area. The initial well was drilled to a true vertical depth of 10,750 feet. The well was logged productive in two sands. The well has been completed in the lower sand. Based on nearby wells in the same sand, GEM expects initial production to be about 7 million gross cubic feet of natural gas and about 300 gross barrels per day of condensate. First sales are expected in late November or early December 2004.
Branville Bay Field, Plaquemines Parish -- Louisiana
GEM has a non-operated working interest of 12.5% in this area. The initial well was drilled to a total depth of 7,400 feet. This well also logged productive in two sands. The well was completed as a dual with total expected gross production of about 500 Bbls per day oil. The first sales of production are expected in December 2004.
"We are pleased with the results from our domestic operations through the first ten months of 2004. Our two new successful wells have the potential to increase our current daily production by approximately 10%. Also, we are confident that further analysis of our existing and newly acquired 3-D seismic data will allow us to identify new prospects," said Jim Denny, President of Gulf Energy Management Company, a wholly owned subsidiary of Harken Energy Corporation. "Since our last update we added four new prospects to complement our existing domestic portfolio and accelerate production growth. We remain strongly committed to our 2004 goal to add production and to generate increased sales of oil and gas from our domestic assets at reasonable finding costs."
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