At South Timbalier 41, EPL initiated production from the #B-1 and #A-2 wells through a mobile offshore production unit (MOPU) earlier in the week. The new production from the two wells, when combined with the production from the #A-1 well which has been online since June of 2004, brings the gross production from the field to 40 million cubic feet of natural gas equivalent (Mmcfe) per day. The Company said that rates from the #B-1 and #A-2 wells are expected to increase over the next few weeks as the wells are brought up to their combined planned capacity of 70 Mmcfe per day. The wells had originally been scheduled to come online in November of 2004, but start up was delayed by a number of factors, including inclement weather and pipeline issues. EPL is the operator of South Timbalier 41 and holds a 60% interest, and Kerr-McGee holds the remaining 40%.
EPL also said that the delay in start up at South Timbalier 41 as well as other weather and storm related delays and downtime in the fourth quarter caused production for the quarter to be lower than earlier estimates. The Company said that it now expects fourth quarter production to average between 22,000 and 23,000 Boe per day, lower than its previous guidance of 23,500 to 25,000 Boe per day. The previously discussed production delays are not expected to impact forecasted 2005 production rates.
In exploratory activity, EPL drilled the Galveston 227 #1 well to a measured depth of 9,177 feet (8,963 true vertical depth) and encountered apparent natural gas pay in a two zones. EPL is the operator and holds a 50% working interest; Seneca Resources Corporation holds a 30% working interest and Fidelity Exploration and Production Company holds the remaining 20%. The Company plans to install a support structure in the first half of 2005, and production is expected to commence in the second half of 2005.
The Eugene Island 277 #4 well was drilled to a measured depth of 14,600 feet (13,110 true vertical depth) and penetrated apparent natural gas pay in two zones. EPL is the operator of the block and holds a 67% working interest in this well; a private company holds the remaining 33%. The Company said that it plans to spud the #5 well on the block near the end of January, and development plans for both wells will be finalized after the Company considers results from the #5 well.
EPL also drilled the South Pass 40 #2 well to a measured depth of 9,850 feet (9,300 true vertical depth) and logged apparent natural gas pay in two intervals. After installation of a support structure, the well will be tied back to existing facilities, and production is expected in the first half of 2005. EPL holds a 100% working interest in the well.
At South Marsh Island 192, the #A-2 well was drilled directionally to a measured depth of 16,258 feet (13,364 true vertical depth) and encountered apparent oil and natural gas pay in a number of intervals. The operator of the well, Stone Energy Corp. (NYSE:SGY), has since run casing and skidded the rig over to spud a follow up development well, the #A-3. EPL holds a 17% interest in both of the wells, and production is expected in the second half of 2005.
At South Marsh Island 109, the #A-4 well was drilled to a measured depth of 10,668 feet (10,350 true vertical depth) and encountered apparent natural gas pay in a single interval. The well has been cased and the operator has skidded the rig to spud the #A-5 well, the last of the five wells originally planned for the block. The first three wells on the block came online in the fourth quarter. EPL holds a 27% working interest in the wells.
Other exploratory tests currently underway include South Timbalier 41 #4, South Pass 40 #1, West Cameron 242 #1, and East Cameron 346 #A-12.
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