The Company is preparing to plug and abandon the McIlhenny #1 (Tabasco), an 18,300-foot exploratory well in Vermillion Parish. The Company will record a pre-tax charge of approximately $4 million related to the abandonment of this well for the fourth quarter of 2004 and approximately $1 million during the first quarter of 2005.
The Company has successfully completed the Orleans Levee District No. 1 (American Bay) in Plaquemines Parish, in the Tex W.-A sand in intervals between 12,910 and 12,993 feet. The well was completed as a gas well and tested at an average of 6,525 mcfpd, 482 bopd and 10 bwpd with a flowing tubing pressure of 4,089 psig. The Company expects the well to be on line in the fourth quarter of 2005 after completion of production facilities. The Company owns a 45% working interest in this well.
The Company is preparing to plug and abandon the Mississippi State University #1, a 17,000-foot exploratory well in Oktibbeha County targeting the Stones River formation, after attempts to complete the well as a commercial producer were unsuccessful. The Company is also preparing to plug and abandon the Inez West et al #1, a 12,000-foot exploratory well in Webster County targeting the Penn formation. The Company encountered mechanical problems while drilling to a secondary target formation, preventing the Company from further evaluation of the well. The Company will record pre-tax charges of approximately $5.4 million during the fourth quarter of 2004 and $2.2 million during the first quarter of 2005 related to the abandonment of these wells.
Based on the drilling results of the Mississippi State University #1 and the Inez West et al #1, the Company will record a pre-tax charge of approximately $5.2 million during the fourth quarter of 2004 to impair the remainder of its Stones River acreage and a significant portion of its Penn acreage. This charge is in addition to the previously announced impairment of $8.4 million recorded after the abandonment of the Weyerhaeuser #1 well in December 2004. The Company is continuing to carry approximately $1.1 million of unimpaired acreage costs attributable to one prospect in the Black Warrior Basin that the Company believes is prospective for Penn production.
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