The Company has made plans to participate in a minimum of seven exploration wells in the GOM during 2002. The gross reserve potential of these prospects are from 50 to 156 Bcfe each. The first well in the 2002 program is currently drilling on Main Pass Block 108 with Kerr-McGee Oil & Gas Corp., a wholly owned subsidiary of Kerr-McGee Corp., as operator.
The remaining exploration blocks to be drilled are with active partners in the GOM such as Spinnaker Exploration Company, Remington Oil & Gas Corporation, and Hunt Oil Company, a private concern. Total potential gross reserves for these seven exploratory wells are approximately 800 Bcfe, of which 200 Bcfe would be net to Magnum Hunter.
Initial production has recently commenced on three new GOM blocks. On Main Pass 178, the #A-2 well is flowing to sales at a daily rate of 12 MMcf and 200 Bop and is currently restricted at these rates due to capacity limitations of the production facilities. The #A-1 well was completed in December and tested at a daily rate of 5 MMcf and 800 Bop. The Company has recently installed additional oil storage facilities on the production platform, however, production rates will be somewhat curtailed on these wells at times of adverse weather until an oil pipeline has been installed and placed into service. Magnum Hunter owns 100% of the working interest in these wells and associated OCS blocks at Main Pass.
On South Marsh Island 35, the #A-1 well is flowing at a daily rate of 1,100 Bop and 2 MMcf. Magnum Hunter owns a 37.5% working interest in this well and associated lease block. Remington Oil and Gas Corporation is the operator. On High Island A-153, the #A-2 well is flowing at daily rates of approximately 5 MMcfe. Magnum Hunter owns a 25% working interest in this well and associated lease block. Spirit Energy 76, a wholly owned subsidiary of UNOCAL Corporation, is the operator.
Commenting on the Company's activities in the Gulf of Mexico, Mr. Gary C. Evans, Chairman, President and CEO stated, "Magnum Hunter has now firmly established a second core operated area on the Shelf with the recent successes established at Main Pass. These new wells are having a substantial impact on our production and net cash flow due to a combination of high flow rates and a 100% ownership position. Our geologists and geophysicists are extremely excited about the future potential for this area due to our significant mineral acreage ownership position in six adjacent OCS blocks as well as recent drilling successes made by industry competitors nearby. We have made a decision to step up the size of the reserve potential of our 2002 exploration program in the Gulf and have teamed up with highly regarded industry partners. We hope to continue during 2002 our ability to maintain a high success rate in the Gulf with our history of 31 of 36 wells drilled to-date on the Shelf having been commercial discoveries."
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