The Company recently completed drilling its first exploratory well of 2006, the successful South Timbalier 23 #CC-4 sidetrack. EPL holds a 27% working interest in the well, which was drilled and completed from the same platform as the last well in 2005, the #CC-6 sidetrack. The Company is currently drilling a development well, the South Timbalier 41 #B-2, at its South Timbalier 41/42 complex, where the Company has six exploratory discoveries in six attempts. Lastly, an exploratory well is underway at East Bay testing the high potential Denali prospect. The Denali well, where EPL holds a 40% working interest, is currently drilling below 9,800 feet with a planned total depth of 18,500 feet. This first well is designed to test the shallower of two prospective horizons, known as the Tex W, with the deeper prospective horizon expected to be tested at a later date.
EPL also updated its estimates for 2006 production levels. For the first quarter of 2006, the Company expects production to average between 25,000 and 27,000 barrels of oil-equivalent (Boe) per day. While first quarter 2006 production levels are still forecast to be below pre-Hurricane Katrina levels, a significant portion of that shortfall is due to production that is still shut-in due to damage from Hurricanes Katrina and Rita, essentially all of which is expected to be online by the end of the first quarter of 2006. For 2006 as a whole, EPL expects production to average between 28,000 and 30,000 Boe per day, which would represent an increase of approximately 25% to 35% over estimated 2005 production levels.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "2005 was a challenging year for our Company and for our industry, with tropical weather impacting all exploration and production companies operating in the Gulf of Mexico. EPL's employees have faced both personal and professional adversity in the last several months, but their continuing hard work has enabled the Company to bounce back quickly, and we are poised for a great year in 2006. Our 2005 exploration and development program has paved the way for meaningful production growth in 2006, and the cash flow we expect to generate in the next twelve months will enable us to fund the largest capital budget in our history."
Richard A. Bachmann will hold a series of meetings with institutional investors in the coming week to outline the Company's strategy and outlook for 2006. An electronic copy of his presentation will be available on EPL's website.
Founded in 1998, EPL is an independent oil and natural gas exploration and production company based in New Orleans, Louisiana. The Company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the shallow to moderate depth waters of the Gulf of Mexico Shelf.
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