Domestic production continued to be affected by the shut-in of production related to hurricane damage and is currently at 75% of pre-Katrina levels. As of January 30, 2006, GEM's net domestic production rate was at approximately 5.6 million cubic feet equivalent of natural gas per day. Prior to the hurricanes, GEM's net domestic production rate was approximately 7.6 million cubic feet equivalent of natural gas per day. The company anticipates returning to previous production levels during the first quarter 2006.
"We will continue to focus on exploiting our Gulf Coast assets in 2006 while working towards developing longer life reserves from our CBM prospects," said GEM President Jim Denny.
The following field data updates the status of GEM's domestic operations through January 30, 2006:
Lapeyrouse Field, Terrebonne Parish -- Louisiana
Hurricane Impact -- The damage to property interests (operated and non-operated) was minimal; all repairs have been made and production was fully restored in September 2005.
Field Activity -- GEM holds an average non-operated working interest of 8.2% in eight wells in this field. Two scheduled workovers and one well deepening in the field were completed during the fourth quarter 2005. As a result of these activities, gross field production increased from 12 million to approximately 20 million cubic feet equivalent of natural gas per day. A ninth well, spudded in June 2005 and drilled to 15,334 feet true vertical depth, was recently completed and first production is expected in April 2006. The initial production test was 2.4 million cubic feet equivalent of natural gas per day. GEM holds an approximately 39% operated working interest in this ninth well.
Main Pass, Plaquemines Parish -- Louisiana
Hurricane Impact -- Production was initially 100% shut-in, but repairs are ongoing and gross production in the field has returned to approximately 65% pre-Katrina levels. GEM has a 90% interest in Main Pass and is the field operator. GEM's eight-mile pipeline connecting the facility to the crude oil shore terminal has been repaired and successfully tested eliminating the need to secure alternative sales delivery services for Main Pass production.
Field Activity -- During the third quarter 2005, GEM completed a major overhaul and rebuild of an additional compressor for the field that has been off-line for the past four years. Repair work on a second rental compressor damaged by the hurricane is expected to be completed by mid-March 2006. Gross Production for the field is now approximately 340 bopd and expected to reach approximately 500 bopd after repairs are complete. GEM continues its geological and geophysical study in the area, utilizing the recently acquired license to 21 square miles of 3D seismic data, covering the area held by production leases.
Raymondville Field, Willacy and Kenedy Counties -- Texas
During the fourth quarter 2005, GEM recompleted certain wells that temporarily increased gross production; however, it is expected that field production has peaked and will continue to decline. Gross production for this field is currently approximately 4 million cubic feet equivalent of natural gas per day. GEM has an average 27% non-operated working interest in this field.
Lake Raccourci Field, Lafourche Parish -- Louisiana
Hurricane Impact -- Although both hurricanes Katrina and Rita required the shut-in of production for short periods in August and September 2005, the field's production has been restored to its pre-storm capacity. Repairs were minimal and were completed in October 2005.
Field Activity -- GEM holds a 40% operated working interest in each of its Lake Raccourci wells. Gross production for this field is approximately 4.6 million cubic feet equivalent of natural gas per day. GEM is presently seeking industry partners to drill a field extension well.
3D Seismic Licenses -- Louisiana
GEM continues to evaluate seismic licenses acquired in the fourth quarter 2004 covering approximately 155 square miles of 3D seismic data in three different surveys across south Louisiana. A number of leads have developed in this continuing study. The process of cataloging and prioritizing the seismic data is ongoing.
South Beach Field, Chambers County -- Texas
After tie-in to the transmission pipeline, initial production from two wells commenced in August 2005. GEM has a non-operated working interest of 10% in this area. Gross production for this field is approximately 4.6 million cubic feet equivalent of natural gas per day.
Branville Bay Field, Plaquemines Parish -- Louisiana
Hurricane Impact -- This non-operated property remains 100% shut-in. Repairs to the production facility are underway and production is expected to resume during the second quarter of 2006.
Field Activity -- A second well was completed to a total depth of 8,000 feet and was connected to the transmission pipeline during the third quarter 2005. GEM has a non-operated working interest of 12.5% in this area.
Point-a-la-Hache Field, Plaquemines Parish -- Louisiana
Hurricane Impact -- This operated property remains 100% shut-in. Damages to this field principally affected a leased production barge facility that was moved to the location in July. Repairs to the production barge are expected to be completed in April 2006.
Field Activity -- The initial well, State Lease 18077 # 1, began producing in July 2005. GEM maintains a 25% operated working interest in the area.
Allen Ranch Field, Colorado County -- Texas
GEM owns an 11.25% non-operated working interest in the area. The initial well, the Hancock Gas Unit # 1, was productive in four sands with first production in April 2005 and has been producing approximately 2.5 million cubic feet equivalent of natural gas per day. In September 2005, the well was fracture stimulated and production increased to 6.5 million cubic feet equivalent of natural gas per day. As a result of the success with the first well, the Hancock Gas Unit # 2 was spudded in October 2005 as an offset to the first well. This second well was logged as productive in the same four sands as the Hancock Gas Unit # 1 well and two deeper zones have indications of potentially being productive also. Production casing has been set and completion and fracture testing are underway.
Coalbed Methane Prospects -- Indiana and Ohio
In 2005, GEM entered into two significant Exploration and Development Agreements in Indiana and Ohio. Each prospect provides for an area of mutual interest of approximately 400,000 acres. The agreements provide for a phased delineation, pilot and development program, with corresponding staged expenditures. Contracted third parties with a long track record in successful Coalbed Methane development are providing expert advice for these projects.
In September 2005, after the submission of a Phase I core evaluation report by the technical consultant, GEM elected to proceed and fund pilot well drilling under Phase II of the agreement. Due to winter access restrictions, GEM expects the drilling of the pilot wells to occur during the first quarter 2006.
Core samples from the Ohio CBM prospect are in the process of being analyzed. Depending on final results, GEM may elect to schedule drilling of pilot wells on its Ohio CBM prospect area during 2006.
Harken Energy Corporation is engaged in oil and gas exploration, development and production operations both domestically and internationally through its various subsidiaries.
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