The company has begun a six-well program on its Floyd prospect in Plaquemines Parish targeting multi-pay objectives ranging in depths from 3,000 to 12,000 feet. The State Lease 195 QQ #1 was drilled to a total depth of 12,981 feet and is currently being completed by Parker Drilling's inland barge 15B. The State Lease 195 QQ #2 has been drilled to a total depth of 6,296 feet and is pending completion. The State Lease 195 QQ #3 has been drilled to a total depth of 9,170 feet, and the Company is currently preparing to run casing on this well. Under the terms of a farmout agreement, the company bears 100% of the costs on these wells before casing point to earn a 75% working interest in the drilled acreage.
The company has also completed the Miami Corp #1 (Tara) in Cameron Parish in the Upper 67 sand in intervals between 12,895 and 12,920 feet. The well was completed as a gas well and tested at an average of 6,800 Mcf of gas per day and 10 barrels of oil per day with a flowing tubing pressure of 4,100 psi. The company owns 100% of the working interest in this well and expects the well to be on production in the second quarter of 2006 after completion of production facilities.
The company is drilling the Borah #1 (Cypress Isle), a 17,000-foot exploratory well in St. Martin Parish targeting the MA-11 and MA-12 sands, in which it owns a 75% working interest.
The company announced that it is actively exploring for gas reserves in the Cotton Valley/Bossier play in North Louisiana. It believes that these regional tight sandstone formations have become more economically viable due to higher product prices, coupled with enhanced drilling and completion techniques. Having accumulated more than 115,000 net acres in this area, the company to date has participated in six non-operated wells on a small portion of the acreage. Four of these wells are expected to be productive and two are in progress. The company is currently drilling the Harris #1 (NE Vernon), a 14,500-foot well in Jackson Parish targeting the Bossier sand, in which it owns a 52% working interest. Depending on results, it expects to employ up to seven rigs on prospects in this area by the end of 2006.
The Company has also begun acquiring leases in the Bossier play in East Texas. To date, it has acquired approximately 28,000 net acres in this area and is actively seeking to add to its acreage position.
In 2005, the company initiated an exploration program in West Texas seeking to extend the limits of the Wolfcamp formation that is regionally productive in this area. It acquired more than 50,000 net acres and has drilled 11 wells across a wide portion of this acreage. All of the wells were completed as producers, but the oil and gas reserves derived from this drilling program were inadequate to recover capitalized costs. As a result, the company will record an $18 million charge for impairment of proved properties in the fourth quarter of 2005 related to its Wolfcamp program.
The company drilled the Leoncita #1, a 9,300-foot exploratory well in Pecos County, Texas, targeting the Barnett Shale. This well was unsuccessful and resulted in a $4.5 million charge to exploration costs in the fourth quarter of 2005.
In addition, the company drilled 22 gross (18.1 net) wells in the Permian Basin and conducted remedial operations on existing wells in 2005. Although some of the drilling activities in 2005 did not result in the expected quantities of oil and gas reserves, the Permian Basin continues to be a significant source of production and cash flow for the company.
Clayton W. Williams, Chairman and CEO of Clayton Williams Energy, said, "I am very encouraged about our first well on the Floyd prospect in South Louisiana, and I am also excited about our Bossier/Cotton Valley plays in North Louisiana and East Texas."
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