Petsec's 2006 drilling performance augers well for the Company's expanded drilling program of 14-20 wells in 2007.
Wednesday's discovery – made on the new Mobile Bay leases acquired by Petsec earlier this year – takes its Gulf of Mexico success rate for 2006 to 8 wells of the 9 wells drilled. The Company also participated in a significant oil discovery in Block 22/12, Beibu Gulf, China.
Petsec said that the Mobile Bay 993 #1 well had reached target depth and encountered 6.1 meters (20 feet) of net gas pay, which is at the high end of the Company's pre-drill expectations.
The well will be cased and completed for production together with the installation of a caisson to support production facilities. It is expected that production from the well will commence in the third quarter of 2007.
The Mobile Bay 993 #1 well is the first well in a one to three well drilling program being conducted on the Mobile Bay 993 and 994 leases which are located approximately 160 kilometers east of New Orleans and adjacent and to the south of the recent gas discoveries made in Mobile Bay 950 and 951.
The current program is targeting a total of 5-7 billion cubic feet equivalent (bcfe) of gas net to Petsec (after payout).
The three other wells drilled in recent months on the Mobile Bay leases also discovered gas and are now being readied for 2007 production.
The Mobile Bay leases are among an additional 37 leases acquired by Petsec in the Gulf of Mexico in the past year.
"We now hold 51 leases in the Gulf with prospects generated by 3D seismic of over 270 billion cubic feet of natural gas and 32 million barrels of oil," Petsec's Executive Chairman, Mr Terry Fern, said today. "As a result of our outstanding 2006 drilling success and the Company's large prospect inventory, our 2007 exploration drilling activity has been significantly expanded," Mr Fern said.
"We are now proposing to drill 14-20 wells in 2007 which if successful could more than double the current oil and gas reserves of the Company."
Petsec expects to produce about 8 Bcf of natural gas for the 2006 year from the Company's Gulf of Mexico gas fields and generate over US$45 million in operating cash flow from that production, with a similar amount forecast for the New Year.
To assist with the expected capital expenditure required for a successful 2007 exploration and development program, Petsec earlier this month announced a share placement of 11.5 million shares at $2.40 to institutional investors and a Shareholder Share Purchase Plan (SSPP) underwritten as to 5 million shares to raise a minimum of A$39.6 million.
The SSPP allows all eligible shareholders to acquire up to $4,999.20 worth of Petsec Energy stock at the same price as the institutions who participated in the placement.
The proceeds of the SSPP will be applied towards the company's projects in the Gulf of Mexico and Gulf Coast region of USA and Block 22/12 in China. Details of the discovery well announced Thursday are as follows:
Petsec Energy Ltd is an independent oil and gas exploration and production company listed on the Australian Stock Exchange. Its focus of operations is on gas in the shallow waters of the Gulf of Mexico and onshore Louisiana Gulf Coast region of the USA, and on oil in the shallow waters of the Beibu Gulf off the south coast of China.
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