MedcoEnergi Logs Natural Gas Pay in the Gulf of Mexico

MedcoEnergi US recently logged two primary pay sands with a combined 25' TVT (Total Vertical Thickness) of natural gas pay in the East Cameron 318 B-4 well. The well, located approximately 150 miles SSW of Lafayette, Louisiana, also encountered three other potential pay sands which will be tested after the two primary zones are produced. The well is currently in the process of being suspended pending removal of Nabors' Super Sundowner XIX. Completion operations will be conducted in early February. Flow rates will be announced after completion and testing are finalized.

Additionally, MedcoEnergi has initiated production from its newly installed EC 318 B facility. Flow from the EC 318 B-3 well commenced on December 22, 2006. The well is currently testing at 5 MMCFD. Further production increases are planned based on additional testing. Pending the release of the drilling rig, the EC 218 B facility will also host additional compression capacity for the four company-operated wells at EC 317 A, as well as anticipated production from EC 318 B-4.

The management of MedcoEnergi is confident that these new developments will significantly increase the company's net production from the Gulf of Mexico. Once fully operational, it is expected that total net production to rise by 30% - 40%. The new platform will also serve as a logistics and operating hub for loop operations in the area.

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