ERT acquired East Cameron 374 from Murphy Exploration & Production Company and Callon Petroleum Operating Company in a transaction which included the subsea wellhead and umbilicals (see April 15, 2002 Press Release). Because these long lead-time items were on hand and much of the engineering had been completed, ERT was able to obtain pipeline permits while the drilling rig, the Rowan Midland semisub, completed the well. As soon as the pipeline permits were obtained, two Cal Dive vessels swung into action: the Intrepid laid the flowline and umbilical and the Cal Diver I completed the hookup and installation.
For oilfield service contractor Baker Oil Tools, EC 374 marked the first Gulf of Mexico application of its "Intelligent Well System." The "InForce(TM) Intelligent Well System" allows ERT to change zones via hydraulic controls on the production platform without having a rig re-enter the well. This type of completion also minimizes future well maintenance requirements.
Owen Kratz, Chairman and Chief Executive Officer of Cal Dive, stated, "Our success proves the Cal Dive PUD (proven undeveloped reserves) model as we were able to create value from a marginal reservoir where the exploratory drilling had been completed. Our customers, Murphy and Callon, were able to direct their capital budgets at higher return prospects while still realizing an attractive overriding royalty interest in EC 374."
"Achieving first production six weeks ahead of schedule was an added bonus," Mr. Kratz continued. "It resulted from outstanding teamwork and execution by all parties involved: ERT planning and project management, performance of the Rowan drilling rig, deployment of the Baker Oil Tools "Intelligent Well System," and the subsea construction work performed by CDI vessels. Successful development of EC 374, combined with the recent Shell, Hess and Williams property acquisitions, results in ERT now having over 90 BCFe of proven developed reserves -- before any consideration of what our interest in the Deepwater Gunnison field will add."
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