Recent Discoveries/Production Pending
The Company continues to take on higher reserve potential prospects in its 2002 Gulf of Mexico exploration program predominately through deeper shelf drilling efforts. Eight prospects currently drilling or scheduled to spud by year-end have potential reserves of over 550 Bcfe gross, or approximately 60 Bcfe net to Magnum Hunter.
Ongoing 2002 Offshore Exploration Program
The Company's East Cameron 185 #2 well was recently drilled to 15,300 feet. The deeper objectives in the well had excellent gas shows; however, electric log analysis indicated low gas saturation that was considered non-commercial. The Company is currently evaluating a possible future location that could encounter these objectives structurally higher to the existing penetration. The Company is currently sidetracking this well with its partners to a more optimum structural position to capture hydrocarbon pay intervals identified in the shallower portion of the well at approximately 11,000 feet. It is anticipated that this well will be completed and then subsequently tied back to an existing production platform on East Cameron Block 184, with first production anticipated sometime in early 2003.
Magnum Hunter has become one of the most active and successful companies in the shallow waters of the Gulf of Mexico. Since initiating an exploration program in the Gulf of Mexico in May, 1999, the Company has developed a large inventory of 135 OCS Blocks (634,000 gross acres) and has maintained an 86% drilling success rate with 45 out of 52 Gulf of Mexico wells drilled to-date. Reserves and production have consistently increased each year.
Commenting on the Company's activities in the Gulf of Mexico, Mr. Charles R. (Chuck) Erwin, Senior Vice President of Exploration for Magnum Hunter stated, "Our exploration success in the Gulf of Mexico has become increasingly repeatable with a large inventory of lease blocks from which to identify trends, use of 3D seismic coverage to select specific drillable targets, and strong joint venture partnerships with other leading Gulf of Mexico exploration companies. We look forward to continuing our success in future exploration projects over the next several years in an increasing commodity price environment, which should enable Magnum Hunter to remain on our trend of increasing our reserves and overall production, and net cash flow derived from the Gulf of Mexico."
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