Magnum Hunter Updates Operations After Isidore and Lili
Magnum Hunter's operations in the Gulf of Mexico and in the marsh area of southern Louisiana were affected by tropical storm Isidore and hurricane Lili. Most of the shut-in production related to these two storms has been restored and there appears to be no permanent damage to facilities owned by the Company. However, there remains to be additional infrastructure repairs on certain Company operated facilities as well as South Marsh Island 35 operated by Remington Oil and Gas Corporation. These minor repairs should be completed within the next several weeks at which time production can resume. The greatest impact appears to be on the Remington operated Eugene Island 302 platform, which continues to be shut-in due to extensive damage to Newfield Exploration's production platform at Eugene Island 324. Prior to the shut-in of these facilities, gross production was 1,850 barrels of oil per day and 3 million cubic feet of natural gas per day or net equivalent production to Magnum Hunter of approximately 3.5 MMcfed. The operator is considering repairs to this facility or possibly re-routing the currently shut-in production to an alternate facility in an effort to restore production sometime early next year.
The Company also had two wells that were in the drilling phase that were affected by the aforementioned storms. On Main Pass 107, operated by LLOG, a private New Orleans based company, where the Company currently has a 50% ownership interest, the RBF 204 which was on location shifted and was damaged during the hurricane. The RBF 204 has subsequently been moved to a shipyard for rig repairs and the well has been suspended. The operator is in the process of contracting another drilling rig to complete the operation. Also, on South Marsh Island 24, operated by Remington, the drilling of this well was suspended at 13,400 feet due to casing damage caused by the hurricane. Prior to evacuation, the well bore was secured below the seabed with a storm packer. During the storm, the drive pipe was separated from the drilling rig and was bent severely at the seabed. The drive pipe is currently being cut off at the sea floor to enable re-entry into the well bore. The well is in a controlled and stable condition. The projected total depth of this well is approximately 18,000 feet. Existing insurance may cover one or both of these delayed drilling projects.
The combination of production lost from property divestitures completed to-date and storm related shut-ins is estimated to be approximately 4 Bcfe net to Magnum Hunter for the second half of calendar 2002. Company-wide production for the month of August 2002 averaged 228.2 million cubic feet equivalents per day.