EPL Enjoys Continued Success in the Gulf of Mexico
Energy Partners, Ltd. reports three additional successful wells in the Gulf of Mexico, the OCS 0369 CG 7 sidetrack well at Greater Bay Marchand, the South Marsh Island 24 No. 2 well and the State Lease 15016 No. 6 well in the East Bay field. The Company also provided an update on its development activities and its production volumes.
In the Bay Marchand Field, EPL successfully drilled the OCS 0369 CG 7 sidetrack well. Located in 49 feet of water approximately five miles off the Louisiana coast, the well was drilled to a total depth of 9,562 feet (7,804 TVD) and encountered a total of 33 feet of oil pay in the 7,600-foot sand objective. EPL is the operator of the well and owns a 40% working interest. The William G. Helis Company, LLC, a privately-owned independent exploration and production company based in New Orleans, also owns a 40% working interest. ChevronTexaco owns the remaining 20% working interest. The well is being completed as a single completion and will be produced from existing platform infrastructure. Initial production is expected in February 2003. ChevronTexaco will operate the well after commencement of production.
At South Marsh Island Block 24, EPL participated with a 25% working interest in a successful exploratory well that is currently being deepened. The SMI 24 No. 2 well was drilled to a depth of 16,970 feet and logged 52 net feet of pay in a single sand package. Casing has been set over the productive interval and the well is being deepened to 17,750 feet. Following the deepening, the well will be completed and tested and facility and pipeline design will commence. Production from this discovery is expected in the third quarter of 2003. Remington Oil and Gas Corporation is the operator of the well with a 45% working interest.
The State Lease 15016 No. 6 well in South Pass Block 26, the Arches Prospect, is located near the mouth of the Mississippi River in approximately 11 feet of water. The well was drilled directionally to a total vertical depth (TVD) of 11,333 feet. The well had two objectives, an exploratory objective at an intermediate depth and a deeper proved undeveloped objective. Hydrocarbons were encountered in the proved undeveloped objective in a single sand interval with 31 feet of net natural gas pay. The exploratory objective was non-commercial. The Company is currently evaluating drilling another exploratory well in this prospect area. EPL owns a 100% working interest in the well and is the operator. The well is currently being completed and will be hooked-up to existing field infrastructure for processing and sales. First production is expected in the next several weeks. EPL also announced that the exploratory well at East Cameron Block 89 did not encounter commercial amounts of hydrocarbons and has been plugged and abandoned. EPL had a 20% working interest in this well. EPL currently has two additional exploratory wells underway: East Cameron Block 378 (33% working interest) and the Yosemite Prospect in the East Bay area (56% working interest).
The Company said that the completion and development activities resulting from its successful drilling in 2002 remain on track. At Eugene Island 247, the J-1 well was completed and brought on-line in late November. In December, the rate was optimized and the well is currently producing 11.6 million cubic feet of natural gas (Mmcf) per day. EPL's working interest in this well is 98%. The West Cameron Block 431 A-3 well, an exploratory discovery announced in early December, was placed on production on December 28 and is currently producing 5.6 Mmcf per day. EPL has a 100% working interest in this well. In the East Bay Field, the State Lease 998 No. 1 exploratory well, a December 2002 discovery also known as the Mesa Verde prospect, was placed on production on December 29 and is presently producing 6.9 Mmcf and 560 barrels of condensate per day. EPL has a 67% working interest in this well.
At High Island Block 72, installation of EPL's platform and facilities was completed in mid-December and the No. 1 well (EPL working interest 50%) was restored to production on December 19 and is currently producing 5.4 Mmcf and 128 barrels of condensate per day. The No. 2 well (EPL working interest 79%) tested at a higher condensate yield than anticipated and is currently shut-in pending further facility modifications.
At High Island Block A-538, the platform was installed and the No.1 well was completed in December. The No. 2 development well has been drilled and is currently being completed. Initial production is expected in early February. EPL has a 33% working interest in this field. At Ship Shoal 133, (33% working interest) pipeline installation and hook-up work is ongoing with first production also expected in February.
With the new production brought on stream in late December, EPL's daily production increased to approximately 20,500 barrels of oil equivalent on December 31, 2002, a record level for the Company. The Company expects that despite scheduled maintenance activities and continued intermittent downtime due to weather, daily production for the first quarter of 2003 should average in the range of 20,000 to 20,500 barrels of oil equivalent per day, up approximately 30% from the fourth quarter 2002. EPL said that its fourth quarter 2002 production of approximately 15,600 barrels of oil equivalent per day was below previous guidance mainly due to weather and operational delays in placing new wells on stream as well as some residual storm-related reductions in production. Additional guidance for the first quarter and full year 2003 will be provided during the Company's quarterly conference call scheduled for Thursday, February 6, 2003 at 9:00 a.m. CST.
Richard A. Bachmann, EPL's Chairman, President and Chief Executive Officer commented, "We are very pleased with the ongoing success of our drilling program and how quickly our operations staff is initiating production from these new fields. We expect to redeploy a significant portion of the cash flow generated from this new production in drilling additional wells from our expanding inventory of prospects. We are in the process of finalizing our 2003 exploration and development budget and expect it to be approved by our Board later this month."