Stone Energy has successfully drilled a deep exploratory prospect on South Pelto Block 22. The South Pelto Block 22 OCS-G 18054 No. 2 Well logged 435 net feet of pay in nine sands. Protective casing has been run across the productive interval and drilling operations are ongoing to a planned depth of approximately 18,800 feet MD. After deepening, completing and testing the No. 2 Well, we will determine the number of future delineation wells and the size of production facilities necessary to develop this significant discovery. Drilling and completion costs for the No. 2 Well are expected to total $3.5 million net to Stone. Stone has a 50% WI and a 40.7% NRI in this well.
As previously announced, Stone expects first quarter 2003 average daily production to total 270-280 MMcfe. Additionally, based on our current capital expenditure budget of $240 million, excluding acquisitions, Stone expects 2003 production to grow 7-10% over 2002's record annual production of 104.4 Bcfe.