Contango Announces Successful Development Well at Mary Rose #2
Contango Oil & Gas Company announced a successful well at its Mary Rose #2 location in Louisiana state waters. This is the third well the Company has drilled on its Mary Rose prospect and we expect to test this well by the end of May 2008. The Company's net revenue interest in this well is approximately 38.5%. Upon completion and tie-in to our recently completed production platform at Eugene Island 11, we expect the well to flow at an 8/8ths rate of approximately 50 to 60 million cubic feet equivalent per day ("Mmcfe/d"). Mary Rose #2 was drilled by Contango Operators, Inc. ("COI"), a wholly-owned subsidiary of the Company.
Mary Rose #1 and Mary Rose #3 have begun producing, and are currently flowing at a combined rate of approximately 85 Mmcfe/d (approximately 33.5 Mmcfe/d net to Contango). The Company's plan is to gradually bring the 8/8ths production of each of these wells up to 50 to 60 Mmcfe/d. The Company's net revenue interest in these two wells is approximately 39.5%. The wells flow into the Company's production platform at Eugene Island 11, and through its associated pipeline into the ANR Pipeline Company facilities at Eugene Island 63. The gas is then processed on-shore at Crosstex's Pelican plant near Patterson, Louisiana.
Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "We are drilling our Mary Rose #4 exploration well, in which we have a net revenue interest of approximately 25.5%. Upon completion of our Mary Rose #2 well and if successful at Mary Rose #4, both wells will flow into our production platform at Eugene Island 11. Our three Dutch wells are currently flowing to a third party operated platform at Eugene Island 24 at a capacity constrained level of approximately 75 Mmcfe/d (approximately 28.5 Mmcfe/d net to Contango). We expect to have the downstream constraints removed by July and then flow our Dutch wells at a combined rate of 100 Mmcfe/d."
Mr. Peak continued, "As previously announced, we have authorized Merrill Lynch & Co. to obtain proposals for the purchase of the Company's Dutch and Mary Rose discoveries, through the sale of the Company, with the simultaneous spin-off of the remaining Contango assets to our shareholders in a new company, Contango Energy Company. We expect to open a data room for this sale upon completion and evaluation of our Mary Rose #4 well, currently estimated to be before the end of June 2008."
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