The Meridian Resource Corporation has had success in its efforts to further exploit its core assets in South Louisiana and its East and South Texas Austin Chalk acreage.
South Louisiana Exploitation
The Weeks Island and Turtle Bayou fields continue to render additional opportunities from new well locations, sidetracks and development drilling. Recent activity in these fields has served to extend field pay and add new reserves and rate. Year-to-date results of the Company's exploitation efforts in this area are set out below:
Field Well Name Sand Net Average Rate Add* -------------------------------------------------------------------- Weeks Island Myles 27 ST Q Sand 2.0 Mmcfe/d Weeks Island Goodrich-Cocke No. 7 BF4 Sand 1.0 Mmcfe/d Turtle Bayou CL&F B-1 AA Sand 0.7 Mmcfe/d Turtle Bayou CL&F C-1 AA Sand 0.9 Mmcfe/d Ramos Avoca 8-1 Big Hum 2 1.4 Mmcfe/d *average of the last two weeks of production
In these prolific fields, the Company has identified several additional well locations, re-completions and workovers, that it expects could significantly add rate and reserves during 2008. Coming up in the short term at Weeks Island, the Company will be re-entering the Goodrich-Cocke No. 6 ST well. The well will be sidetracked at approximately 4,700 feet and drilled an additional 3,600 feet, testing the F-sand in the Miocene formation at a depth of approximately 8,300 feet.
Additionally, the Company is also reprocessing its 3-D seismic data over Weeks Island and other regions in its South Louisiana play area (Atchafalaya Bay and Barataria Bay), the expectations being that the re-processed and newly acquired 3-D data will enhance the Company's ability to generate low-to-moderate risk new projects in this core area where it is already active and has operations and infrastructure in place. It is anticipated that the greatest near term and long term impact on production and reserve value will result from the Company's capital spending program in these two areas this year.
In the East Texas area, initial production test on the Freeman No. 1 well, located in Polk County, Texas resulted in gross daily flow rates as high as 16.7 Mmcfe/d (8.8 Mmcfe/d, net). The gross amount includes 336 Bopd. The well was drilled vertically to approximately 13,000 feet, then added two horizontal laterals, 4,000 feet and 5,600 feet respectively. The Company expects that the well (which was tested three weeks ago) will display similar producing characteristics to other Austin Chalk wells in the area, with the typical hyperbolic decline curve from these production levels, during the coming months. The well is currently producing at an average rate of 2.1 Mmcfe/d (1.1 Mmcfe/d, net). Meridian owns approximately 69% working interest in this well.
The Company continues the extension of its East Texas Austin Chalk play with a two rig program. The Davis A-388 well is located approximately four miles north of the BSM No. 5 well and is currently drilling the vertical section at a depth of approximately 12,300 feet. The Company has approximately 45% working interest in this dual horizontal lateral well. Additionally, the dual lateral BSM 507 No. 1 well has recently spud and is currently drilling at 2,500 feet.
As part of the Company's business plan, it has acquired a significant lease position (approximately 30,000 acres) in South Texas within a major Austin Chalk play in the region that covers over 200,000 acres. The Company has scheduled a well to be drilled in late summer in this area. Additionally, a shallow oil well is scheduled to be drilled to test the Vicksburg formation next month in Bee County.
Cotton Valley/Haynesville Play
The Company initiated leasing activities in the North Louisiana Cotton Valley producing region with a 50% interest partner in the area. Although the announcement of the Haynesville play increased the competition for acreage in the area, the Company and its partner have acquired over 6,000 acres in this exploitation styled play opportunity. Two wells are anticipated to be drilled to test multiple objectives including the Haynesville Shale and Cotton Valley.
In the Biloxi Marshland area, the natural gas transmission company that takes gas from the Company's two production facilities in that area has temporarily shut-in production from the various wells that feed into those facilities. Maintenance and repairs are being conducted on the transmission company's line to correct minor damage caused by the hurricanes of 2005. The wells were shut-in on April 25, and Meridian is being informed by the pipeline operator that repairs should be completed by May 12. The amount of production being shut-in is estimated to be 7.6 Mmcfe/d net. After the completion of these repairs, daily production rates for the Company are projected to be around 45 Mmcfe/d.
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