Meridian Outlines 2003 Drilling Program
Meridian Resource Corp. completed the pipeline and production facilities for the Biloxi Marshlands discovery well No. 6-1 in March and the Biloxi Marshlands No. 6-1 well is currently producing at a steady rate of 11.5 MMCFE/D. The facilities were designed for a production capacity of 60 MMCFE/D based on anticipated additional drilling in the immediate area. The company has identified other drill sites in the immediate area; and, acquired leasehold and state water bottoms acreage for current and future drilling operations.
In addition to the facilities at Biloxi, utilizing proprietary 3-D seismic which was acquired during 2002, the company was successful in acquiring state lease acreage for coverage of anticipated units to be formed as additional wells are drilled in the area. Because the data is proprietary to Meridian, specific potential drill site acreage was identified and the company was successful winning the bids to acquire all of the acreage positions which were targeted during both the March Louisiana state lease sale and most recently the May Louisiana state lease sale.
Further, additional drill sites have been identified based upon proprietary 3-D and the state water bottom acreage acquired to protect our land positions. As a result, drilling on additional wells in the immediate area has been initiated. The first well is the Biloxi Marshlands No. 6-2 well which was spud on May 3, 2003 and reached total depth on May 14, 2003. Logging operations will commence immediately. If successful, this well can be placed on production within ten days because the production facilities recently completed are immediately adjacent to the well's surface location.
Having already identified additional drilling opportunities in the adjacent area over which acreage has been acquired, the Biloxi Marshlands No. 7-1 well has been accelerated and is currently scheduled to be drilled as soon as practicable, utilizing the same rig used on the Biloxi Marshlands No. 6-2 well. This will save rig mobilization costs, take advantage of the accelerated drilling time line of ten drilling days experienced with the Biloxi Marshlands No. 6-2 well and, if successful, will accelerate production rate increases, enabling the company to take advantage of current high natural gas prices.
Other activities in the first quarter in the Biloxi Marshlands play included the planning, permitting and negotiating of a 3-D seismic acquisition contract to acquire a minimum of an additional 105 square miles of 3-D seismic data to the south and east of the current 3-D seismic coverage owned by Meridian. Field operations are currently underway for the 3-D survey. Depending on weather conditions during the summer months in this region, additional 3-D data may be acquired under the current contract.
Based on current plans, the Company has scheduled a total of five (5) and possibly six (6) wells for the Biloxi Marshlands play for calendar year 2003. Any additional wells will depend on budget availability, and the results and timing of completing the acquisition, processing and interpretation of the new 3-D seismic data currently being acquired.
Meridian operates the Biloxi Marshlands acreage and owns a 93% working interest (66% net revenue interest) in the project area.
In addition to the activities in the Biloxi Marshlands play, the Company is currently scheduled to drill its Ship Shoal prospect beginning during the late second quarter or early third quarter, depending on rig availability and move-in timing. Meridian developed the play and owns a 43% working interest. The well will test the Lower Pleistocene sands at approximately 13,000 feet and should be drilled and logged by the end of the August or early September depending on start date and operations. It is expected that the well will be drilled under a turnkey contract. Although, if successful, reserves will be added in calendar year 2003, it is anticipated that the well will not be on production until 2004 inasmuch as it is in over 250 feet of water and production facilities will have to be constructed.
Other prospects scheduled for the second quarter are in the Company's Riceville area. The Pathfinder prospect has been planned for a June spud date and will test the Lower Miocene series sands at approximately 12,500 feet. Again, depending on spud date and drilling operations, the drilling is expected to be completed during the end of the second quarter or beginning of the third quarter, and, if successful, placed on production within 45-60 days thereafter.
Workover and completion activities scheduled for the second quarter include the Avoca No. 47-1 well which was producing approximately 8 MMCFE/D and was placed back on production on May 15, 2003. In addition, the Thibodaux No. 1 well is scheduled for late May or as soon as equipment is available. This is a high pressured well and is located over water. As a result, the right equipment to handle the workover operations is an issue to insure safe operations.
Lastly, the Hughes No. 2 well is awaiting completion operations to commence which are expected to begin on or about June 15, 2003. Plans have been established to re-enter the open hole section, clean out the bore hole to total depth, set a production liner and perforate the Bol Mex 5 series of sands encountered and logged during February 2003. Meridian is the operator of the well and owns an approximate 94% working interest and a 70% net revenue interest in the well. We expect that the well will be on production immediately after completion operations are concluded inasmuch as production facilities are in place and awaiting tie-in.
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