Pyramid Petroleum Inc. announced that Hurricane Ike had caused damages to several offshore platforms with the result of approximately 80% of its production will be curtailed for the next two months. The estimated cost for repairs net to Pyramid, before insurance reimbursement, is $3.0 million. Pyramid has filed a claim with its insurance company and expects recovery of a majority of the repair costs.
Further details on Ike and other operational updates are as follows:
- Green Canyon 53/52/184: Sustained damages due to Ike. Pyramid's share of estimated costs for repairs: $2.2 million. Production will be curtailed for approximately two months. The Green Canyon Blocks are located in 570 to 1,760 feet of water in the Gulf of Mexico and produce a gross of 2,300 bopd and 4,000 mcfd. The design capacity of the platform facilities located at Block 52 is 55,000 bopd and 125,000 mcfd. Produced oil is shipped through a 32-mile pipeline line in which Pyramid has an ownership interest of 19%. The gas is marketed through a third party gas pipeline. Pyramid has working interests ranging from 16.5% to 25% in the Green Canyon wells, the platform facilities, and the 15,000 acre leasehold.
- Green Canyon 184 well workover program: Before suffering the effects of Ike, Pyramid had completed three of eight planned workovers. The results of the three well workover program were announced earlier. The remaining well workovers will commence after production has been restored.
- High Island 160: Sustained damages due to Ike. Pyramid's share of the repair cost is estimated to be $0.8 million. It is anticipated that production will be curtailed for the next 30 days. High Island 160 Block is located in 50 feet of water and produces a gross of 1.7 mmcfd. The gas is marketed through the Black Marlin 16" pipeline. Pyramid has a 50% working interest in the Field.
- VR 331/MU804: MU 804 has returned to production but the timing of the return to production of VR 331 is undetermined at present. Approximately one-third of Pyramid's cash flow is from these leases in which Pyramid has a 12.5% working interest.
- Drilling Program: Pyramid has reduced its interest in the three new wells from 20% to 10% and has funded its share of the land and drilling costs of the first well. Pyramid has been informed by the operator that it expects drilling of the first well to commence within 30 days.
CEO Ilyas Chaudhary added, "As has been the case with past hurricanes, Pyramid will recover efficiently from the effects of Hurricane Ike and will continue to build its asset base in the Gulf of Mexico. We have a firm belief the Gulf of Mexico is a vast frontier where substantial hydrocarbons still remain untapped."