McMoRan has issued an update on its latest developments at the Flatrock field and the South Timbalier Block 168 ultra-deep exploratory well.
McMoRan announced a successful production test at Flatrock No. 4 (location "C"). The production test, which was performed in the primary Rob-L section, indicated a gross flow rate of approximately 109 million cubic feet of natural gas per day (MMcf/d), 2,500 barrels per day of condensate and zero barrels of water, approximately 124 MMcfe/d (23 MMcfe/d net to McMoRan), on a 50/64th choke with flowing tubing pressure of 8,170 pounds per square inch. This is the same Rob-L sand currently producing at an approximate gross rate of 100 MMcfe/d in the Flatrock No. 2 well, which commenced production in July 2008. McMoRan and its partners will use the results of the production test to determine the optimal flow rate for the well, which is expected to begin production by year-end 2008 using the Tiger Shoal facilities in the immediate area.
Since the initial discovery in July 2007, McMoRan has drilled five successful wells at Flatrock on South Marsh Island Block 212 in the OCS 310/Louisiana State Lease 340 area in approximately 10 feet of water. The first three wells are currently producing at an aggregate gross rate of approximately 170 MMfcfe/d, 32 MMcfe/d net to McMoRan. Wireline logs indicated 100 net feet of pay (based on new data) in the Rob-L section of the Flatrock No. 5 development well (location "E") in October 2008.
The No. 5 well is drilling ahead at 15,800 feet towards a proposed total depth of 18,400 feet and is targeting deeper Rob-L and Operc sands. The No. 6 delineation well, located on South Marsh Island Block 217 is expected to commence drilling in the fourth quarter of 2008. The well will target the deeper Operc and possibly penetrate the upper Gyro section of the Flatrock/Hurricane Deep structure. Successful wells can be brought on line quickly using the Tiger Shoal facilities in the immediate area.
McMoRan controls approximately 150,000 gross acres in the Tiger Shoal/Mound Point area (OCS 310/Louisiana State Lease 340) and has multiple additional exploration opportunities with significant potential on this large acreage position. McMoRan has a 25.0 percent working interest and an 18.8 percent net revenue interest in Flatrock. Plains Exploration & Production Company holds a 30.0 percent working interest.
McMoRan also announced it plans to complete and test the South Timbalier Block 168 No. 1 ultra-deep exploratory well (formerly known as Blackbeard West No. 1). As previously reported, the well was drilled to a total depth of 32,997 feet in October 2008 and logs indicated four potential hydrocarbon bearing zones below 30,067 feet that require further evaluation. The well will be temporarily abandoned while the necessary long-lead time completion equipment is procured for this anticipated high pressure test.
McMoRan will continue to review additional drilling opportunities on the flanks of the structure and on other acreage it holds in the ultra-deep trend. The South Timbalier Block 168 well is located on the top of the targeted structure. Seismic data on the prospect indicates the potential for significantly thicker sands on the flanks of the structure as confirmed in recent major deepwater discoveries. Based on information obtained to date in the South Timbalier Block 168 well, McMoRan believes additional drilling on the flanks could result in significant reserve potential.
South Timbalier Block 168 is located in 70 feet of water approximately 115 miles southwest of New Orleans. McMoRan operates the well, which is the deepest ever drilled below the mud line in the Gulf of Mexico, and owns a 32.3 percent working interest. McMoRan's partners, PXP and Energy XXI, hold a 35 percent working interest and 20 percent working interest, respectively.
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