As previously reported, the vast majority of EPL's producing properties, which are located in the Gulf of Mexico ("GOM"), have suffered minor damage as a result of Hurricanes Gustav and Ike. Current daily production is approximately 50% of pre-storm production levels. Restoration of the Company's remaining production is dependent upon the acceptance of production by third party sales pipelines damaged during the storms. Based on estimates from these third parties, EPL expects the vast majority of its pre-storm production to be restored in the latter part of this year's fourth quarter.
In addition to restoration of hurricane-related shut-in production before year end 2008, the Company has two projects from prior years' discoveries scheduled to commence production in 2008, including the deepwater Raton gas well in Mississippi Canyon 248 and one GOM Shelf ("Shelf") well. The Raton well, a deepwater gas discovery, is scheduled to commence production late fourth quarter of this year. EPL has a 33% non-operated working interest in this well.
On the Shelf, the Company anticipates the start of production late in the fourth quarter from the South Marsh Island 79 #E-1 well, a 100% EPL owned gas discovery awaiting a third party pipeline repair. EPL is currently projecting full year 2008 production in the range of 13,000 to 14,000 Boe per day, with its fourth quarter 2008 production estimated to average between 9,000 and 11,000 Boe per day. With the benefit of these new sources of production and the current schedule of hurricane-related production restoration, EPL projects its 2008 production exit rate will range from 16,000 to 20,000 Boe per day.
The Company announced that in its East Bay development program, it has drilled its seventh successful sidetrack this year, the OCS-694 #147st, with over 145 feet of net pay and four pay sands. EPL's drillwell 2008 performance to date on the Shelf, all within its core areas of South Timbalier, Bay Marchand and East Bay, is at a 93% success rate. This rate is above its historical success rate of 75%, with the development drillwell program yielding better than expected results from oil opportunities exploited in East Bay and from several projects in South Timbalier 26. This includes three wells in Bay Marchand, three in South Timbalier 26 and seven in East Bay. Regarding its 2008 development program, EPL expects to complete one additional rig workover operation in the East Bay field before the end of year.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "I am extremely pleased with the progress our staff has made towards meeting our key goals this year, which include stabilizing production, improving our drilling results and controlling our costs. We have stabilized production, and, more importantly, we were able to add significant new sources of production from our successful drilling programs prior to the hurricanes despite not yet having contribution from our deepwater Raton well. Controlling our costs throughout this year has positioned us well during this period of production disruptions caused by the hurricanes. We also expect to be within our planned capital budget of $200 million for 2008 despite the additional cost from the storms to our rig operations."
Bachmann continued, "Our overall investment approach going forward into 2009 will be conservative. We plan to manage capital expenditures one quarter at a time in a concerted effort to stay well below our expected cash flow. Our current concerns are not with liquidity since we have always strived to live within our cash flow, but with the changing price environment. We remain prospect rich with a multi-year exploitation and exploration drilling inventory and we will prudently evaluate the timing of these investment options. We plan to slow down our capital expenditures in early 2009 by reducing rig utilization until drilling and service costs come in line with the most recent decreases in commodity prices. We also will continue to focus on controlling our cash operating costs. These combined efforts will enable us to build cash which could be used to be opportunistic when acquisition opportunities arise or to pay down debt."
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