Meridian Petroleum, the oil and gas exploration and production company with producing assets in the USA and exploration licenses in Australia, announces an update on the Company's current activities.
The 3D seismic survey on the PEL 82 license in South Australia has progressed well. Recording operations commenced on schedule in mid-February and will be completed this weekend. Early indications are that the quality of the data collected is very good and far superior to the old 2D data previously available. Data processing will commence shortly.
With three large potentially hydrocarbon bearing structures, the Board believes that the prospects for PEL 82 are exciting. Meridian currently has a 100% interest in the license and therefore has considerable scope to bring in a partner or partners. The availability of high-quality 3D seismic results is expected to considerably enhance the attraction to potential drilling partners, and initial marketing of this opportunity is scheduled for the third quarter of 2009. With a large survey area of 88 square km and high-quality detailed data, thorough and complete processing and interpretation are critical but will take some time. The Company expects to provide an update on progress at the end of the second quarter 2009.
Pontiac Well, Michigan, USA
As a result of an early thaw, weight restrictions for commercial truck traffic in Michigan were introduced in mid February and currently remain in place. Experience of previous years suggests that these will be lifted around end March/early April. The rig contracted to drill the Pontiac well is currently in Hillsdale county, south Michigan, relatively close to the drilling location, and as soon as restrictions are lifted, the rig will be moved to commence drilling of the well from Meridian's existing Orion 36 production site.
East Lake Verret, Louisiana, USA
Further good progress has been made on the planned initial development well at East Lake Verret field where there are currently six producing wells. This will be located in the central lease area and, as the drilling site is under water, it will require a drilling barge. The well is planned to be drilled down to 12,000 feet and has a number of target zones for production. Drilling and completion costs are anticipated to be some US $6 million, with a further US $1-2 million of costs for connection to the central production and processing facility. Meridian has an initial working interest of 24% in the well, but there may be an opportunity to increase this.
The Orion 36 well continues to perform as expected. Average gross daily gas production (excluding downtime) was 3.3mmcfd in January and 2.7mmcfd in February. In the first half of March the average has been 2.4 mmcfd.
Cumulative 2009 production to mid-March is just over 200 mmcf of natural gas and 4700 bbls of natural gas liquids (NGL's).
Net production to Meridian in January (based on a Net Revenue Interest of 54.589%) was 51.7mmcf of gas and 1089 bbls of NGL's and in February net production was 38.7mmcf of gas and 912 bbls of NGL's. This equates to daily production rates of 313 barrels of oil equivalent per day (boepd) and 263 boepd for January and February respectively.
Current mid-March flowing well-head pressure is in the range of 210-220 psi.
The average price for Orion gas sold in January was US $6.03 per mcf, and in February US $4.97 per mcf.
The Company's hedging contracts produced total profits of US $448,000 in the first two months of 2009.
East Lake Verret Field (ELV), Louisiana, USA
The production performance of ELV in 2009 so far has been consistently good. Gross gas production in the first two months of 2009 totalled 294mmcf, with gross oil production of 11,642 bbls.
Meridian's net share of production in this period was 59.5mmcf of gas and 2,560 bbls of oil, equivalent to an average daily rate over the two months of 211 boepd.
The company will announce its preliminary results for the year ended December 31, 2008 on Wednesday, April 15, 2009.
Stephen Gutteridge, Chairman of Meridian, said, "Following a highly successful 2008 as an oil and gas producer, our emphasis in 2009 has moved much more onto development activity. In contrast to the many companies now cutting back on development plans, we see significant advantage in pushing ahead with our intention of bringing substantial new production on-stream prior to next winter, as we foresee much improved market conditions, particularly for US natural gas.
"We are also very excited about our PEL 82 licence in Australia. By investing in the 3D seismic on a 100% basis we have established ourselves as an active participant in the Australian market. We now intend to further develop our position through discussions with potential drilling partners in the third quarter of this year.
"In the meantime, we continue with good levels of production in both Michigan and Louisiana, with revenues underpinned by our hedging contracts. We are also engaged in a number of active asset acquisition opportunities, but we will not be tempted to overpay in what we believe remains very much a buyer's market."
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