Saratoga announced that the continuing Gulf of Mexico oil spill is not anticipated to have any material impact on its current or future operations, including its in-field development and drilling program. In a letter to its shareholders, posted on the Company's website, management pointed to major differences between the blowout in deepwater Gulf of Mexico and the Company's inventory of development and exploratory prospects.
In the letter to shareholders, the Company noted that Saratoga's assets are located in transitional coastline and protected in-bay environments on parish and state leases of Louisiana which, to date, have not been impacted by the BP oil spill and have not been the focus of the deepwater drilling moratorium or other regulatory actions. The blowout occurred far offshore on a federal lease in water depths of approximately 5,000 feet. The resulting oil spill has not to date impacted Saratoga's operational area, the vast majority of which is protected by the barrier islands as well as by the outflow of water from various distributaries of the Mississippi River such as Baptiste Collette, Dennis Pass and Lookout Pass.
The Company noted that it has initiated a safety review and a mid-term update of its spill prevention control contingency plans and that it is constantly working on improving environmental and operational safety standards.
Thomas Cooke, Chairman and CEO, stated, "Saratoga is not active in deepwater and we currently have no federal leases. Our near-term drilling plans are in less than twenty feet of water and most of the opportunities we have identified are technically onshore or in less than six feet of water. Compared with drilling in water depths of 5,000 feet, the BOP stack for any drilling on our prospects will be above the water."
Mr. Cooke added, "The target for additional regulatory action is currently focused on federal leases especially in water depths of greater than 500 feet. To date we have seen nothing but encouragement from parish governments and the State of Louisiana. Our well design consultants are making sure that our future wells employ state-of-the-art technologies and sound disaster response plans that either meet or exceed government regulatory standards. We think that increased scrutiny and regulation affecting future operations on offshore federal leases, and particularly drilling in deepwater, will make operations in shallow waters more attractive and that, as a result, we will be better positioned to attract industry partners to participate with us on our deep exploratory prospects, which the Company believes have multi-Tcfe (trillion cubic feet of gas equivalent) potential. We expect that our attractiveness to drilling partners will similarly be enhanced by lower costs and our immediate proximity to onshore infrastructure.”
Mr. Cooke further went on to say, "Our hearts go out to those adversely affected by this horrible disaster. We hope we can do our small part to help the economic recovery in the Gulf Coast region by continuing our development program which supports many jobs and businesses in south Louisiana, including small and large service providers which rely on independent producers such as Saratoga."
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