Spinnaker and its partner, The Houston Exploration Company, have drilled a significant deep shelf well on HI 47. The well is a structurally high offset to a recent discovery made by another operator. Production from the new venture is anticipated in the first half of 2004. Spinnaker owns a 67% working interest (WI) and a 56% net revenue interest in the field and block. Houston Exploration owns a 33% WI in the field and block. SKE and THX drilled a separate discovery on the block earlier this year.
The Company has drilled a dry hole on High Island 162. Spinnaker paid 50% of exploratory well costs in that test or a total of approximately $2.9 million, net to its interest.
The Spiderman/Amazon discovery well has been sidetracked successfully to a structurally high position in both of the main objectives. Operations to temporarily abandon the well are underway. Conventional cores were recovered from both of the primary middle Miocene reservoirs. Pay thicknesses encountered in the well are as anticipated and reservoir quality is excellent.
Spinnaker participated in OCS Sale #189 covering a portion of the Eastern Gulf of Mexico. The Company and its partner were successful in the submission of one apparent high bid (AHB). The partnership was unsuccessful on one other bid submission. The Company's AHB covered acreage offsetting its San Jacinto prospect located in DeSoto Canyon 618. It is anticipated that an exploratory well to test San Jacinto will be drilled in the first half of 2004. Spinnaker owns a 33% WI and 29% NRI in the discussed AHB.
The Company currently is participating in eight active rig operations. Five rigs are being operated by Spinnaker. Three rigs are operating in deepwater, five on the shelf. Five rigs are drilling exploratory wells, two are involved in completion operations and one is involved in a workover of an existing well.
The Company has received commitments from a group of eight banks to renew and extend its existing $200 million revolving credit agreement for three years. The facility should close before year-end and will have initial availability of $175 million.
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