Magnum Hunter Increases Reserves in Gulf of Mexico
Magnum Hunter Resources, Inc. has participated in three new oil and gas discoveries and commenced production from six additional lease blocks, all located on the Outer Continental Shelf of the Gulf of Mexico. Initial gross production rates from the six blocks aggregates approximately 97 million cubic feet equivalent of gas per day (MMcfe/d), or approximately 22 MMcfe/d net to Magnum Hunter.
On Main Pass Block 108, the Company participated in a deep shelf oil and gas discovery drilled from a production platform in 70 feet of water. The MP 108 B-3 well was drilled to a depth of 19,292 feet (15,810 feet TVD) and encountered hydrocarbons in multiple sand intervals. The well has been completed and is flowing to sales from one sand interval at rates up to 18 MMcfe/d. Kerr-McGee Oil & Gas, a subsidiary of Kerr-McGee Corp., is operator with a 50% working interest. Magnum Hunter holds a 25% working interest and the remaining 25% is held by a Samedan Oil Corp., a subsidiary of Noble Energy Inc. Magnum Hunter has recently entered into a new agreement with Kerr McGee to drill another exploration well on Main Pass Block 107; this well is scheduled to spud during the third quarter of 2002. Magnum Hunter will retain a 33.3% working interest in the MP 107 exploration well.
On South Timbalier Block 275, the Company participated in an oil and gas discovery drilled from a production platform in 270 feet of water. The ST 275 A2 well was drilled to a depth of 14,267 feet (13,000 feet TVD). The well has been completed and is flowing to sales at a rate of approximately 15 MMcfe/d. Spinnaker Exploration Company is the operator of this block with a 50% working interest. Magnum Hunter holds the remaining 50% working interest.
The West Cameron Block 417 field began production on June 10 at a rate of 12 MMcfe/d from the initial discovery well announced last November. The Company and its partners achieved a 7-month cycle time from discovery to production at the West Cameron 417 Project where Magnum Hunter owns a 25% working interest. Remington Oil and Gas Corporation is the operator with a 50% working interest and The Wiser Oil Company owns the remaining 25% working interest.
At Eugene Island Block 397 field, the Company has a 12.5% working interest in three new wells, the A-1, A-2, and A-4. These wells have been completed and are currently producing at a combined daily rate of approximately 2,900 barrels of oil and 2.2 million cubic feet of natural gas. Drilling operations on the A-5 well are currently in progress. Future plans are to drill up to four additional wells with three of the wells targeting exploratory zones. W & T Offshore, Inc. operates the Eugene Island 397 field with a 50% working interest. Magnum Hunter owns a 12.5% working interest and Remington Oil and Gas Corporation owns the remaining 37.5% working interest.
On the Company's Eugene Island Block 302 field, drilling and completion of the A-2 development well has been finalized. Field production is currently 2,300 barrels of oil and 3.0 million cubic feet of natural gas per day. Additional exploratory targets below existing field pays have been identified on Eugene Island Block 302 and are currently being considered for drilling later in 2002. Magnum Hunter owns a 30% working interest in Eugene Island Block 302. Remington Oil and Gas operates this field and has a 57.5% working and The Wiser Oil Company owns the remaining 12.5% working interest.
Platform and pipeline installations are near completion at the Company's South Marsh Island Block 93 development project. A new well drilled has been flow tested at a rate of 1,630 barrels of oil and 2.7 million cubic feet of natural gas per day. Production is expected to commence in approximately one week, and additional drilling on this block is anticipated later this year. Magnum Hunter owns a 30% working interest in South Marsh Island Block 93. Remington Oil and Gas operates this property with a 57.5% working interest and The Wiser Oil Company owns the remaining 12.5% working interest.
On West Cameron Block 347, the Company has recently participated in a natural gas discovery. The WC 347 #1 well was drilled to a depth of 11,600 feet (11,023 feet TVD) and should be completed in three separate sands. First production is expected in early 2003. Magnum Hunter owns a 25% working interest in West Cameron Block 347. Remington Oil and Gas is the operator with a 50% working interest and the Wiser Oil Company owns the remaining 25% working interest.
Commenting on the Company's activities in the Gulf of Mexico, Mr. Gary C. Evans, Chairman, President, and CEO stated, "Magnum Hunter has participated in new discoveries in the Gulf of Mexico that have been put on production over the last several weeks, which now approximate 100 million cubic feet of natural gas equivalents per day of gross production. Our decision to spread our capital risk dollars over a larger group of lease blocks is proving to be a wise game plan. We are exposed to many more opportunities and we have built relationships with strong industry partners. The Company has been awarded 40 of the 41 offshore blocks where we were high bidder at the 2002 Central Gulf of Mexico lease sale. The addition of these new exploration blocks brings the Company's current leasehold inventory to 127 OCS blocks covering over 600,000 gross mineral acres. Our technical team has identified drillable prospects utilizing 3-D seismic on all of these blocks which contain reserve potential of 10-150 BCFE per prospect. We are excited about the success our 2002 drilling program has shown to-date and we believe our future exploration drilling has the potential for significant increases in reserves and the production profile of Magnum Hunter."