Meridian Resumes Production in Biloxi Marshland
The Meridian Resource Corporation reports that the Delacroix et al No. 1 well on its Bayou Gentilly prospect located on the southern edge of the Biloxi Marshland area was recently tied-in and is producing into sales (the well has been re-named from the Apache La. Minerals No. 1). The well, which was originally tested from the Cris "I" sand interval prior to Hurricane Katrina last year, is currently producing at a gross daily flow rate of approximately 3.8 million cubic feet of gas equivalent per day ("Mmcfe/d) at 6,800 pounds per square inch ("psi") on a 9/64ths choke. Because of the time delay between testing and actual production, the well will be produced on a more conservative basis until the reservoir is properly evaluated. The Company owns a 92% working interest and is the operator of this well.
Also in the Biloxi Marshland area, the maintenance and repairs to the pipeline transportation facilities were recently completed ahead of schedule and production (approximately 12 Mmcfe/d net) has been re-established as of December 2, 2006. During this period of shut-in, Meridian took advantage of the down time and made minor repairs to its gathering facilities.
North Grand Lake Prospect
The Lake Arthur Reclamation No. 1 well on the Company's North Grand Lake prospect in Cameron Parish, Louisiana recently reached total depth of approximately 16,400 feet measured depth ("MD"), targeting the main Marg sand. The electric log indicated that the target sand did not contain sufficient hydrocarbons to justify a completion and the well was plugged and abandoned. Meridian owned approximately 56% working interest in the drilling well and was the operator. The rig utilized to drill this well is being mobilized to drill the R.E. Odom No. 1 well on the Turning Basin prospect located in Calcasieu Parish, targeting the Hackberry formation at approximately 11,000 feet MD.
Nueces Bay Area
The Company recently spudded the ST 786 No. 12 well on its Indian Point prospect located in the Nueces Bay project area on the Texas Gulf Coast. Currently the well is at a depth of approximately 1,500 feet MD and will be drilled to approximately 14,500 feet MD to target the lower Frio sands. This well is immediately east of the previously announced discovery on the BP America well. Meridian has a 49% working interest in this well and is the operator.
East Texas Area
As previously announced, in the East Texas Austin Chalk/Woodbine play, the first of two rigs scheduled for the area is expected to arrive within the next two weeks. This rig will commence the drilling of two horizontal laterals from the existing vertical wellbore in the Katherine Leary No. 1 well. The second rig will move to the BSM No. 3 well and is expected in early January. After the two wells' laterals are drilled, the Company will retain one rig in the area for continued development of the play until its two new rigs are fabricated and delivered at which time it is anticipated that the Company will dedicate two to three rigs to the area depending on success and timing of permitting. Production from the BSM No. 1 well is currently at a gross rate of 8.7 Mmcfe/d and continues to be on track with other higher producing wells in the area.
The first of seven scheduled wells in the Hunton/Woodford De-watering Play in north central Oklahoma (the Carrier Prospect) has reached its total depth of 9,200 feet, and is being completed as a saltwater disposal well. Once completed, the rig will be moved to its next location to spud the initial exploration/exploitation well to test the first of four separate areas of the play. The Company, which will operate the field, owns approximately 19,000 acres in the area and has targeted potential reserves for this play of approximately 30 to 40 Bcfe, gross unrisked. Meridian will own a 92% working interest position.
During the recent upswing in prices last week, the Company entered into several new hedging contracts to hedge an additional portion of its expected gas production for 2007. The additional gas hedge contracts were completed in the form of costless collars, and ranged between a floor price of $7.00 and a ceiling price of $11.50 with monthly volumes ranging between 130 and 500 Mmcf between January and December 2007. The costless collars provide the Company with a lower limit "floor" price and an upper limit "ceiling" price on the hedged volumes. The floor price represents the lowest price the Company will receive for the hedged volumes while the ceiling price represents the highest price the Company will receive for the hedged volumes. The costless collars are settled monthly based on the NYMEX futures contract during each respective month.
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