Helix Encounters Pay at Noonan Prospect
Helix Energy Solutions Group provides an update on it drilling activity at its 100% owned "NOONAN" prospect on Garden Banks Block 506, located approximately 145 miles offshore from Galveston, Texas in 2,700 feet of water. Since operations commenced in October, we have completed the drilling of an exploratory well and two appraisal sidetracks. Formation evaluation from wireline logs, pressure analysis, and sidewall cores, acquired late last week, have successfully delineated our reservoir for completion of the well.
While it is still premature to finalize a reserve estimate, sufficient pay was encountered to point to reserve potential of at least 100 bcfe. Development plans being screened include a fast track subsea tie-back to selected infrastructure located in shallower water. First production should be achieved in the second half of 2008.
Martin Ferron, President and Chief Executive Officer of Helix, stated, "We are obviously very pleased to have made a commercial discovery with the first prospect drilled from the deepwater inventory acquired as part of the Remington Oil and Gas transaction last year. This demonstrates the considerable potential value of our deepwater resources, especially since we have over twenty high quality prospects left to drill and the highly skilled personnel necessary to identify and secure more prospects in the future.
"The drilling of the deepwater prospect inventory, particularly with the Q4000, should create significant production returns and provide incremental contracting backlog to supplement an already buoyant medium term deepwater service outlook. All of the development work for Noonan will be performed using Helix assets and services and we estimate that this work will generate around $100 million of revenue at market rates.
"As stated in our recent earnings guidance conference call, this deepwater success is not factored into our projected growth rates for 2008 and beyond. Also we may sell up to 50% of our interest to cover development costs and provide cash for possible debt reduction and/or stock repurchase. This would also allow us to recognize the profit on the related services work as it is performed with respect to the share owned by the partner. Our share will be recognized through reduced DD&A charges over the production life of the field."
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