Meridian Resource Returns Delacroix #1 to Production
The Meridian Resource Corporation says that its Delacroix No. 1 well in the Bayou Gentilly area (southwest of the Biloxi Marshland area), has been returned to production after repairs to a major pipeline were completed. The well was shut-in during early August 2007 when the major pipeline system was shut-in because of an explosion that occurred on a downstream production platform. The Pipeline and Hazardous Material Safety Administration released the pipeline for gas transmission in the area of the Company's Delacroix No. 1 well on November 27, 2007 and the well was brought back on-line at a net rate of approximately 3 million cubic feet of natural gas equivalent per day (''Mmcfe/d''). No reserves were lost or impacted as a result of the temporary shut-in, although full-year production was impacted by approximately 350 Mmcfe. The Company stated that the loss of production was an important, but not material, event and that the reduction in overall production for this period did not impact 2007 capital spending or its scheduled drilling activities.
In the Company's Austin Chalk play in Polk County, Texas, the outside operated Bear Creek No. 1-H well was recently completed as a dual lateral and tested in the Austin Chalk formation. Initial gross daily flow rates were as high as 25 Mmcf/d and 2,400 barrels of oil per day (''Bopd''). Flowing tubing pressure was measured at approximately 3,100 psi through an open choke. As the well continues to clean up after drilling, it is currently producing at 7 Mmcf/d and 940 Bopd with a flowing tubing pressure of approximately 5,100 psi on a 17/64th choke. Meridian participated in this well as a result of its large acreage position (over 60,000 acres gross) held in the area. The Company expects that the well will display similar producing characteristics to other Austin Chalk wells in the area, with the typical hyperbolic decline curve. Meridian holds approximately 7% working interest in this well. In addition, the Company is drilling two dual lateral Austin Chalk wells. The BSM No. 5 well is currently drilling at approximately 13,250 feet, and the Freeman No. 1 is at approximately 12,200 feet. Each well is at, or nearing the point of beginning the first updip horizontal lateral. The Company owns 65% and 84% working interest, respectively in each well, and is the operator.
The Austin Chalk has become an important resource play for the Company and is currently being extended westward into other counties on trend where it is believed to be shallower in depth, thicker in section and produce a higher oil ratio. Expectations of additional drilling in the expanded areas are scheduled for sometime in 2008, based on continued successful results.
The Company continues to develop larger exploration target prospects that provide the opportunity for additional wells if successful in its south Louisiana exploration program such as the Company's Northeast Bayou Chene prospect in St. Mary Parish, offset to the Company's Ramos field development area. Based on reprocessing Meridian's 3-D seismic coverage in the area, the first well was spudded in mid-November, 2007 and is currently drilling at a depth of approximately 13,600 feet measured depth (''MD''). The well is scheduled to be drilled to a total depth of approximately 17,000 feet to test the ''Rob L'' sands in the Lower Miocene formation. The well is being drilled under a turnkey drilling contract and Meridian owns 44% of the working interest before casing point, and 57% working interest after casing point. The gross, unrisked reserve target for this well is between 35 and 40 Bcfe.
In other operations, in Garfield County, Oklahoma, the Company expects to place its Benkendorf No. 21-1 well on production within the next fifteen days upon completion of pipeline construction and tie-in to production facilities. This well tested the Nash project area where the company drilled an extension of the Hunton de-watering play. The well tested at approximately 400 thousand cubic feet of gas per day immediately upon completion before the de-watering process had been established. Nearby, the Company farmed-out a portion of its acreage for the drilling of two Hunton tests in the Hillsdale project area, retaining interests in five (5) sections adjacent to the farmout. To date, the farmee has drilled both of the test wells with plans to complete and produce each. Meridian owns approximately 80% working interest in the Benkendorf No. 21-1 well and acreage in the surrounding project area, and has an ORRI in the farmout acreage. Meridian is the operator of its acreage in both areas. The Company holds approximately 45,000 gross acres and 24,000 net acres in the greater Carrier Project area.
In the Nueces Bay area, additional uphole perforations were added to the outside operated ST 974 No. 2 well that was previously completed in the Brigham sand section. Production from the well increased from approximately 1 Mmcfe/d to 2 Mmcfe/d at a flowing tubing pressure (FTP) of approximately 1,800 psi. Depending on production from this well, it is anticipated that this well might be offset with one or two additional development wells. The Company owns approximately 23% working interest in the well and its possible offsets.
As previously stated, capital spending for 2007 is on track with original estimates. Capital spending for 2008 is currently under review; however the Company plans to place special emphasis on technical development of plays that have repeatable, multiple-well extensions in all areas of current exploration. It is contemplated that acquisitions may play a role in the Company's 2008 growth plans as it extends its resource play concepts based on positive results. In support of that effort, the addition of new exploration and technical staff continues under the Company's Senior Vice President of Exploration, Steve Western. Additionally, the new members of the Company's Board of Directors, Byrd Larberg and Paul Ching, will officially join the Board on January 1, 2008 and have already been significant contributors to the Company's business plan for 2008.
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