Newfield Makes Commercial Discovery in Pearl River Mouth Basin
Newfield has announced its second drilling success on Block 16/05, located in the Pearl River Mouth Basin in China. The LF 7-1 well tested a single zone at 6,000 BOPD (35 degrees API gravity oil), which was the maximum limit of the test equipment on location.
The LF 7-1 well, located in approximately 350 feet of water, was drilled to a total depth of nearly 10,000 feet and encountered more than 75 meters (approximately 250 feet) of high-quality oil pay in multiple sands. The well was drilled to test a downthrown anticline and was an offset to Newfield's 2008 oil discovery - the LF 7-2. Success with the LF 7-1 well set up a deeper oil prospect within the same fault trap, which the Company may test in 2010 through a down-dip sidetrack of the LF 7-1 well.
"Our two successes on Block 16/05 confirm that we have a commercial oil development with considerable running room," said William Schneider, Newfield's Vice President - Onshore Gulf Coast and International. "We estimate that the gross reserves associated with our two discoveries to date are in excess of 30 MMBbls. This development will provide significant new oil production for Newfield beginning in 2012. We are very encouraged by this discovery and its implications for our remaining prospects on this block and we expect an active drilling campaign here over the next several years."
In 2007, Newfield acquired 200 square kilometers of new 3-D seismic data to better assess this structural complex. There are numerous independent untested structures identified on the 3-D survey analogous to this discovery and additional drilling is planned. The LF 7-6 structure, located 15 kilometers to the northeast, is planned for drilling in 2010.
The China National Offshore Oil Corporation (CNOOC) has the right to participate in any development with a 51% interest.
East Belumut Phase II, offshore Malaysia
Newfield also announced plans to accelerate by approximately six months the timing on its "Phase II" development of the East Belumut oil field, located on PM 323 offshore Malaysia. As a result, the Company will invest $18 million (net) to drill three development wells in late 2009 from its existing production platform. An additional $18 million will be invested in early 2010 to drill three additional development wells. It is estimated that the six-well drilling campaign will increase 2010 oil production by an additional 1 MMBbls (net).
Newfield will fund the 2009 portion of this investment within its current capital budget of $1.45 billion. Newfield is the operator of PM 323 with a 60% interest.
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