ATP Concludes Drilling Campaign at Mirage, Morgus in Telemark Hub
ATP has released updates on its ongoing development activities, reserves and production.
In the deepwater Gulf of Mexico, ATP recently concluded the planned activity of the three-well drilling campaign at Mirage located at Mississippi Canyon Block 941 ("MC 941") and Morgus at Mississippi Canyon Block 942 ("MC 942") which comprises two of three blocks that make up the Telemark Hub. The third block within the Telemark Hub is Telemark (Atwater Valley Block 63, "AT 63"). At Morgus, ATP drilled one will to approximately 12,000 feet. At Mirage, ATP drilled one well to total depth and one well to approximately 12,000 feet. As previously announced, ATP experienced outstanding results with the MC 941 #3 well that was drilled to total measured depth of 20,043 feet. The MC 941 #3 well encountered approximately 266 net feet of logged hydrocarbon pay as compared to the discovery well (the Vastar MC 941 #1 sidetrack 1) that encountered approximately 87 net feet of logged hydrocarbon pay. These additional pay sands will increase production and the proved and probable reserves at the Telemark Hub.
The ATP Titan, the floating drilling and production platform that will service the Telemark Hub, is scheduled for sail-out and mooring in October 2009. The ATP Titan will be moored initially between Mirage and Morgus and serve as the production platform for the life of these reserves. After the reserves at Mirage and Morgus are produced, the ATP Titan is scheduled to be moved to AT 63 where it will recover the remaining Telemark reserves. First production at ATP's Telemark Hub is expected in early 2010. ATP has a 100% WI and is the operator of the Telemark Hub.
Reserves and Production
As mentioned above, ATP encountered approximately three times the amount of net feet of logged hydrocarbons in the MC 941 #3 well as compared to the Vastar discovery well. ATP expects the additional logged hydrocarbons at MC 941 to result in increased reserves at year-end compared to those currently booked in our third-party reserve reports of proved and probable reserves.
ATP had requested approval from the Minerals Management Service ("MMS") to commingle two zones at ATP's Gomez (Mississippi Canyon Block 711) development in April 2009. Approval was recently granted and ATP intends to perform the work which will result in increased production from Gomez beginning in October 2009. MMS approval had been expected several months ago and as a result of the delay, production associated with the commingling in the third quarter will be deferred into future periods. Third quarter estimated production will be approximately 1-2 Bcfe lower than expected as a result of the delay in receiving this approval and voluntary price related curtailments of natural gas production in the U.K. North Sea.
Fourth Quarter 2009 Outlook
Additional production enhancements are expected at other ATP locations in the fourth quarter 2009. At Canyon Express ATP has begun a well side-track operation which is expected to provide additional production beginning in the fourth quarter 2009. The Ocean Confidence drilling rig is on location and will side-track the MC 217 #3 well. As noted above, ATP voluntarily curtailed U.K. production levels in the third quarter 2009 due to relatively low prices during that quarter. ATP expects to ramp up its U.K. production levels during the fourth quarter 2009 due to higher anticipated prices. In the U.K. North Sea ATP has 8.25 MMBtu/day hedged at 39.5 pence per therm or approximately $6.52 per MMBtu.
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