McMoRan (MMR) Had 'Limited Success' in Unblocking Davy Jones No. 1

December 27, 2012 8:19 AM EST
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McMoRan Exploration Co. (NYSE: MMR) pdated its ultra-deep exploration and development activities in the shallow waters of the Gulf of Mexico (GOM) Shelf and onshore in the Gulf Coast area, including ongoing operations at Davy Jones No. 1, completion plans at Blackbeard West No. 2 and operations at Lineham Creek and Lomond North.

McMoRan announced today that operations to achieve commercial production at Davy Jones No. 1 on South Marsh Island Block 230 are ongoing. Recent operations designed to unblock the perforations using a propellant stimulation gun had limited success and McMoRan is initiating operations to re-perforate the well with electric wireline through-tubing guns. McMoRan will provide updates as flow testing operations progress. Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres). McMoRan is the operator and holds a 63.4 percent working interest and a 50.2 percent net revenue interest in Davy Jones. Other working interest owners in Davy Jones include: Energy XXI (NASDAQ: EXXI) (15.8%), JX Nippon Oil Exploration (Gulf) Limited (12%) and Moncrief Offshore LLC (8.8%).

The Blackbeard West No. 2 ultra-deep exploration well on Ship Shoal Block 188 was drilled to a total depth of 25,584 feet and McMoRan plans to set a production liner, which would enable completion. Through logs and core data, McMoRan has identified three potential hydrocarbon bearing Miocene sand sections between approximately 20,800 and 24,000 feet. Initial completion efforts are expected to focus on the development of approximately 50 net feet of laminated sands in the Middle Miocene located at approximately 24,000 feet. Additional development opportunities in the well bore include approximately 80 net feet of potential low-resistivity pay at approximately 22,400 feet and an approximate 75 foot gross section at approximately 20,900 feet. Pressure and temperature data indicate that a completion at these depths could utilize conventional equipment and technologies. McMoRan holds a 69.4 percent working interest and a 53.1 percent net revenue interest in Ship Shoal Block 188. Other working interest owners include EXXI (22.9%) and Moncrief Offshore LLC (7.7%).

The Lineham Creek exploratory well, which is located onshore in Cameron Parish, Louisiana, has been drilled to 25,250 feet. The operator has set a drilling liner and is preparing to drill ahead to a proposed total depth of 29,000 feet to evaluate Eocene and Paleocene objectives. As previously reported, the well encountered what appears to be hydrocarbon bearing porous sands above 24,000 feet, as identified by wireline logs. McMoRan is participating for a 36.0 percent working interest. Other working interest owners include EXXI (9.0%) and W. A. “Tex” Moncrief Jr. (5.0%).

The Lomond North ultra-deep prospect, which is located in the Highlander area in St. Martin Parish, LA, is currently drilling below 12,900 feet. This exploratory well has a proposed total depth of 30,000 feet and is targeting Eocene, Paleocene and Cretaceous objectives below the salt weld. McMoRan controls rights to approximately 80,000 gross acres in Iberia, St. Martin, Assumption and Iberville Parishes, Louisiana. Lomond North is approximately 65 miles north of Davy Jones. McMoRan is operator and currently holds a 72.0 percent working interest. Other working interest owners include EXXI (18.0%) and W. A. “Tex” Moncrief Jr. (10.0%).

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