McMoRan Exploration Co. Reports Third-Quarter/Nine-Month 2012 Results
In October 2012, McMoRan submitted initial development plans for Lafitte to the BSEE. McMoRan is seeking approval to complete and test the Jackson/Yegua sands below 33,300 feet in the Upper Eocene. This completion will require the development of 30,000 psi equipment. McMoRan logged two hydrocarbon bearing zones in the Upper Eocene section of the Lafitte well with an aggregate thickness of approximately 65 net feet.
The Lafitte ultra-deep exploration well, which is located on Eugene Island Block 223 in 140 feet of water, was drilled to a total depth of 34,162 feet in March 2012. Exploration results from the well indicate the presence of hydrocarbons below the salt weld in geologic formations including Middle/Lower Miocene, Frio, Upper Eocene, and Sparta carbonate. The Upper Eocene sands are the first hydrocarbon bearing Upper Eocene sands encountered either on the GOM Shelf or in the deepwater offshore Louisiana. These exploration results enhance the potential of McMoRan’s other acreage in the Lafitte strategic area, including McMoRan’s Barataria and Captain Blood ultra-deep prospects. Barataria (25,000 gross acres) is located west southwest of Lafitte, and Captain Blood (25,000 gross acres) is located immediately south of Lafitte.
McMoRan holds a 72.0 percent working interest and a 58.3 percent net revenue interest in Lafitte. Other working interest owners in Lafitte include EXXI (18.0%) and Moncrief Offshore LLC (10.0%). McMoRan’s total investment in Lafitte, which includes $35.8 million in allocated property acquisition costs, totaled $194.7 million at September 30, 2012.
EXPLORATION UPDATEThe Blackbeard West No. 2 ultra-deep exploration well on Ship Shoal Block 188 is currently drilling below 23,600 feet towards a proposed total depth of 24,500 feet to evaluate deeper Miocene targets. Recent logging data indicate the presence of potential low-resistivity pay zones, one of which is approximately 80 feet thick and requires further evaluation. In addition, wireline logs encountered Middle Miocene sands below 22,500 feet with 24 percent porosity, which have potential hydrocarbon columns on water. The presence of sands with high porosity is significant, indicating that sands can retain excellent characteristics in a high-temperature, high-pressure environment on the Shelf below the salt weld. 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%). McMoRan’s investment in Blackbeard West No. 2 totaled $71.5 million at September 30, 2012. The information obtained from Blackbeard West No. 2 provides positive data supporting McMoRan’s “cupola” play, which targets Miocene objectives immediately below the salt weld. These objectives are typically above 25,000 feet, where lower pressure and temperatures may enable the use of more conventional equipment and technologies, and potentially increase the amount of liquid hydrocarbons accompanying the natural gas. McMoRan’s drilling results from Blackbeard West No. 2 enhance the prospectivity of other “cupola” prospects on McMoRan’s leasehold position, including the Barbosa and Calico Jack prospects.
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