McMoRan Exploration Co. (NYSE: MMR) today provided an update on flow
testing activities at the Davy Jones No. 1 well on South Marsh Island
Block 230. Technical completion has been achieved successfully and work
is ongoing to establish commercial production from the well.
The perforation of the Wilcox "D" sand resulted in positive
pressure build-up in the wellbore followed by a gas flare from the well.
Initial samples indicated that the natural gas from the Wilcox "D" sand
is high quality and contains low levels of CO2 and no H2S.
Blockage from drilling fluid associated with initial drilling operations
prevented McMoRan from obtaining a measurable flow rate. Attempts to
perforate the Wilcox "C" sand did not clear the blockage and McMoRan has
commenced operations to remove the tubing from the well, clear the
residual drilling fluid, and remove the perforating guns currently set
across the Wilcox "F" sand to provide access to all of the Wilcox
reservoirs ("A" through "F") totaling 200 net feet.
To maximize production from the well and enable effective formation
penetrations, McMoRan plans to use electric wireline casing guns that
are larger than the tubing guns used to perforate the Wilcox "C" and "D"
sands. The Bureau of Safety and Environmental Enforcement (BSEE) issued
the final permits on Friday, April 6, 2012 to approve the current
operations. McMoRan expects the operations currently under way will
enable a measurable flow rate during the second quarter of 2012 followed
by commercial production shortly thereafter.
James R. Moffett, Co-Chairman, President and CEO of McMoRan,
said, "We are pleased to report that we have achieved a major
engineering milestone in completing the first sub-salt well in the
shallow waters of the Gulf of Mexico and are making continuing progress
to convert our geologic success into commercial success. Results
of the limited test of Wilcox "D" sand reservoir indicate that our
equipment and completion technologies have met the challenge of
completing high pressure and high temperature wells. We are also
encouraged by the high quality initial samples of gas from the Wilcox
"D" sand. Current operations are being initiated to remove the
blockage of residual drilling fluid that has hampered flow from the
Wilcox "D" sand and to provide access to all Wilcox sands encountered in
the wellbore using powerful wireline casing guns capable of effective
reservoir penetration. We look forward to the results of these
activities and the establishment of commercial production from the well."
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%).
McMoRan plans to conduct a conference call on Monday, April 9, 2012 at
10:00 a.m. Eastern to discuss the details and current activities
concerning its Davy Jones No. 1 well. The conference call will be
broadcast live on the Internet along with slides. Interested parties may
listen to the conference call live and view the slides by accessing "www.mcmoran.com".
A replay of the webcast will be available through Friday, May 11, 2012.
McMoRan Exploration Co. is an independent public company engaged in the
exploration, development and production of natural gas and oil in the
shallow waters of the GOM Shelf and onshore in the Gulf Coast area.
Additional information about McMoRan is available on its internet
CAUTIONARY STATEMENT: This press release contains
forward-looking statements that involve a number of assumptions, risks
and uncertainties that could cause actual results to differ materially
from those contained in the forward-looking statements. We caution
readers that forward-looking statements are not guarantees of future
performance or exploration and development success, and our actual
exploration experience and future financial results may differ
materially from those anticipated, projected or assumed in the
forward-looking statements. Such forward-looking statements include, but
are not limited to, statements regarding various oil and gas
discoveries, oil and gas exploration, development and production
activities and costs, capital expenditures, reclamation, indemnification
and environmental obligations and costs, the potential for or
expectation of successful flow tests, anticipated and potential
quarterly and annual production and flow rates, reserve estimates,
projected operating cash flows and liquidity and other statements that
are not historical facts. No assurance can be given that any of the
events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they may have on our results
of operations or financial condition. Important factors that may cause
actual results to differ materially from those anticipated by
forward-looking statements include, but are not limited to, those
associated with general economic and business conditions, failure to
realize expected value creation from acquired properties, variations in
the market demand for, and prices of, oil and natural gas, drilling
results, unanticipated fluctuations in flow rates of producing wells due
to mechanical or operational issues (including those experienced at
wells operated by third parties where we are a participant), changes in
oil and natural gas reserve expectations, the potential adoption of new
governmental regulations, unanticipated hazards for which we have
limited or no insurance coverage, failure of third party partners to
fulfill their capital and other commitments, the ability to satisfy
future cash obligations and environmental costs, adverse conditions,
such as high temperatures and pressure that could lead to mechanical
failures or increased costs, the ability to retain current or future
lease acreage rights, the ability to satisfy future cash obligations and
environmental costs, access to capital to fund drilling activities, as
well as other general exploration and development risks and hazards and
other factors described in more detail in Part I, Item 1A. "Risk
Factors" included in our Annual Report on Form 10-K for the year ended
December 31, 2011 filed with the SEC.
Investors are cautioned that many of the assumptions upon which our
forward-looking statements are based are likely to change after our
forward-looking statements are made, including for example the market
prices of oil and natural gas, which we cannot control, and production
volumes and costs, some aspects of which we may or may not be able to
control. Further, we may make changes to our business plans that could
or will affect our results. We caution investors that we do not intend
to update our forward-looking statements more frequently than quarterly,
notwithstanding any changes in our assumptions, changes in our business
plans, our actual experience, or other changes, and we undertake no
obligation to update any forward-looking statements.
McMoRan Exploration Co.
Financial & Media Contact:
P. Joint, 504-582-4203