By OGJ editors
HOUSTON, Aug. 7 -- Energy Partners Ltd., New Orleans independent focused on the central Gulf of Mexico shelf, plans significantly higher capital spending in the second half of 2002 with accelerated exploratory drilling and workover/recompletion programs.
Against $60-80 million budgeted for the year, EPL spent only $14 million through June 30 out of $28.4 million in discretionary cash flow.
With three exploratory successes under its belt in the second quarter, the company expects to have spent nearly the full budget by yearend, all of it from internal cash flow, assuming that commodity prices hold near current levels, said Richard A. Bachmann, chairman, president, and chief executive officer.
EP plans to drill at least 9 exploratory wells in the next 12-15 months. These will include wells on its core East (Terrebonne) Bay and Bay Marchand properties and on acreage acquired earlier this year with Hall-Houston Oil Corp.
The discovery well for East Cameron Block 9 field in state waters off Louisiana went on line June 10 and was making 12 MMcfd of gas in early August, less than 5 months after discovery (OGJ Online, Jan. 28, 2002). EPL, operator, and Nexen Petroleum USA Inc. are evaluating deeper potential and opportunities on other jointly held acreage nearby.
The company began evaluating development options for an EPL-operated new field discovery on High Island Block A-538. The No. 1 well in 220 ft of water went to TD 2,797 ft MD and cut 156 ft of net pay in four sand intervals.
It also plans to develop a pay discovery at High Island Block 72 field, where an operated well in 35 ft of water went to TD 8,338 ft MD and cut 38 ft of apparent gas pay in two sands.
A wildcat on Vermilion Block 16 operated by private Westport Resources Corp., Houston, in which EPL holds 20% interest, has a pre-drill potential of 60 bcf. EPL puts its exposure in the 9 exploratory wells at a combined 400 bcf.
The company has begun trading part of its interest in its own prospects for interests in partners' exploration prospects, which could further accelerate its exploratory drilling in near term, Bachmann said.
It has identified prospects on the three blocks awarded of the four for which it bid Mar. 20 in the central gulf sale: Eugene Island 27 adjacent to EI 28 previously held, South Pass Block 36 adjacent to the East Bay holding, and East Cameron Block 43.
EPL's production in the third quarter should be flat with second quarter's record 9,067 b/d of oil and 56.6 MMcfd of gas but should begin rising towards yearend, said Suzanne V. Baer, vice-president of finance and administration and chief financial officer. EPL completed 9 successful workovers/recompletions in the second quarter.
The company said it achieved or exceeded all financial goals for the quarter. It reduced lease operating costs 24% year to year to $5.02/boe, surpassing its target of $5.50-$6/boe, and anticipates further reductions.
