Meridian sets $127 million 2007 budget

March 16, 2007
Meridian Resource Corp., Houston, has approved a $127 million capital budget for 2007, focused on its four primary regions of south Louisiana, South Texas, East Texas, and north-central Oklahoma.

By OGJ editors
HOUSTON, Mar. 16 -- Meridian Resource Corp., Houston, has approved a $127 million capital budget for 2007, focused on its four primary regions of south Louisiana, South Texas, East Texas, and north-central Oklahoma.

In the south Louisiana region Meridian plans to participate in at least 6-8 exploration wells and 3 development wells. And it will place the E.W. Brown No. 1 well on production during late second or early third quarter. The well, which was drilled as a sidetrack from Odom No. 1 to test a separate prospect closure adjacent to Odom, logged 32 gross ft of pay in the targeted Hackberry sands.

Also, in Weeks Island oil and gas field near New Iberia, La., the company plans to test its nitrogen injection program during late second quarter or third quarter. The project is to recover attic oil reserves adjacent to the dome that are updip to perforations in the well bores.

On its Deep Archtop prospect, Meridian will conduct predrill work in preparation for a 30,000 ft wildcat that will be drilled early second quarter 2008 to test a Jurassic Cotton Valley four-way closure in the Biloxi Marshlands area of St. Bernard Parish, La. The well offers reserve potential of up to 5 tcf of gas. And drilling costs are estimated at $60,000.

Meridian plans this year to drill an additional well and three to four prospective offset locations on its South Texas acreage in the Nueces Bay area, following successful fracture stimulation work in the deep Frio sands.

Its offshore program includes drilling 3 offshore wells in the shallow waters off Louisiana and Texas in the Gulf of Mexico. The first well, which is on West Cameron Block 332—acquired at a 2006 lease sale—is scheduled to spud during this year's second quarter. The well is expected to reach 13,800 ft MD to test Plio-Pleistocene sands. The two other prospects are slated for drilling during the third and fourth quarters.

About 37% of the company's 2007 E&P budget is earmarked for the East Texas Area, where 7 wells are planned. The play was originally designed to test 3D seismic-based prospects similar to the Woodbine production in AA Wells field, but initial wells indicate the presence of the same or similar Austin Chalk section present in a nearby producing field 9-12 miles to the east.

Meridian and its partners currently have under lease or control about 30,000 acres in the area. The company said about 30-40 additional wells initially could be required to develop the area.

About $12 million is allocated for the purchase of a newly constructed drilling rig for development of its deep Austin Chalk play in East Texas.

The company has signed an agreement with Orion Drilling Co. LP for the construction and purchase of one newly built land-based drilling rig, which is to be delivered in the third quarter. Depending on the success of the operations in the play, Meridian has plans for a 2-rig, multiwell drilling program to exploit the company's lease acreage for about 3-5 years.

In the Hunton-Mississippian play in Garfield County, Okla., Meridian has about 13 wells planned. It is currently drilling its first Mississippian well (horizontally) in the play.

Meridian and its joint venture partner are currently evaluating recently acquired and older reprocessed 2D data from the Delaware basin area, where the group will drill at least two wells this year. Targeted formations are the Barnett and Woodford Shale sections between 5,500 and 8,500 ft.

The company is evaluating drilling and development options in the New Albany Shale Play in the Illinois basin and in the Palo Duro basin play in Floyd and Motley Counties, Tex.

Meridian estimates that its average production for the fourth quarter of 2006 was about 58 MMcfd of gas equivalent.