McMoRan reestablishes Eugene Island production

McMoRan Exploration Co., New Orleans, said Wednesday that it reestablished sustained production earlier this month from four wells on blocks in the Eugene Island sector of the US Gulf of Mexico. The company said production is flowing from Blocks 193, 208, and 215 with gross production averaging 1,100 b/d of oil and 600 Mcfd of natural gas.


McMoRan Exploration Co., New Orleans, said Wednesday that it reestablished sustained production earlier this month from four wells on blocks in the Eugene Island sector of the US Gulf of Mexico. The company said production is flowing from Blocks 193, 208, and 215 with gross production averaging 1,100 b/d of oil and 600 Mcfd of natural gas.

McMoRan is also evaluating several additional inactive wells in the 193-208-215 field for potential reworking in light of strong oil and gas prices. And in the second half of this year, the firm plans to drill an exploratory well on Block 193 to a proposed depth of 17,500 ft to explore a previously untested fault block.

McMoRan is operator of the blocks and owns a 56.25% working interest and a 43.9% net revenue interest in them. The three blocks cover 10,000 acres in about 100 ft of water, 135 miles off Louisiana. McMoRan acquired its interest earlier this year from Texaco Inc. and agreed to reestablish production, assume a proportional share of an abandonment obligation associated with existing wells and platforms, and drill an exploratory well on Block 193. Texaco owns a 43.75% working interest and a 36.46% net revenue interest in the project.

Cumulative production from Eugene Island 193-208-215 field has been 64.7 million bbls of oil and 243 bcf of gas.

Richard C. Adkerson, cochairman and CEO of McMoRan, says the Eugene Island project was entered into subsequent to an 89-block transaction his firm completed earlier this year with Texaco (OGJ, Jan. 3, 2000, Newsletter). Under terms of that deal, Texaco gave McMoRan the right to explore tracts on the US Outer Continental Shelf, allowing Texaco to focus on its deepwater program and leave its OCS work to a firm with significant experience there.

McMoRan agreed to commit more than $100 million for exploration drilling over 4 years and serve as operator of the tracts while earning various interests. Texaco retained the right to participate in the prospects McMoRan decides to drill.

Before the agreement with McMoran, said Robert S. Lane, vice-president of Texaco's Gulf of Mexico producing operations unit, Texaco had exercised its preferential right to acquire an additional 50% in Eugene Island Blocks 193, 208, and 215. "We subsequently partnered with MMR to explore and develop the remaining potential on the blocks. The relationship we have established with MMR has provided us with an avenue to quickly act on business opportunities as they arise,'' said Lane.

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