Tuesday, February 15, 2011

McMoran ExplorationDoubles Down in Gulf Waters

McMoran Exploration’s (MMR-$17.58) drilling strategy is focused on extracting reserves thought to exist below the “salt weld” — specifically, hydrocarbon-bearing sands in the “deep gas plays” (depths of 15,000 to 25,000 feet) and “ultra-deep gas plays” below 25,000 feet.

Management believes its successful strike at Flatrock — discovered in mid-2007 and brought online the following year — demonstrates the validity of its “deep gas” model.

Drilling almost four miles down, producing wells pumped out, on average, 272 MMcfe/d gross in the fourth quarter of 2009 ( 25 percent working interest). But by December 2010, production from prolific Flatrock gas field operations had fallen to 165 MMcfe/d (31MMcfe/d net to McMoran), due to persistent wellbore and remedial work-over issues.

In a recent interview with Oil & Gas Financial Journal, John Schiller, CEO of minority partner XX I (EXXI-$32.25), downplayed technological complexities involved in spudding sights like Blackbeard or Davy Jones, preferring to focus on reservoir potentials, improvements in seismic imaging and assessment tools, and past successes, such as Flatrock. He admitted, nonetheless, that ultra-deep drilling wasn’t for the “faint-hearted” and was capital-intensive.

Read More at BNET….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.