Not only did the company’s offshore Chinese well, the Roc Oil-operated Wei 6-12S, result in a significant oil discovery, but a string of successes in the Gulf of Mexico have seen Petsec deliver a 9-out-of-10 success rate with wells drilled in the past year.
To produce these elegant numbers, the company managed to squeeze in one last well for the year, announcing yesterday that its Mobile Bay 993-1 well had reached target depth and encountered 6.1m (20 feet) of net gas pay, which was at the high end of Petsec’s pre-drill expectations.
The well was spudded on December 21 in 25m of water. Total depth was 1013 metres. The operator is Royal Exploration Company. Petsec’s working interest is 50% before payout (40% after payout); its net revenue interest is 39.42% before payout, (30.53% after payout).
Mobile Bay 993-1 will be cased and completed for production together with the installation of a caisson to support production facilities. Petsec said it expected production from the well to start in the third quarter of 2007.
This was the first well in a one-to-three well drilling program being conducted on the Mobile Bay 993 and 994 leases about 160km east of New Orleans and adjacent and to the south of Petsec’s recent gas discoveries in the Mobile Bay 950 and 951 blocks.
The current program is targeting a total of 5-7 billion cubic feet (bcf) of gas net to Petsec (after payout).
The three other wells drilled in recent months on the Mobile Bay leases also discovered gas and are now being readied for 2007 production.
The Mobile Bay leases are among an additional 37 leases acquired by Petsec in the Gulf of Mexico in the past year.
“We now hold 51 leases in the Gulf with prospects generated by 3D seismic of over 270bcf of natural gas and 32 million barrels of oil,” Petsec executive chairman Terry Fern said yesterday.
“As a result of our outstanding 2006 drilling success and the Company's large prospect inventory, our 2007 exploration drilling activity has been significantly expanded,” he said.
“We are now proposing to drill 14-20 wells in 2007 which if successful could more than double the current oil and gas reserves of the Company.”
Petsec expects to produce about 8 Bcf of natural gas for the 2006 year from its Gulf of Mexico gas fields and generate over $ US45 million in operating cash flow from that production, with a similar amount forecast for the New Year.
To assist with the expected capital expenditure required for a successful 2007 exploration and development program, Petsec earlier this month announced a share placement of 11.5 million shares at $2.40 to institutional investors and a shareholder share purchase plan underwritten as to 5 million shares to raise a minimum of $A39.6 million.
The SSPP allows all eligible shareholders to acquire up to $4999.20 worth of Petsec Energy stock at the same price as the institutions who participated in the placement.
The proceeds of the SSPP will be applied towards the company’s projects in the Gulf of Mexico and Gulf Coast region of USA and Block 22/12 in China.
