HOUSTON--(BUSINESS WIRE)--July 31, 2003--The Meridian Resource Corporation (NYSE:TMR - News) today announced the initial production test results from its Biloxi Marshlands No. 1-2 well. The well was tested from the Lower Cris I sand interval through 40 feet of perforations between 9,102 and 9,159 feet measured depth (MD) at a stabilized gross daily flow rate of approximately 16.1 million cubic feet of gas equivalent per day (mmcfe/d). Flowing tubing pressure was measured at 2,875 psi (pounds per square inch) with a shut-in tubing pressure of 3,690 psi. The well was drilled to 9,625 feet MD, or 8,999 feet true vertical depth (TVD). The Company owns a 71.6% working interest (WI) and a 50.7% net revenue interest (NRI) in the well.
A very good cc. Problem with non-increasing production is two-fold--a number of exploratory wells not being drilled until later and infrastructure work on CO2 and tertiary fields holding up advances there.
Good answers so the analyst community seems to be satisfied about the future.
From my notes:
1. No additional hedges added during the Q. Still only 50% hedged next year. Reaffirmation that hedging program is to produce $110mm to $120mm/ yr. to fund capex.
2. LOE will drop to $6.50/BOE Q3 (very important) This is approximately a nickel a share. It will drop another quarter in Q4 as up-front costs on CO2 decline in relation to production.
3. The second N. Lirette Field well is an offset which will take only 12 days to drill and they are very confident that it is similar in reserves and production add to the first. They will tell us the results of the second well in 30 to 60 days.
4. After completion of the upcoming CO2 infrastructure work, they will have carrying capacity of 300mmcf/day.
5. Sale of Industrial CO2 business to GEL is still on but moving more slowly than expected because of related party issues needing to be papered over properly. Expect completion of deal in October.
6. 7 of 8 Barnett Shale wells drilled found NG with good economics at $4/m.
7. 36,500 BOE/d new predicted run rate of production for Q4.
8. Most importantly, prediction that roughly double this years annual production will be found in new reserve adds with capex. Reserve replacement costs will be in the $4.50 per BOE range. Of the 8 exploratory wells that have been drilled so far this year 5 were successful and the cost of the reserves found was 88 cents.
A very good call, as usual. Analysts got good, honest answers and seemed to be very satisfied with the answers they got.
Thanks for notes. Wasn't able to listen. Been accumulating GEL last few weeks. Any more details on your point #5. Will sale and perhaps thruput guarantee for CO and/or CO2 allow GEL to raise divy? GEL TA looks like its ready to move higher. Thanks for any thoughts.
Of the subject, but are you familiar with High Pressure Air Injection (HPAI) as a tertiary recovery method. Essentially what they do is inject air at high pressure into resevoirs and the air combusts with some of the hydrocarbon and the gas vapors begin driving the remaining hydrocarbons towards the recovrey well.