Freeport-McMoRan Inc. (NYSE: FCX) announced today that following production testing on Freeport-McMoRan Oil & Gas' (FM O&G) Highlander discovery, located onshore in South Louisiana in the Inboard Lower Tertiary/Cretaceous trend, independent reserve engineers provided estimates of proved reserves totaling approximately 38 billion cubic feet (Bcf) of natural gas (approximately 19 Bcf net to FM O&G) associated with the initial well. Independent reserve engineers estimates of proved, probable and possible reserves for the initial well totaled approximately 197 Bcf of natural gas (approximately 97 Bcf net to FM O&G). In addition, based on work performed to date, independent reserve engineers estimate additional gross resources for the Highlander field exceeding 2 trillion cubic feet (Tcf), in excess of 1 Tcf net to FM O&G.
As previously reported, the February 2015 production test, which was performed in the Cretaceous/Tuscaloosa section, utilized expanded testing equipment and indicated a flow rate of approximately 75 million cubic feet of natural gas per day (MMcf/d), approximately 37 MMcf/d net to FM O&G, on a 42/64th choke with flowing tubing pressure of 10,300 pounds per square inch. FM O&G commenced production in late February 2015. FM O&G plans to install additional amine processing facilities to accommodate the higher rates.
A second well location has been identified and future plans will be determined pending review of performance of the first well. FM O&G has identified multiple prospects in the Highlander area which provide opportunities for future development of the field. FM O&G controls rights to more than 50,000 gross acres.
Item 8.01. Other Events.
Freeport-McMoRan Inc. (FCX) issued a press release dated December 24, 2014, announcing a successful production test from McMoRan Oil &
Gas LLC's (McMoRan) Highlander discovery located onshore in South Louisiana in the Inboard Lower Tertiary/Cretaceous trend. FCX stated that
the production test, which was performed in the Cretaceous/Tuscaloosa section, indicated a flow rate of approximately 43.5 million cubic feet of
natural gas per day (MMcf/d), approximately 21 MMcf/d net to McMoRan, on a 22/64th choke with flowing tubing pressure of 11,880 pounds per
square inch. FCX also stated that McMoRan and its partners expect to begin production in 2015 using facilities in the immediate area.
As previously reported by FCX, the Highlander discovery well was drilled to a total depth of approximately
29,400 feet in first-quarter 2014, and wireline log and core data obtained from the Wilcox and Cretaceous sand
packages indicated favorable reservoir characteristics with approximately 150 feet of net pay. FCX further noted that McMoRan has identified
multiple prospects in the Highlander area where it controls rights to more than 60,000 gross acres.
The press release notes that McMoRan is operator of the Highlander well and holds an approximate 49 percent net revenue interest. Gulf Coast
Ultra Deep Royalty Trust (the Royalty Trust) holds a 3.6 percent overriding royalty interest in the Highlander subject interest.