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‘Prudent’ cuts to Arctic drilling by junior explorer MGM Energy
MGM Energy, the junior explorer in Canada’s Arctic, has taken the paring knife to its upcoming winter plans, dropping one of four wells from its program.
The three remaining wells will be drilled in Ellice Island to test the Taglu formation, one to test an Ellice anticline and one to test a stratigraphic play on the west side of Langley Island.
In undertaking a review of its capital and operating expenditures “to ensure they remain necessary in the current uncertain economic climate,” MGM said reducing the winter program is a prudent step given the lack of progress on the Mackenzie Gas Project regulatory phase.
MGM posted a net loss for the third quarter of C$1 million (C$51 million for the January-September period), primarily due to general administrative and stock-based compensation expenses. For the nine-month period the losses included dry hole and seismic costs from the 2007-08 winter drilling.
Equipment on site The company said all of the drilling and construction equipment needed for this winter have been barged to the landing site in the Northwest Territories.
Road construction is expected to start by mid-November with the first well spudded before Christmas.
“Everything is on track to complete the three well drilling program this winter,” said company president Henry Sykes. “We look forward to providing updates on our drilling results as they occur.”
Meanwhile, MGM has been chosen 2008 Producer of the Year by Canada’s Oilweek magazine, beating out three other finalists — EnCana, Shell Canada and junior E&P company Galleon Energy.
A long-shot choice, given that it has no production, MGM found itself on a short list of nominations after a canvass of the oil and gas community, which apparently found much to admire in a company that is tackling one of the highest-risk, potentially highest-reward plays in Canada.
—Gary Park
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