Ladyfern woes accumulate for Murphy
Gary Park, Petroleum News Calgary correspondent
Murphy Oil has added another chapter to its frustrations over British Columbia’s Ladyfern natural gas field.
Claiborne Deming, president and chief operating officer of the U.S. independent, said earlier this month that it chose not to participate in two successful wells in the play because of unspecified “philosophical” differences with partners — ConocoPhillips Canada which tested one find at 10 million cubic feet per day and Apache Canada’s discovery which registered 18 million cubic feet per day.
In a conference call, Deming vented some anger, contending that Ladyfern “has been hugely over-capitalized ... it’s a regrettable situation.”
He said Murphy believes it will be a challenge to add incremental reserves given the amount of money already sunk into the play.
Not joining ConocoPhillips and Apache is “just a different philosophy ... we would rather have participated than not, but we’re happy with the decision.”
Murphy was the trailblazer in early 2001 when it announced that one of its Ladyfern wells flowed at 100 million cubic feet per day, ranking it among the top 10 onshore finds in Canadian history.
But a rush to exploit got out of hand, with Ladyfern crashing from a peak of 665 million cubic feet per day in spring 2002 to well under 200 million now.
Murphy tried and failed to work out an agreement with EnCana and Canadian Natural Resources to slow production to extend the field’s longevity and raise profit margins.
Harvey Doerr, the president of Murphy’s Canadian unit, said the competition to tap into the reservoir amounted to “value destruction.” and resulted in the field being overcapitalized.
“There should have been windfall profits in something that involved taking the risk that we took ... and there wasn’t,” he said.
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