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Houston Exploration racks up first deep gas GOM discovery Company acquires more 3-D seismic; plans five more deep wells Petroleum News Houston Staff
The Houston Exploration Co., a small independent with a penchant for growth and picking good prospects, says it has scored its first geologically deep natural gas discovery on the Gulf of Mexico’s continental shelf.
The No. 1 exploratory well, drilled to a depth of 19,800 feet in just 44 feet of water, tested at 20,000 million cubic feet per day and could produce at higher rates when the field is brought into production, the company said May 21.
“Being in only 44 feet of water, we will be able to bring this well into production quickly, and with the current pricing environment, it will be highly economic for Houston Exploration,” said Charles Adcock, the company’s senior vice president and general manager of the offshore region.
The company said it is hoping to bring the well on stream in this year’s fourth quarter and may drill “one or two more wells” on the prospect, located on High Island Block 115. The federal lease is owned 50-50 by Houston Exploration and El Paso with El Paso serving as operator under a previously announced joint venture agreement.
Because El Paso farmed into leases initially held 100 percent by Houston Exploration, El Paso paid for drilling costs on the first four shallow gas wells. On the fifth, a deep gas well at High Island 115, El Paso picked up two-thirds of the estimated $15 million cost, Houston Exploration said. Under the agreement, one more well remains to be drilled. Company turns to deep gas drilling Houston Exploration is now turning its attention to deep gas drilling, hoping to drill 10 to 20 wells over the next two to three years, Adcock said.
The company has 118 leases on the continental shelf and has budgeted for five more deep gas wells in 2003. West Cameron 227, the next well in the inventory, should begin drilling in July, the company said.
“The economics are going to be very, very good,” he said, adding that Houston Exploration will be satisfied with natural gas targets of 30 to 35 billion cubic feet while hoping for larger ones.
“We certainly are trying to find the big reserve accumulations,” Adcock said. “These would have a huge impact for us.”
Houston Exploration recently signed an agreement with Fairfield Industries to license offshore 3-D seismic data that will double the company’s current in-house 3-D resources. Included in the agreement is Fairfield’s recently released 3-D information from its deep-shelf program “that will be instrumental in developing a strategy for the play,” Houston Exploration said.
Since going public in 1996, Houston Exploration has grown its production an average 22 percent a year to a current 288,000 million cubic feet per day of gas equivalent. Net proved reserves at year-end 2002 stood at 650 billion cubic feet of equivalent.
Revenues in the 2003 first quarter also rocketed to $128 million from $74.8 million in the 2002 first quarter, while net income leaped to $41.7 million or $1.34 per shape from $12.5 million compared to the year-ago period.
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