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Gulf’s Dawson Deep prospect turns up 160 feet of pay for Kerr-McGee
Ray Tyson Petroleum News Houston correspondent
The Dawson Deep exploration well on Garden Banks Block 625 in the Gulf of Mexico encountered 160 feet of net hydrocarbon pay, operator Kerr-McGee disclosed in a Feb. 25 conference call with industry analysts.
Moreover, a sidetrack currently being drilled off the main well bore should provide “meaningful insight into other satellite opportunities that we have surrounding the Gunnison facility,” said Rick Buterbaugh, the company’s head of investor relations.
The nearby Gunnison field, recently brought on line, is currently producing daily about 3,600 barrels of oil and 125 million cubic feet of natural gas, with peak daily rates of 30,000 barrels of oil and 180 million cubic feet of gas expected by year-end when field development is completed.
The Dawson Creek well was drilled to a total depth of 24,450 feet, including about 3,000 feet of water, Buterbaugh said, adding that the sidetrack is planned to reach a total depth of nearly 26,000 feet with results expected in two or three weeks.
Kerr-McGee, an exploration and production independent, operates Dawson Deep with a 25 percent interest. It also operates Gunnison with a 50 percent working interest.
Buterbaugh assured analysts in the conference call that Kerr-McGee’s Red Hawk project in the deepwater Gulf is on schedule for startup about mid-year. He said the company also does not expect any delays with its Constitution project in the deepwater Gulf, largely because the company adopted the same “proven design” used at Gunnison and employed the same contractors for the project’s major components.
“First production is expected late in the second quarter of 2006,” Buterbaugh said. Kerr-McGee holds a 100 percent stake in Constitution and a 50 interest in Red Hawk. Company hopes to do an Alaska appraisal well this season On Alaska’s North Slope, where Kerr-McGee is a new player, exploration drilling began mid-February at the company’s Northwest Milne prospect – referred to by Buterbaugh as the “Milne Point extension well.” He said it should take two to three weeks to complete.
“We hope to do an appraisal well prior to the end of the drilling season in March,” Buterbaugh added.
Meanwhile, Oklahoma-based Kerr-McGee said it is holding to earlier production guidance of 257,500-274,000 barrels of oil equivalent per day during the 2004 first quarter and an average 260,000 barrels of equivalent per day for the year. First-quarter projections break down to 132,000-140,000 barrels per day of oil and 750-805 million cubic feet of natural gas, with 85 percent of the volume coming from the United States, the company said.
Buterbaugh noted that since the beginning of the year, benchmark NYMEX oil prices for West Texas Intermediate have averaged $34.25 per barrel and North Sea Brent $30.40 per barrel, up $3 for WTI and $1.25 for Brent when compared to 2003 fourth-quarter averages. Kerr-McGee has hedged about 75 percent of its projected first quarter U.S. oil production at $29.03 per barrel WTI and 75 percent of its Brent at $26.76 per barrel.
Since the start of the year, NYMEX gas prices have averaged $5.85 per thousand cubic feet, up about 45 cents versus last quarter averages. Kerr-McGee has hedged 25 percent of its projected U.S. gas volumes in the first quarter at $5.33 per thousand cubic feet. “The remaining sales will likely fluctuate with the appropriate index prices,” Buterbaugh said.
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