Newfield takes on partners to drill ‘ultra-deep’ Treasure Island prospect

Ray Tyson

Petroleum News Houston correspondent

Newfield Exploration, following a lengthy search for a partner to pick up the costs of an “ultra-deep” exploration well on its Treasure Island play in the shallow waters of the Gulf of Mexico’s continental shelf, has signed on ExxonMobil, BP, and a third party which Newfield would not disclose.

“We are extremely happy,” Newfield spokesman Steve Campbell told Petroleum News April 22. That’s because Treasure Island leases are set to expire in March 2005. Under the terms of the agreement, the Treasure Island well must be spud no later than Jan. 31, 2005.

ExxonMobil will serve as operator, targeting the Blackbeard West Prospect that covers multiple blocks in the South Timbalier and Ship Shoal regions offshore Louisiana, Newfield said.

The well is being designed to test prospective objectives that range from 27,000 feet to more than 30,000 feet, which likely would make it the deepest well yet drilled on the Gulf’s continental shelf. Shell was the first explorer to break the 25,000-foot ultra-deep barrier on its Shark prospect at South Timbalier. It was a dry hole.

Analysts speculated that an ultra-deep well on the shelf could cost upward of $50 million or more, although it’s believed Shell paid far less for Shark.

Newfield, an exploration and production independent based in Houston, Texas, said the undisclosed third party’s participation is still subject to approval by its board of directors. Newfield will be carried for a 23 percent working interest in Blackbeard. Just how the remaining interest would be split among Newfield’s partners also was not disclosed.

The Blackbeard West Prospect is subject to a 1.25 percent overriding royalty interest held by the Treasure Island Royalty Trust, which was established in connection with Newfield’s November 2002 acquisition of independent EEX. The sole purpose of the trust is to hold non-expense bearing overriding royalty interests in future production from the ultra-deep zones of the Treasure Island area, Newfield said.