HOUSTON -- Callon Petroleum Co. will suspend operations underway to develop the Entrada field located on the Garden Banks 782 block in deepwater Gulf of Mexico.
Higher than expected costs incurred to date and declining commodity prices since development operations began in mid-2008, have resulted in a serious decline in project economics, the company says. Under current economic conditions the company does not plan to return the project.
"The current financial climate is extremely difficult and presents a significant challenge for a company of Callon's size to absorb continuing cost increases of this magnitude while commodity prices continue to fall. We will continue to be an active participant in the Gulf of Mexico region as we seek to build the company," said Fred Callon, chairman and CEO of the company.
The Entrada field is owned 50% by a subsidiary of Callon, which is the operator. The company drilled the GB 782 #3 well to a total depth of 21,100 ft (6,431 m) and the well needs to be sidetracked back toward the original GB 782 #2 discovery well.