US, GoM -- Petsec Energy is accelerating its Gulf of Mexico exploration program, which includes drilling of up to 11 wells.
"Starting in October, the closing months of 2006 will see Petsec target a total of 19-36 bcfe of gas with the drilling of a significantly increased number of exploration wells in the Gulf region," says Terry Fern, Petsec executive chairman.
"If successful, that exploration could generate free cash flow over the next three years to Petsec in the range of $120 to $216 million, based on the current net operating margin of $6/MMcf of gas," he says.
Petsec has already enjoyed exploration success in 2006, with five reported discoveries in the first half of the year, yielding 21 Bcfe of gas in the Main Pass block 18/19 leases.
The company has increased its leasehold position in the GoM as well, from 17 to 50 leases, substantially increasing its inventory of "high quality drillable prospects."
Its "new focus exploration joint venture" covers 33 lease blocks on the Shelf. Petsec acquired a 50% interest in 28 lease blocks, a 25% interest in 5 additional lease blocks, and the right to participate in future MMS lease sales with the group for up to a 35% working interest.
The company has mapped over 36 prospects to date with an estimated net unrisked potential of 157 bcf of gas and 29 MMbbl of oil, and an estimated 43 bcfe of gas net, discovered by prior drilling.
The leases, which have all been acquired at OCS lease sales in 2005 and 2006, are expected to be tested over the next two to three years. The current prospect inventory of 280 bcf of gas and 37 MMbbl of oil, reserves potential, is seven times larger than the company's current reserves.
The drilling program on the newly acquired lease blocks in Mobile Bay is expected to begin next month, targeting 5-11 bcf of gas net to Petsec from 2-5 wells.
Exploration and development of the company's Main Pass block 18 and 103 leases (2-3 wells) will test 8-5 bcf of gas, starting in late 2006.