Unocal's Spirit Energy 76 scores with 100% working interest gas discovery on new GOM shelf block; ups production to 175,000 BOE/D
Sugar Land, Texas, Jan. 13, 2000 -- Unocal Corporation's Spirit Energy 76 unit today said that a wildcat exploration well in 240 feet of water on its 100-percent owned Ship Shoal block 295 offshore Louisiana has discovered a significant new natural gas field with an ultimate discovery volume of as much as 130 billion cubic feet (bcf).
Spirit Energy also said that its net production reached 175,000 barrels-of-oil-equivalent (BOE) per day at the end of 1999. The company expects continued production strength into 2000 due to increased development activities and exploration success resulting from higher capital spending in the last six months of 1999.
On Ship Shoal 295, the Muni well logged more than 450 feet of hydrocarbon pay in three zones, with indications of additional possible pay. While appraisal drilling is required, indications from this well alone are that the discovery volumes for the field will be between 80 bcf and 130 bcf. The ultimate volume could be higher if appraisal drilling confirms the additional possible pay.
Spirit has an aggressive facilities and drilling program that calls for first gas production from the field about the beginning of 2001 at an expected rate of 100 to 130 million cubic feet per day. The upper end of this projection would represent more than 20 percent of Spirit's current net production from the GOM shelf on a BOE basis. Spirit has a 100-percent working interest in the block, which was acquired in the Central Gulf lease sale in early 1999.
"A discovery of this size in shallow water that can be brought on production quickly at high rates has extremely attractive economics," said Timothy H. Ling, Unocal chief financial officer and executive vice president, North American Energy Operations. "Successes like the Muni well are critical to helping Unocal meet its return on capital goals for the company's mature areas."
The Muni discovery is the latest success recorded by Spirit Energy in its mature areas (Gulf of Mexico shelf, Gulf Coast onshore and Permian Basin). In 1999, Spirit's shelf drilling program recorded 11 successes with 14 wells for a success rate of 79 percent. Already in 2000, the company has logged an additional exploratory success.
"Our overall exploratory success rate and the Muni discovery highlight the strength of our mature area exploration portfolio," said Kenneth B. Butler, Spirit vice president for the Mature Region Profit Center. "Our record shows that there is still potential for major discoveries on the shelf for strong, skilled players like Unocal."
Net production from Spirit Energy's mature regions was about 175,000 barrels of oil equivalent per day (BOE/D) at the end of 1999, an increase of roughly 20,000 BOE/D, or 13 percent above Spirit's average production for the third quarter. The increase was in addition to the 40-percent production decline rate that Spirit must overcome simply to maintain steady production levels.
"The higher year-end production rate places Spirit Energy in an excellent position for attractive production performance in early 2000 and establishes the production capacity needed to achieve critical production goals for 2000 and 2001," said Ling.
Spirit Energy 76, Unocal's U.S. Lower 48 exploration and production unit, has major operations onshore in Texas and Louisiana and on the Gulf of Mexico shelf.
Forward-looking statements regarding exploration and development activities, discovery volumes and forecasted production levels in this news release are based on assumptions concerning operational, market, competitive, regulatory, environmental and other considerations. Actual results could differ materially as a result of factors discussed in Unocal Corporation's 1998 Form 10-K report filed with the Securities and Exchange Commission.
Updated: January 2000