Jan. 13, 2010
McMoRan Exploration Co. today announced what it said could be one of the largest oil and natural gas discoveries in the shallow waters of the Gulf of Mexico in decades.
The discovery was made at the Davy Jones ultra-deep prospect located on South Marsh Island Block 230 in about 20 feet of water and 10 miles off the Louisiana coast, the New Orleans company and Energy XXI, one of its Houston partners in the project, said in statements this morning.
The well was drilled to 28,263 feet and found a 135-foot column of hydrocarbon-filled sands in the Wilcox section of the Eocene and Paleocene geologic trends.
That puts the estimated the size of the discovery close to 2 trillion cubic feet of resources, rivaling some oil and gas discoveries in the deep water Gulf.
If development drilling confirms what early testing has shown, “this is going to be a huge reserve,” McMoRan’s co-chairman, James R. Moffett, said in a conference call this morning.
What’s more, Energy XXI Chairman and CEO John Schiller said the discovery “verifies the ultra-deep potential of the Gulf of Mexico shelf and opens this horizon as a major exploration frontier.”
Investors responded by driving up the stock prices of McMoran and Energy XXI by more than 25 percent in morning trading.
“Success at Davy Jones could be a transformative event for (the companies),” said Jefferies Research, in a note to investors, noting the prospect could boost McMoRan’s year-end proved reserve base by 150 percent and Energy XXI’s by 60 percent.
McMoRan is the lead operator of Davy Jones, with 32.7 percent working interest. Houston’s Plains Exploration & Production Co. has a 27.7 percent stake, Energy XXI has a 15.8 percent interest, Japan’s Nippon Oil Exploration USA Limited holds 12 percent, while W.A. “Tex” Moncrief, Jr. has an 8.8 percent interest.