LGO has exercised its rights under its strategic alliance agreement with Byron to acquire 20% direct working interests in Ship Shoal block 180 and South Marsh Island block 6. These blocks were awarded to Byron by the US BOEMRE in March 2010 as part of lease sale 213.
Under terms of the company’s Byron shareholding conversion, which was completed at start 2010, LGO and Byron completed a strategic alliance agreement whereby LGO retains the rights to acquire up to a 20% direct working interest in all properties acquired by Byron outwith of the joint venture relationship with Leed Petroleum.
Ship Shoal 180 is located east of the company’s existing acreage in Ship Shoal 197/201/202 held jointly with Leed and Byron and which commenced production in May 2010 at over gross 2000boepd. Seismic interpretation and review of historical production in block 180 by LGO has identified a significant stratigraphic trapping component with a previous well identifying high quality sands and reservoir sand thickness up to 60ft.
Ship Shoal 180 contains two prospects with preliminary estimates on gross best case prospective resources in excess of 5mmboe in the oil case and in excess of 12bcf in the gas case (2mmboe). Estimates are in accordance with the SPE Petroleum Resources Management System.
The development strategy for Ship Shoal 180 will be two wells drilled from a single surface location on conclusion of further geotechnical works to finalize resources estimates, target locations and drilling economics.
South Marsh Island block 6 is located west of LGO’s existing acreage in South Marsh Island 8/Eugene Island 133. South Marsh Island 6 contains three prospects and one deep potential location located near to significant historical production zones and within a large area to trap substantial incremental hydrocarbons. Previous production in the block by Union Oil produced over 24mmboe from 20 pay zones.
The three prospects have preliminary estimates on best case gross prospective resources in excess of 4mmboe in the three shallow prospects and in excess of 25bcf (4.2mmboe) in the deep prospect.
Estimates are in accordance with the SPE Petroleum Resources Management System. The development strategy for South Marsh Island 6 is to reprocess the current 3D seismic dataset to finalize the prospect inventory and resources before identifying development options.
LGO will fund 20% of the cost of each development on the new properties, expending to date $212,592 to acquire the interests. The operator of both properties is Byron.
LGO’s other production interests in Eugene Island (7.25%) are currently undergoing well intervention to recommence production in well A7 and return the total platform production to about gross 1000boepd.
Additional development drilling is provisionally planned for end 2010 to access the T1 sands containing the majority of Eugene Island reserves and resources. The undeveloped gross proved reserves in the T1 sands are 4.8mmboe with probable reserves of 2.8mmboe (50.50% oil gas) as estimated by Collarini Associates of Texas and previously reported by LGO in April 2010.
LGO said it does not expect the drilling moratorium and associated appeals in the Gulf of Mexico to apply to its interests as these limitations are only applicable in water depths in excess of 500ft. All of the company’s Gulf Coast assets are located in less than 200 feet of water.
The company has engaged Collarini Associates to revise the March 2009 reserves and resources report to include all of the company’s interests in the Gulf Coast. This report is due for completion in mid Q3 2010.
