Byron Energy spudded the South Marsh Island 71 #1 (SM 71 #1) well located in South Marsh Island Block 71 in the Gulf of Mexico, using the Hercules 205 jackup drilling rig this week.
Current operations at the SM 71 #1 well are drilling ahead at 671ft measured depth. A 20in conductor casing will be set at 800ft measured depth.
The SM 71 #1 well is being drilled to test two objective sands in the southwest corner of a major salt dome in a water depth of 131ft (40m) and has a planned total measured depth of approximately 7451ft (2272m) and total vertical depth of 6900ft (2104m). It is anticipated that the well will take approximately 20 days to drill and evaluate.
The SM 71 #1 well is the second well to be drilled as part of Byron’s farm-out to Otto Energy, announced on 11 December 2015. In order to earn a 50% working interest (equal to a 40.625% net revenue interest) in the South Marsh Island block, Otto will contribute 66.67% (US$2.99 million) of the total estimated costs of the SM 71 #1 well ($4.5 million). Any costs above $4.5 million in respect of the SM 71 #1 well and all future expenditure in SM 71 will be in accordance with Byron’s and Otto’s respective working interest (Byron 50%/Otto 50%). Otto has also paid Byron $903,610 for past cost reimbursement in the SM 71 project.
Byron, through its wholly owned subsidiary Byron Energy Inc. (operator), currently has a 100% working interest and an 81.25% net revenue interest in SM 71. If Otto earns an interest in the SM 71 block, Byron’s working and net revenue interests will be reduced by 50% at the earn-in point, to 50% and 40.625% respectively.
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