Gulf of Mexico
On April 16, 2007, Maxim Resources Inc. entered into an agreement with Emperor World Trading LLC, an arm's-length company located in the United Arab Emirates, to ultimately acquire a 10.075 percent net revenue interest in the 115 B-1 well and the High Island block oil and gas leases. The purchase price for Maxim’s portion of the acquisition was $2 million (US) and this included Maxim’s portion for the farm-in, drilling and completion costs for the re-work sidetrack drilling program.
The High Island B-1 well produced 8.5 billion cubic feet from the Cris R sand at an average rate of 22 million cubic feet of gas per day from October, 2003, to December, 2004, when an abrupt mechanical failure of the production casing occurred.
The High Island B-1 well is a single caisson well in 44 feet of water in the western Gulf of Mexico. The platform, facilities and associated gas pipeline connections are less than four years old and remain intact. This well was previously operated by El Paso Corporation and was drilled to a total depth of 19,800 feet to test Frio targets. It was originally completed in the Miocene age Cris R sand, which was targeted on the re-drill sidetrack program. A large four-way dipping structure exists under a major down to the southeast listric fault that is at 15,400 feet. The original well logged more than 180 feet (tvd) of gross sand with 124 feet (tvd) of gross gas column. This 250-acre reservoir has porosity ranging from 18 per cent to 22 per cent and water saturation ranging from 25 per cent to 35 per cent. The original formation pressure was confirmed to be 15,665 pounds per square inch.
The High Island 115 B-1 well was a low-risk offshore Gulf of Mexico re-drilling sidetrack to develop remaining proven and probable reserves in the prolific Cris R reservoir. The operator Republic Petroleum, LLC drilled the sidetrack low angle (less-than-eight-degree) hole with less than 2,000 feet of open hole to a depth of approximately 14,950 feet to 16,931 feet (vertical depth of 16,901 feet). The entire cost for Maxim and partners was estimated at $7 million (US)
On August 21, 2007, Republic Petroleum LLC advised Maxim that the well had reached total depth and that the sidetrack drilling encountered a minimum of 75 feet of gas pay in the Cris R-1 sand and the upper Cris R-1 sand. The initial well flow tests indicate that an absolute open flow of 52.3 million cubic feet of gas per day is estimated. In addition, the well flow tests indicate that the well will flow at an estimated rate of 15 million cubic feet of gas per day on an 11/64th-inch choke. The initial draw down pressure is estimated at 939 pounds per square inch and a flowing tubing pressure of about 9,600 pounds per square inch.
The well was intentionally drilled to stop an estimated 30 feet short of penetrating the gas water contact so as to avoid potential mechanical complications associated with behind-pipe water communication. According to the operator, the well is expected to be placed on-line in late September or early October of this year following the completion of a new flow line.
In November 2007 the flow line activities commenced by Bisso Marine Co., the contractor hired to lay the new flow-line. The contractor was able to salvage and repair the original riser, flow-test and production facilities so that the same could be installed at the new destination of the High Island project.
In December 2007 the High Island block 115 B-1 sidetrack 2 well, was tied into the flow line and was reported to be flowing at sustained rates of 9.3 million cubic feet of gas per day. The goal is to increase this rate to 15 million cubic feet per day over time as the well cleans up.
The successful drilling of the High Island B-1 well earned Maxim the rights to 10.075 per-cent net revenue interest (estimated rate of 15 million cubic feet) and the rights to nearly 5,700 acres over the entire block. It is speculated that additional prospectivity exists within the acreage earned through this proposed development. Maxim and the partners are proceeding with seismic data acquisition on the High Island Block along with adjacent blocks, and are investigating the economic feasibility of developing oil and gas reserves from within the High Island Block.
