USA: Silvermere Provides Update on Its Operations in Gulf of Mexico

Silvermere Energy plc, the independent oil and gas company focused principally on appraisal and production opportunities in the US, announces further progress with the tie-in of the I-1 well in its Mustang Island 818-L Field. This is based on information provided by the Operator, Dominion Production Company LLC (“Dominion”).

Production from the I-1 well was resumed on 29 August 2012 under supervised and choked (deliberately limited flow) conditions. Gas and condensate were produced along with quantities of drilling mud and other solid material during the clean-up phase. By 5 September, production consisted of clean gas and condensate, suggesting that the clean-up was substantially completed. It is too early to know what long term flow rates will be achieved, but reservoir and flowing tube pressures are encouraging and there are indications that condensate production may exceed internal projections. The completion of the tie-in and resumption of production on 29 August signaled the satisfaction of the Company’s obligations to carry the residual working interest of the original asset vendors.

Initial production was used to charge the pipeline towards the shore facility on South Padre Island and increasing pipeline pressure recorded at the beach-head indicated that the pipeline condition was sound.

The well was shut in on the afternoon of 5 September after a small leak was detected on a neighbouring abandoned platform that is connected to the same pipeline. The authorities responsible for the abandoned platform were notified and an operation to seal off the pipeline connection from that platform was devised. The lift-boat required to perform the work was mobilised on 27 September and the work is expected to be completed within one week. The costs of the operation to seal off the abandoned platform will be borne by the pipeline owner and do not represent any additional burden on the Company.

Commenting on the developments, Andy Morrison, Chief Executive of Silvermere, said: “The completion of the tie-in and commencement of production at Mustang Island represent the achievement of important milestones. The early performance of the I-1 well is encouraging and while the temporary shut-in has been frustrating, it does not represent a significant set-back. Sealing off the abandoned platforms should provide a permanent solution and enable the well to proceed towards commercial production.”

[mappress]
Press Release, September 28, 2012