) Reply # of 2825
8,640 BARRELS OF CONDENSATE & 76.4 MILLION CUBIC FEET OF
NATURAL GAS PER DAY IN GALVESTON BAY WELL
First Flow Test Is From Upper Zone Only
HOUSTON, January 8, 1998 - TransTexas Gas Corporation (NYSE: TTG) and Davis
Petroleum Corp. today reported that they had successfully tested the upper pay zone in
the State Tract 331 #1 well in the Eagle Point field of Galveston Bay, Texas. The State
Tract 331 #1 is the discovery well for a large new natural gas and condensate field at
Eagle Point. The Companies' internal estimates indicate that the ultimate reserves in this
field could exceed 1 trillion cubic feet of natural gas equivalent.
TransTexas, the operator of the field, said that it had initially tested only the upper zone,
consisting of 101 feet of net pay, at a gross rate equivalent to 8,640 barrels of
condensate per day (Bpd) and 76.4 million cubic feet of natural gas per day (MMcfd)
on a 48/64-inch choke with flowing tubing pressure of 7,600 p.s.i. Calculated absolute
open flow of the well is 381 MMcfd. The natural gas, containing 1,300 MBtu/Mcf is
calculated to yield 6.14 gallons per Mcf.
Arnold Brackenridge, President of TransTexas, said: "We've now completed a series of
detailed, extended duration flow tests, including a reservoir limits test, over a four-day
period." As expected, these tests confirmed the highly productive nature of the field but
surprised us with the actual flow rate and the high yield of condensate produced. It's
further encouraging that this rate was achieved from only the upper zone. We expect to
find the lower zone will also prove to be highly productive.
TransTexas said that it expects to be able to produce the first Eagle Point well at a daily
rate of 50-75 MMcfd. Assuming this production rate and current natural gas and crude
oil 12-month futures pricing, the 331#1 well could generate between $49 and $75
million cashflow in the first full year of production.
The Company noted that it had elected not to conduct a flow test of the second, lower
pay zone of 60 feet thickness, as a result of mechanical difficulties specific to the first
well. It said that a test of the lower Vicksburg zone is planned for the second well in the
field, the State Tract 331#3, which is currently drilling below 15,200 feet. This well, like
the #1, is expected to commence production by the end of March, after a short 20"
diameter pipeline and natural gas liquids plant are completed.
Brackenridge continued, "We're already close to total depth on the second well of an
8-well program to develop the field. As we add new wells, Eagle Point should
significantly impact TransTexas' future reserve and production base. This field is in
shallow coastal waters of just 7-10 feet depth, less than 5 miles from arterial pipelines.
Yet it is a discovery of similar proportions to major industry efforts in the deep water
portion of the Gulf of Mexico, that often cost 4-5 times more to develop." The new field
lies in an area of Galveston Bay long overlooked by other energy interests about one
mile off the coast of San Leon, a city roughly halfway between Galveston and Houston.
The Eagle Point field is one of several prospects controlled by TransTexas & Davis in
the Galveston Bay area. Two of these other prospects, known as Virginia Point and
Goat Isle, are also currently being drilled and are expected to reach total depth within
the month.
On January 6, TransTexas was the successful bidder on an additional 2,055 acres in
State Tracts 308, 352 & 353. These blocks are adjacent to the north, west and
southwest perimeters of the Eagle Point field in State Tract 331.
The discovery and development of Eagle Point, and the Company's other Galveston
Bay activity, are important steps in TransTexas' major shift in its strategic direction and
asset base. The pending start-up of production from the Eagle Point field illustrates the
company's strategy to focus on high-impact areas located along productive trends.
This strategic shift has already included the 1997 sale of TransTexas' Lobo Trend
properties for $1.1 billion. Until that sale, which included reserves of 550 billion cubic
feet of natural gas equivalent, the Lobo Trend had generated the bulk of TransTexas'
production. The sale resulted in a gain on the sale of assets of over $540 million and a
recapitalization that lowered net debt substantially. The Eagle Point discovery alone,
with its 8 wells, shows the potential to more than replace the reserves and production of
the 850 Lobo wells sold this year.
TransTexas Gas Corp., with headquarters in Houston, Texas owns a fleet of 24 drilling
rigs, operates a full-line services division and acts as the operator for the Eagle Point
drilling and production activities.
Davis Petroleum Corp., which owns a 25% working interest in the Eagle Point field, is
also based in Houston. Its staff of explorationists, landmen and engineers developed and
assembled the drilling prospects. |
