Helix Energy Solution’s exploration and production (E&P) subsidiary Energy Resource Technology (ERT) has reported the second discovery in less than six months in the deepwater Garden Banks Block 506, which is located about 145 miles offshore Galveston, TX, in the Gulf of Mexico (GOM) in 2,700 feet of water.

Tests on the Danny exploration well, 100% owned and operated by ERT, indicate the presence of high-quality oil in a single sand body. The well is currently being completed, and the discovery is expected to be developed in conjunction with the Noonan reservoir, which ERT discovered in February.

The two wells would be developed via a subsea tie-back system to ERT’s East Cameron Block 381 platform, which is 31 miles to the north of the Garden Banks discoveries in 370 feet of water.

First production from both the Danny and Noonan discoveries is expected in the second half of 2008. Preliminary analysis on Danny indicates reserve potential of around 50 Bcfe; Noonan holds a reserve potential of at least 100 Bcfe, according to ERT.

“When we announced the acquisition of Remington Oil and Gas last year we pointed to the deepwater prospect portfolio as a potential source of significant production and contracting services value,” said CEO Martin Ferron. Helix paid $1.4 billion for Remington last year (see Daily GPI, July 6, 2006). “We have now made two very successful steps in unlocking that value, which bodes well for the remaining inventory. With these first two discoveries, the ultimate value created from the deepwater prospect portfolio alone could well exceed the total acquisition price.”

Ferron said both Noonan and Danny will be developed using Helix’s marine assets at a combined finding and development cost of less than $2/Mcfe. However, to pay for development costs and provide cash for possible debt reduction, Ferron said Helix could sell up to 50% of its interest in the Garden Banks discoveries.

“This would also allow us to recognize the profit on the related services work as it is performed with respect to the share owned by the partner,” Ferron said.

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