Irving, TX-based Magnum Hunter Resources Inc. estimated Tuesday that it will lose about 4 Bcfe of production in the second half of the year from a combination of property divestitures and storm related shut-ins. The company said total production for the month of August 2002 averaged 228.2 MMcfe/d.

Based upon sales completed to date and negotiations currently in progress on additional property divestitures, total proceeds from the sale of certain non-core assets that predominantly come from the former Prize Energy Corp. portfolio should come to $100 million by fiscal year-end, Magnum Hunter estimated. All proceeds received to date ( $60 million) have been used to retire existing bank indebtedness. Magnum Hunter completed the Prize Energy acquisition in March.

In updating the status of its Gulf of Mexico operations that were affected by Tropical Storm Isidore and Hurricane Lili, Magnum Hunter said that most of the shut-in production related to the two storms has been restored and there appears to be no permanent damage to facilities owned by the company.

However, the company noted there remains to be additional infrastructure repairs on certain company operated facilities as well as South Marsh Island 35 operated by Remington Oil and Gas Corp. Magnum Hunter said these minor repairs should be completed within the next several weeks at which time production can resume. Of the storms damage, Magnum said the greatest impact appears to be on the Remington operated Eugene Island 302 platform, which continues to be shut-in due to extensive damage to Newfield Exploration’s production platform at Eugene Island 324.

Prior to the shut-in of these facilities, the company said gross production was 1,850 bbl/d of oil and 3 MMcf/d or net equivalent production to Magnum Hunter of approximately 3.5 MMcfe/d. Magnum Hunter said the operator is considering repairs to this facility or possibly re-routing the currently shut-in production to an alternate facility in an effort to restore production sometime early next year.

In addition to its other operations that were affected, Magnum Hunter said it also had two wells that were in the drilling phase that were damaged by the storms. On Main Pass 107, operated by LLOG, a private New Orleans based company, where Magnum Hunter currently has a 50% ownership interest, the drilling rig on location shifted and was damaged during the hurricane. The drilling rig has subsequently been moved to a shipyard for rig repairs and the well has been suspended. The operator is in the process of contracting another drilling rig to complete the operation.

Also, drilling was suspended at 13,400 feet on the Remington-operated South Marsh Island 24 due to casing damage caused by the hurricane. Magnum Hunter said that prior to evacuation, the well bore was secured below the sea bed with a storm packer. During the storm, the drive pipe was separated from the drilling rig and was bent severely at the sea bed. The drive pipe is currently being cut off at the sea floor to enable re-entry into the well bore. The well is in a controlled and stable condition. The projected total depth of this well is approximately 18,000 feet. The company noted that existing insurance may cover one or both of these delayed drilling projects.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.