Marathon Oil Co. and partner EnCana Corp. announced last week they have discovered a new wildcat natural gas well (Annapolis G-24) in deep waters about 215 miles south of Halifax offshore Nova Scotia. The well encountered about 100 feet of net gas pay over several zones that have the potential to flow, they said. It will be temporarily abandoned to allow for re-entry at a later time.

“The discovery of gas is an important first step in the developing deepwater play offshore Nova Scotia. While the results of the Annapolis well are promising, further activities will be required to determine the commerciality of the discovery,” said Phil Behrman, Marathon’s senior vice president of worldwide exploration. Marathon and its partners are developing plans for further seismic and drilling in 2003, he noted.

“It is our understanding that the initial results of this well (100 feet of net pay) may have fallen short of expectations (100-300 feet of net pay), but needless to say [it] is encouraging, especially given this was their first deepwater well drilled in the area,” said A.G. Edwards analysts of the discovery.

They noted Marathon has three licenses in the region, which “are equivalent to roughly 1,000 Gulf of Mexico blocks.” Although the licenses are “high risk,” they “represent the possibility for establishing a new core area for the company and expanding its exposure to North American natural gas,” the analysts said.

“Nevertheless, in light of the company’s historically disappointing exploration efforts, we continue to believe that it is essential for Marathon to significantly improve its success in key areas such as the Gulf of Mexico and offshore West Africa and Nova Scotia, in order to develop an attractive long-term production growth profile.”

The Annapolis well marks the second one drilled on the Annapolis Prospect. The first well (B-24) was suspended and plugged following a well-control incident last March caused by an influx of gas at a well depth of 11,469 feet.

Marathon holds a 30% interest in the Annapolis prospect and is operator. Other partners include EnCana (26%), Norsk Hydro Canada Oil and Gas Inc. (25%) and Murphy Oil Co. Ltd. (19%). Marathon also is operator of the adjoining Empire and Cortland leases, holding 50% and 75% interests, respectively. Marathon said it has identified 10 prospects in this trend on the three leases.

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