Stone Energy Corporation is working to restore production from its Amethyst well in the U.S. Gulf of Mexico. However, the company said it might not be able to restore the well to its previous production levels, or at all.
Stone brought the Amethyst well online in late December 2015. The project is a tie-back to the Pompano platform, located less than five miles from the discovery, where Stone holds a 100% working interest.
The company was forced to shut in the well in late April to address suspected blockage around the perforated section and to allow for a technical evaluation.
During the first week of November, the company initiated acid stimulation work and intermittently flowed the well during the month of November at a rate of 10 – 15 million cubic feet of gas per day, while observing and evaluating the well’s performance. On November 30, 2016, Stone performed a routine shut in of the well to record pressures and determined that pressure communication exists between the production tubing and production casing strings, resulting from a suspected tubing leak.
Stone said on Monday it was diagnosing the pressure information in an attempt to determine the most likely failure points. The company expects to have a better understanding within one to two weeks.
“We will evaluate our options to restore production from the well, and all potential impacts on our estimated proved oil and gas reserves, which we anticipate will continue for at least several months,” the company added.
The estimated proved reserves associated with the Amethyst well at year-end 2015 were approximately 79 billion cubic feet of gas equivalent.
However, Stone added, there is no assurance the company will be able to restore the well’s production to previous levels, or at all. In addition, the company is unsure if a replacement or sidetrack well would be economic, or that it would have sufficient liquidity if significant capital is needed to restore the well’s production.
In order to improve its liquidity, the company in October entered into a restructuring support agreement with senior noteholders. The restructuring agreement contemplates that the company will file for voluntary relief under Chapter 11 of the United States Bankruptcy Code on or before December 9, 2016.
Assuming implementation of the plan, Stone expects to eliminate approximately $850 million in principal of outstanding debt and reduce its annual interest payment burden by approximately $46 million. The company, however, said it couldn’t provide any assurances the restructuring would be successful.
Offshore Energy Today Staff