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W&T believes still sizable upside left in US Gulf of Mexico Mahogany Field

Pure-play U.S. Gulf of Mexico operator W&T Offshore Inc. believes it has a lot more proved reserves at its legacy Mahogany Field than is on the books right now, founder and CEO Tracy Krohn said late Aug. 12.

W&T, which operates in both shallow and deep waters of 560 feet to 7,100 feet, mostly offshore Louisiana, has "substantially" expanded Mahogany's size and depth since 2011 by drilling and sidetracking new producing locations, Krohn said at the Enercom Oil & Gas Conference.

"I believe we're sitting on 100 million barrels of additional reserves that have not been booked as proved," he said, adding those volumes are more than the 33.6 million barrels of proved reserves currently.

W&T has kept to a strategy for the past 30 or 35 years of acquiring older fields at relatively inexpensive prices, reprocessing seismic data and applying new technology to eke more oil and gas from them.

The company entered Mahogany as a minority partner in 1999 but slowly built up its interest over a number of years. It bought the final stake and operatorship of the field in 2008 from Apache Corp.

W&T has sizably increased field production at the legacy field twelvefold to about 15,500 barrels of oil equivalent per day currently, from 1,290 boe/d at the same time in 2011.

Mahogany was the first commercial subsalt field in the shallow-water Gulf of Mexico, discovered in 1993 by a consortium of Phillips Petroleum, which has since merged into ConocoPhillips Amoco, which since merged into BP PLC; and Anadarko Petroleum Corp. which was recently acquired by Occidental Petroleum Corp.

The U.S. Gulf's thick canopy of salt in many areas has been a bane to the offshore industry for decades, although seismic imaging has greatly improved over the years.

The key to exploiting mature fields is better data, Krohn said.

"We spent a lot of time and money and effort on new seismic, on processing and reprocessing it," he said, which is also true today for all the company's operations.

Eventually, W&T brought the data reprocessing function in-house to improve its own method of interpreting it, he said. Mahogany's P-sand was the traditional producing sand, located about 15,000 feet below an 8,000-foot salt canopy.

W&T's data-heavy focus paid off. Since 2011, W&T expanded Mahogany's size and depth by drilling and sidetracking 13 new producing horizons. And in 2016, the company's A-18 logged oil pay beneath the T-sand in the U sand.

In addition to Mahogany, W&T has a lineup of other U.S. Gulf projects. It recently made a discovery at Gladden Deep, a field off Louisiana's "big toe" in 3,000 feet of water. It should begin production late this year.

Also, the company expects to close on a $200 million purchase later this month from Exxon Mobil Corp. of the major's Mobile Bay assets offshore Alabama.

The field, which comes with about 19,800 boe/d net, and was discovered by the former Mobil Oil Company in 1979, has some "unusual characteristics," Krohn said.

"It's very deep, high pressured and has a little [hydrogen sulfide gas] in it," he said.

"There's a lot of ... potential here," Krohn said. "We'll be drilling some wells here and expect to find more reserves. There hasn't been a well drilled here in at least a decade. It's a nice little piece of business for us."

Starr Spencer is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.