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Field production is currently 15,500 boe/d

Will close soon on ExxonMobil's Mobile Bay assets

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

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, Tracy Krohn said at the Enercom Oil & Gas Conference.

"I believe we're siting 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 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 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.

INCREASED PRODUCTION 12-FOLD SINCE 2011

The company has sizably increased field production at the legacy field twelve-fold to about 15,500 b/d of oil equivalent (76% liquids) 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 (since merged into BP) and Anadarko Petroleum which was acquired last week by Occidental Petroleum.

The US 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 better come up with 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.

FUTURE DRILLING PROJECTS IN OTHER SANDS

The company has a roster of future Mahogany drilling projects in the P, Q, and T thru V sands, according to Krohn's presentation slides. At least six pay zones have proven to be productive at the field.

In addition to Mahogany, W&T has a lineup of other US 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 be begin production late this year.

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

The field, which comes with about 19,800 boe/d net (25% liquids), 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 H2S in it," he said. H2S is hydrogen sulfide gas.

"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, starr.spencer@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com