Cobalt International Energy (CIE)
Q3 2012 Earnings Call
October 30, 2012 11:00 am ET
Joseph H. Bryant - Chairman and Chief Executive Officer
John P. Wilkirson - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Brian Singer - Goldman Sachs Group Inc., Research Division
Michael S. Scialla - Stifel, Nicolaus & Co., Inc., Research Division
Joseph D. Allman - JP Morgan Chase & Co, Research Division
Al Stanton - RBC Capital Markets, LLC, Research Division
Richard M. Tullis - Capital One Southcoast, Inc., Research Division
Matthew Portillo - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
Edward Westlake - Crédit Suisse AG, Research Division
Previous Statements by CIE
» Cobalt International Energy's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Cobalt International Energy's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Cobalt International's CEO Discusses Q3 2011 Results - Earnings Call Transcript
Joseph H. Bryant
Good morning, and thank you for joining us on Cobalt's Third Quarter 2012 Earnings Call. I'm joined on today's call by John Wilkirson, our Chief Financial Officer.
Before I get into my prepared comments this morning, I would like to say that our thoughts are with all of our fellow Americans and shareholders who are affected by Sandy. Having gone through numerous similar storms, all of us at Cobalt understand and empathize with their current circumstances. At this time, we wish for nothing more than your safety and the safety of your family.
I'll begin by discussing our third quarter operational activities and a few plans for the near term. I will then turn the call over to John for a discussion of our financial results. Our overall objective in the third quarter was and continues to be to move all of our catalytic events closer to value realization for our shareholders. While I'm disappointed that we had to delay the production test in the Cameia #2 well from the third quarter, I am pleased to report that we continue on track to deliver results in the near term for our North Platt and Shenandoah wells in the Gulf of Mexico and have made significant progress moving our previously-discovered Cameia and Heidelberg fields to first production. The progress that we continue to make is setting a stage for a very exciting fourth quarter and a catalyst-rich 2013. All of our current and near-term activities have the potential to deliver immense shareholder value in the coming year.
As I announced in our second quarter earnings call, the Cameia #2 appraisal well offshore Angola reached its total depth on July 4. After obtaining encouraging logging results, we planned to perform a production test in the lowest interval to provide further insights into a new, potentially productive deeper zone in the field. However, we were delayed due to numerous mechanical malfunctions of the Ocean Confidence drilling rig, causing us to release the rig to Diamond Offshore Drilling for repairs before we could perform the production test. Since the rig release, we have evaluated other rigs, which may be available to perform the production test while closely monitoring the status of the Ocean Confidence rig and when it may be able to return to conduct the test. As of today, we believe that the most likely option is to use the Ocean Confidence, which is expected to return before year end, allowing us to conduct the production test sometime in the next 45 to 60 days. Based on this timing, the earliest that we will be able to report results is late in the fourth quarter.
Moving to the deepwater Gulf of Mexico. We spud the North Platte #1 exploratory well on Garden Banks Block 959 on July 3, with the Ensco 8503 drilling rig. The Cobalt-operated North Platte prospect is a 4-way inboard lower tertiary structure that lies in the heart of the emerging inboard lower tertiary plate. Cobalt holds a dominant position in this exciting play with numerous follow-on inboard lower tertiary exploratory prospects. Drilling on this well is proceeding as planned and we continue to expect that we will announce the results of this well by year end.
Appraisal drilling operations continue in the Anadarko-operated Shenandoah field. We and our partners are drilling a well that will appraise the Shenandoah inboard lower tertiary oil discovery announced in 2009, where more than 300 feet of net oil pay was discovered. Progress on the appraisal operations has been slower than anticipated but we are hopeful that we will have well results in the next few months.
Back in Angola, we continue to work closely with our Cameia partners and the concessionaire to advance our Cameia super pay development, planning efforts in order to help us achieve production from the Cameia field in a timely manner. We anticipate employing a phased development approach and are currently pursuing the ordering of critical long-lead subsidy equipment and evaluating FPSO options for this development project. We are anticipating a final investment decision on the first phase of this development project to be made sometime in 2013. If we maintain this schedule, I continue to believe that we will begin production at Cameia in early 2016.
In the Gulf of Mexico, the Heidelberg partnership is continuing the pre-FEED work and is evaluating development solutions with the objective of advancing commercialization of Heidelberg as a standalone development. First production for this development is also anticipated to be in 2016. As I announced in our second quarter earnings call, Cobalt was the high bidder on 10 Gulf of Mexico blocks in the Central Gulf of Mexico lease sale held on June 20. I'm pleased to report that Cobalt has been awarded leases on all 10 of these high bid blocks, which has added 2 new prospects to our inventory and added adjacent blocks to 2 of our existing prospects.