Royal Dutch Shell (NYSE:RDS-A, RDS-B) and Nexen (NYSE:NXY) have reported additional oil and gas resources at the Appomattox discovery in the Deepwater Gulf of Mexico. The companies plan additional drilling over the next two years to further delineate and appraise this prolific discovery.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Royal Dutch Shell is the operator of the Appomattox discovery and owns an 80% working interest. Nexen is also involved on a non-operated basis and owns a 20% working interest.

Appomattox History
Royal Dutch Shell and Nexen reported initial success at Appomattox in March 2010 on Mississippi Canyon blocks 391 and 392. The discovery well here found 530 feet of gross oil pay at a depth of approximately 25,000 feet. Two sidetrack appraisal wells also drilled by the operator confirmed the presence of oil at the prospect. The three wells announced in 2010 were evaluating the south fault block, one of three located at the property.

In September 2010, the two companies announced that Appomattox contained recoverable contingent resources in excess of 250 million barrels of oil equivalent (BOE). Nexen had booked 65 million BOE of probable reserves from Appomattox prior to the most recent evaluation.

SEE: Oil And Gas Industry Primer

Northeast Fault Block
The latest revised estimate of resources at Appomattox involved the Northeast fault block. The operator estimates that this area of Appomattox contains 215 million BOE of gross recoverable resources, with a range of 120 million to 370 million BOE.

The Appomattox discovery is expected to be developed in phases and support production in excess of 100,000 barrels per day. First oil is expected around 2017 or 2018.

Gulf of Mexico
McMoRan Exploration Co. (NYSE:MMR) is involved with a number of prospects in the Gulf of Mexico and recently reported an update on the Davy Jones No. 1 well in the shallow water area of the coast of Louisiana. The company reported a malfunction with equipment used to flow test this well.

Exxon Mobil (NYSE:XOM) is the operator of the Hadrian South prospect located on Keathley Canyon Block 919 in the deepwater Gulf of Mexico. The company reported several successful exploration wells on this block in 2011 and is moving forward with the development of Hadrian South and other discoveries in the area. Eni (NYSE:E) and Petrobras (NYSE:PBR) also have an ownership interest at Hadrian South.

SEE: A Guide To Investing In Oil Markets

The Bottom Line
The Appomattox discovery is even better than expected and once again proves the prolific nature of the deepwater Gulf of Mexico. The Federal government should speed up the permitting process here so that these resources can be brought to market.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
  4. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  5. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  6. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  7. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  8. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  9. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  10. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center