For McMoRan Exploration
Now is a good time to check on how the stocks in your portfolio might shape up next year. A good knowledge of the opportunities and the challenges ahead for the company should help you make better investing decisions regarding its stock. McMoRan might even have a potential game-changing strategy on its hands.
A light at the end of the tunnel?
The first Davy Jones well is expected to undergo flow tests this month as scheduled. I have a feeling this will turn out to be good news. The Wilcox cretaceous play, where the well is located, is said to contain an estimated 2 trillion to 6 trillion cubic feet equivalent (Tcfe) of reserves.
The Davy Jones well No. 2 is expected to finish in the second half of next year. Now that's what looks like a game changer. McMoRan's cumulative share from the two wells is a huge 3.2 Tcfe. With such reserves in hand, coupled with increasing production, the cost of production could come down significantly.
The big challenge
If management can curtail costs and bring them below the costs at which they sell natural gas, cash flows should see a big improvement. Ultra Petroleum
However, I'm not expecting much from McMoRan's Lafitte ultra-deep prospect, though additional hydrocarbons have been discovered. With Energy XXI
Foolish bottom line
With acquisitions from Plains Exploration & Production
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Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Ultra Petroleum. Motley Fool newsletter services have recommended buying shares of Ultra Petroleum. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.