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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date or Report (Date of earliest event reported)
September 10, 1998
EEX CORPORATION
(Exact name of Registrant as specified in its charter)
Texas 1-12905 75-2421863
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
No.)
incorporation)
2500 CityWest Boulevard, Suite 1400, Houston, Texas 77042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code (713)243-3100
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ITEM 5. Other Events
Set forth below in its entirety is a News Release issued by
EEX Corporation on September 10, 1998:
EEX UPDATES LLANO DEVELOPMENT PLANS AND DEEPWATER
EXPLORATION PROGRAM
HOUSTON, TEXAS (September 10, 1998) -- In a
presentation this morning at an energy conference in New
York City, David Henderson, Executive Vice President and
Chief Operating Officer for EEX Corporation (NYSE: EEX),
described the latest developments at the Llano discovery in
the Garden Banks Area of the Gulf of Mexico, reviewed the
status of the ongoing exploration drilling program in the
deep waters of the Gulf and updated the drilling programs on
the Continental Shelf and International areas.
Llano Development Plan
EEX is planning a phased development approach to
exploit the potentially sizeable reserves encountered at
Llano. The phased approach begins with an appraisal well to
be drilled during the fourth quarter and an early
development option that could bring first production on line
as early as late next year. In addition to development
drilling at Llano, additional exploration drilling is
planned on other prospects in the area over the next several
years. Information provided from early production at Llano
and any additional exploration success will be used to
properly size the eventual production facilities.
"Although additional information must be evaluated
prior to accurately determining recoverable reserves, we
believe that the greater Llano area has an estimated gross,
unrisked reserve potential in excess of one billion barrels.
This phased development approach should allow the field to
generate cash flow while the ultimate reserve potential is
determined and the associated development facilities are
designed accordingly," said Henderson.
After drilling of the Sheba prospect in the Green
Canyon area of the Gulf, the Ocean Voyager semi-submersible
drilling rig is expected to return to Garden Banks Block 386
to begin drilling the first Llano appraisal well. By
drilling approximately 4,000 feet to the northeast of the
discovery well bottom-hole location, EEX will not only
evaluate the reservoir encountered with the first well, but
also test for additional reserve potential. The second well
is expected to penetrate the "up-dip" or higher section of
the reservoir where there is the potential for hydrocarbons
in water-bearing sands encountered in the first well. As a
result of a shallow salt layer, the full extent of the Llano
field has not been imaged by seismic data. Consequently,
the first appraisal well will be drilled to a point slightly
under this salt mass in order to gain a better understanding
of the potential size of the reservoir.
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Early production options may include utilization of the
existing facility currently located on Garden Banks Block
388. The Cooper field on Block 388 is producing through a
Floating Production System (FPS) and sub-sea pipelines that
flow to a shallow water facility on Eugene Island Block 315.
With Cooper field production rapidly declining, EEX is
considering relocating the FPS from Cooper to the Llano area
in order to accelerate first production by connecting the
appraisal wells to the existing infrastructure.
Deepwater Exploration Program
In addition to development activities at Llano, EEX
continues to pursue an exploration drilling program and to
participate in offshore lease sales in the deepwater of the
Gulf of Mexico. In the most recent offshore lease sale
(Western Gulf of Mexico Sale # 171), EEX, along with
partners, were the high bidders on four out of five blocks
bid upon, including a highly sought after prospect on Garden
Banks Block 562 (EEX 40%). Assuming these bids are awarded,
EEX will have an interest in 97 blocks in the deepwater Gulf
of Mexico.
EEX currently has deepwater wells drilling on three
prospects: Sheba, Elvis and Gamera. At the Sheba prospect
on Green Canyon Block 341, the well has been drilled to
approximately 23,000 feet and expects to reach target depth
around 25,000 feet in the next few weeks. "To date,
drilling in the Sheba area, while encouraging for the
presence of several thick sand sections, has not yet
encountered hydrocarbons. As we have often indicated, this
large prospect area, with an areal extent of approximately
14,000 acres, could require several wells to fully evaluate
its potential. The results of this first well are providing
valuable insight as we plan drilling on additional locations
within the Sheba area," Henderson added.
The Elvis prospect on Mississippi Canyon block 580 is
drilling below 16,000 feet, still above the objective
horizons, which are as deep as 20,000 feet. The Elvis well
is expected to reach total depth in October, depending on
weather conditions in the Gulf. Following the completion of
drilling at Elvis and Sheba, EEX expects to begin drilling
its George Prospect on Mississippi Canyon Block 442 and the
first Llano appraisal well described above.
The recently spud Gamera prospect is located in the
ultra-deep waters of Atwater Valley in the Gulf. The
initial objective of this well is the Lower Pliocene sand
around 16,000 feet, however, when the results of this
initial target are known, the well could be sidetracked to
test the deeper Miocene section. "There are some unknowns
regarding the nature of the Pliocene and Miocene sands, as
they become shallower in the ultra-deep waters of the Gulf.
This well gives EEX a very economical look at the potential
of the ultra-deep water play, " Henderson commented.
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Gulf of Mexico Shelf Activities
The shelf drilling program thus far in 1998 has
resulted in five successes and three dry holes. EEX expects
to drill five more shelf wells before the end of the year.
The successful wells will contribute to additional gas
production at an estimated rate, net to EEX, of some 35
million cubic feet per day. The largest contributors to
this rate will come from South Timbalier Block 217 and West
Cameron Block 204, which are expected to begin producing in
the 4th quarter.
"Our investment on the shelf is expected to provide
near-term additions to our production and the associated
cash flow should provide part of the funding of the
deepwater program. The success to date indicates that our
inventory of prospects on the shelf can deliver meaningful
results," Henderson said.
International Activities
In the Tuban Block of Indonesia, EEX has a 50%
interest in production at the Mudi Field and is continuing
to evaluate additional prospects located within the block.
In Turkey, the Company has pursued two areas of interest:
the Salt Lake prospect in Central Turkey, near Ankara, and
the South Mardin Basin along the southeast border with
Syria. A recent well drilled at the Salt Lake prospect was
unsuccessful.
Stock Repurchase Program
Henderson indicated that under the previously
announced stock repurchase plan, EEX has implemented a
program of forward purchases of its shares. Under this
program, which will not impact EEX's balance sheet for at
least 12 months, approximately one million shares have been
acquired since the end of the second quarter at an average
price per share of less than $6. While the company
continues to believe that the most appropriate use of funds
is to invest in its exploration program, Henderson explained
that the recent stock market decline has created an
unusually favorable opportunity for EEX to acquire treasury
shares that are expected to be used for company benefit
plans.
EEX Corporation is an oil and natural gas exploration
and production company with activities currently focused in
Texas, the Gulf of Mexico and Indonesia.
This report includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Although EEX believes that its expectations are based on
reasonable assumptions, it can give no assurance that its
goals will be achieved. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include political developments in
foreign countries, federal and state regulatory
developments, the timing and extent of changes in commodity
prices, the timing and extent of success in discovering,
developing and producing or acquiring oil and gas reserves,
and conditions of the capital and equity markets during the
periods covered by the forward-looking statements. EEX's
periodic reports filed with the Securities and Exchange
Commission include a discussion of important factors that
could cause actual results to differ materially from those
indicated in forward-looking statements.
For additional information, call 1-888-EEX-NEWS, or visit
our Website at http://www.eex.com
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
EEX Corporation
By: /s/ T. E.Coats
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T. E. Coats
Vice President and
Controller
Date: September 15, 1998
