Mr. Gessinger: The Meridian Resource Corporation applies high-grade technology to a vast resource base of geologic information. We use state-of-the-art technology to find oil and gas, predominantly through the drill bit. Our major area of operation is onshore in south Louisiana, along the Texas Gulf Coast, and to some extent, in the Gulf of Mexico. We are exploration oriented and we have supplemented our exploration activities with significant acquisitions. In 1997, we acquired Cairn Energy USA, which gave us a presence in the Gulf of Mexico, and then in June 1998, we established our footprint in south Louisiana by acquiring all of Shell's onshore Louisiana properties. Each of the two acquisitions roughly doubled the size of our operation. So, in summary, our game is one of exploration and exploitation of our resource base in south Louisiana. We believe that finding more natural gas and hydrocarbon resources in the lower 48 takes new technology and we seek to drill deeper, more complex wells than some of the other small independents. We believe that our geology and geophysical capability gives us a competitive advantage over our competition in the highly faulted reservoirs of south Louisiana.
TWST: How would you differentiate between exploration and exploitation?
Mr. Gessinger: The concept of exploration and exploitation has been
blurred when it comes to SEC accounting. With respect to SEC accounting
presentation purposes, you have a very confined definition of proved
reserves broken down into proved developed and proved undeveloped. Now
with the exploitation concept, we explore for additional hydrocarbon
deposits that might not qualify in a strict SEC sense as development
resources. Because of our technology, we believe that fault separated
reserves, when properly imaged and interpreted through 3-D technology,
give us enough confidence to categorize their drilling as
'exploitation.' We feel it's less risky than traditional 'exploration'
activity. So I'd say that the difference between development,
exploitation and exploration is a matter of risk. Exploitation falls in
between development drilling and exploration drilling, but it is
drilling that is high-graded with respect to moderating risk for
prospective hydrocarbon deposits.
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