The Blackbeard East well is drilling below 33,100 ft in 85 ft of water in the Gulf of Mexico.  That is already the record depth for an oil and gas well in the United States, and it’s going deeper.

The Davy Jones No. 1 well is drilled and cased to 29,122 ft.  When that well begins production in early 2012, it will set the U.S. depth record for production.

That’s not bad for a company that started out on a strategy of buying mature oil fields in the Gulf of Mexico.

“We’ve been very successful.  We actually operate six of the 10 largest fields on the outer continental shelf (OCS) in terms of oil production,” said John Schiller Jr. , chairman and chief executive officer, Energy XXI , on Dec. 1 at the Jefferies 2011 Global Energy Conference in Houston.

The shallower, mature fields generate cash flow and fix the balance sheet, he explained.  “It lets us do some wildcat exploration in our joint venture with McMoRan.”

And those wildcats are ultradeep wells in shallow water.  “Bottomline, the geology picture changed from the mid-1990s when we went out to deepwater.  We started finding rock in the Mid- and Lower Miocene.  In 2001, we found Eocene and Lower Tertiary.  We thought prior to that those rocks would be much younger,” he explained.

“Once we had that data, we brought all these plays back to where we could reach them on the OCS,” he added.

Schiller credited James R. Moffett , co-chairman, president and chief executive officer, McMoRan Exploration , with the idea of going into Blackbeard.

“Davy Jones was kind of the culmination of that.  We learned a lot.  Davy Jones is a 20,000-acre structure with 200 ft of pay in the Wilcox.  We drilled the Davy Jones No. 2 through the Cretaceous.”

The No. 2 well was drilled and cased to 30,731 ft on South Marsh Island Block 234.  There was 120 ft of net Wilcox pay logged and 192 ft of potential pay in the Tuscaloosa and Lower Cretaceous.

The companies are on track with the Davy Jones No. 1, which is on SMI Block 230, to begin production once the well is cleaned up.  The well has five-inch liner set from 16,000 to 29,000 ft.  A 2-7/8-inch workstring is being used to clean out the well.

“We’ve got to clean that out.  That is what determines when we