ExxonMobil
and Apache Corporation to optimise Exploration and Development in
West Texas, Western Canada, Louisiana and Gulf of Mexico
Posted: 24 May 2004
Exxon Mobil Corporation and Apache Corporation today announced
a program that will capitalize on the respective strengths and assets
of both companies to optimize hydrocarbon exploration and development
in the United States and Canada.
The agreement provides for transfers and joint venture activity
across a broad range of prospective and mature properties in West
Texas, Western Canada, onshore Louisiana and the Gulf of Mexico
Continental Shelf, and is expected to increase the realized value
of the portfolio for both companies. Apache's participation in this
agreement will include a cash payment of $385 million.
The parties will now work together to close the various transactions
with more definitive agreements.
ExxonMobil agreed to transfer its interests in 28 mature producing
oil and gas fields in West Texas and New Mexico with current gross
production of about 10,000 oil-equivalent barrels per day and will
retain a revenue interest indexed to oil price through 2009. ExxonMobil
will retain a 50 percent working interest in all properties beneath
the currently producing intervals.
In the Western Canadian Province of Alberta, ExxonMobil's subsidiary,
ExxonMobil Canada Energy, will farm out its interest in approximately
300,000 acres of undeveloped property interests in mature areas
to Apache Canada Ltd. Apache will drill and operate more than 250
wells over an initial two-year period with upside for further drilling.
ExxonMobil Canada will retain a 37.5 percent lessor royalty on fee
lands and 35 percent of its working interest on ExxonMobil leasehold
as to any production resulting from the drilling program.
Regarding onshore Louisiana and Gulf of Mexico shelf acreage, the
parties jointly will explore for deep gas on more than 800,000 acres
of high-potential Apache onshore and offshore properties for an
initial period of five years, with provisions for extension.
In order to expedite exploration, the agreement provides flexibility
on participation and operatorship.
ExxonMobil will operate high-cost, deep-gas prospects that rely
on state-of-the-art technology and Apache may pursue and operate
shallower prospects whether ExxonMobil chooses to participate or
not.
"We look forward to implementing this agreement with Apache
Corporation, which covers such a broad portfolio of opportunities
for our two companies," said Harry J. Longwell, ExxonMobil
director and executive vice president. "This allows us to create
more shareholder value from mature producing properties and large
undeveloped acreage positions, and gives us access to new deep gas
prospects in Louisiana both on and offshore. It has been a pleasure
to work together to determine how best to take advantage of the
relative strengths and assets of both parties to greatly increase
both the near-term and long-term value of what we held separately."
"We are pleased to have the opportunity to consummate such
a far-reaching, value-added transaction with ExxonMobil," said
G. Steven Farris, Apache's president, chief executive officer and
chief operating officer. "The work necessary to put this transaction
together took several months during which time ExxonMobil's people,
at every level, were a pleasure to work with. It is apparent why
ExxonMobil is the largest and most respected energy company in the
world, and we look forward to working with them in our expanded
relationship to add value for our respective shareholders."
Exploration agreements for North American acreage would add to
ExxonMobil's industry-leading portfolio, the largest in terms of
proved reserves and production. North American operations contributed
approximately 36 percent of ExxonMobil's 2003 worldwide production
on an oil-equivalent basis and 37 percent of its Upstream earnings.
With interests in more than 40 producing Gulf of Mexico fields,
development projects under way, participation in high-potential
discoveries and a strong inventory of prospects, ExxonMobil is well
positioned for future growth. The company also holds interests in
approximately 600 exploration blocks throughout the Gulf of Mexico
encompassing more than 3.4 million gross and 2.8 million net acres.
Apache Corporation is a large oil and gas independent with core
operations in the United States, Canada, the United Kingdom North
Sea, Egypt and Western Australia. For Apache, the agreement adds
production in the Permian Basin, which is one of the company's core
areas, and provides access to a significant new acreage position
in Canada as well as a world-class partner for deep gas exploration
in South Louisiana and the Gulf of Mexico.
For more information see www.exxonmobil.com
Posted by Richard Price,
Editor Pipeline Magazine
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