"These new leases will strengthen our shelf and deepwater portfolio, adding acreage in our existing core areas and several new opportunities," said Dave Hager, Kerr-McGee senior vice president responsible for oil and gas exploration and production. "We believe the deepwater gulf provides meaningful exploratory growth opportunities for Kerr-McGee. During the past decade, we have demonstrated a record of geologic, drilling and operating success in this prolific region. We are confident we can further capitalize on this expertise in the gulf creating value-adding growth opportunities for our company."
With the new leases, Kerr-McGee will hold interests in 712 leases in the Gulf of Mexico and will operate more than 73% of these leases with an average working interest of 57%. Award of the 22 high-bid leases would increase the company's total undeveloped lease holdings in the gulf by about 116,000 gross acres to nearly 3.8 million gross acres.
Currently, the company's production from the gulf accounts for approximately 40% of its total worldwide production, of which 85% is from deepwater fields. In December 2003, Kerr-McGee achieved initial production from its deepwater Gunnison field, and first production from the Red Hawk field in 5,300 feet of water is expected mid-2004. Kerr-McGee operates both of these fields with 50% interest. Development of its 100%-owned Constitution field is under way, creating the company's sixth deepwater hub in the gulf.
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