The first two firm wells began drilling in July. The drilling program has resulted from Conoco's continuous high grading of its deepwater exploration portfolio over several years. The majority of this portfolio was acquired in 1996-97.
Norsk Hydro has options to participate in future exploration wells resulting from further mapping of 178 leases in Conoco's existing portfolio through 2005. Norsk Hydro personnel will support Conoco's organization as secondees. Conoco will remain the operator of all the prospects it currently operates. The two companies will also evaluate further joint business development activities.
Norsk Hydro expects a total expenditure in the order of 130 million USD for acquisition, exploration drilling, data purchases and organizational costs related to this deal during the 2001-02 period. A new business unit will be established in Houston, Texas to manage the activities and further develop the initial portfolio.
Frank Pedersen, Senior Vice President, New Ventures, commented that Norsk Hydro regards entry into deepwater Gulf of Mexico as a strategic move that will create opportunities for long-term profitable E&P growth and good prospects for value creation. "This area offers many attractions as a potential new core area for Norsk Hydro's exploration and production activities. These include high quality exploration opportunities with large undiscovered resource potential, favourable fiscal framework and the opportunity to further build on Norsk Hydro's offshore competence from the Norwegian Continental Shelf. The Gulf of Mexico is considered to be a prime arena for further development of deepwater oil and gas technology."
"This transaction is a win-win proposition for both companies as Norsk Hydro gains access to a mature, strategically positioned portfolio while Conoco is fully compensated for developing that position," commented Glen Bishop, General Manager, Gulf of Mexico Business Unit. "Norsk Hydro is a highly respected global company that will certainly compliment the staff we have dedicated to exploration and production activities in the Deepwater Gulf of Mexico. We look forward to working together."
Norsk Hydro and Conoco have long standing business relations from previous and existing joint ventures in Norway, the UK as well as in Russia. Norsk Hydro will contribute competencies and experience from project developments in Norway and complement Conoco's knowledge and strengths.
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