Conoco Signs Second Gulf of Mexico Exploration Agreement
Conoco Inc. has entered into a deepwater Gulf of Mexico exploration joint venture agreement with AEC Gulf of Mexico Inc., a wholly owned subsidiary of Alberta Energy Company Ltd. This follows an agreement signed in September with Norsk Hydro USA Oil & Gas Inc., a wholly owned subsidiary of Norsk Hydro Americas Inc. The AEC and Norsk Hydro joint venture agreements overlap on several prospect areas.
AEC has committed to participate, with working interests ranging from 12.5 percent to 15 percent, in four exploration wells to earn an interest in 26 exploratory leases held by Conoco. Also, AEC has the right to participate in six potential wells in 35 other exploratory leases, with working interests ranging from 12.5 percent to 25 percent. In addition, an option to participate in one shallow-water prospect at a 50-percent working interest is included, which covers two leases in 240 feet of water. The deepwater leases are located in water depths between 3,500 feet and 9,500 feet.
Norsk Hydro has acquired a 25 percent working interest in five firm and three contingent exploration wells covering 55 exploratory leases held by Conoco. Additionally, Norsk Hydro has the option through 2005 to participate in wells on other select prospects currently held in Conoco's inventory, with working interests ranging from 12.5 percent to 25 percent. The leases covered are located in water depths up to 10,500 feet.
"Our strategy upon entering the deepwater Gulf of Mexico in 1996 was to acquire large prospective acreage positions at high working interest levels and bring in partners with terms deemed favorable to Conoco," said Gary Merriman, president, exploration production, U.S. and South America. "We have now secured both our target working interest and cost interest levels in all exploration prospects included in these two agreements. The deepwater Gulf of Mexico continues to be a key growth area for Conoco."
Conoco will remain operator of all the prospects it currently operates, retaining working interests that range from 25 percent to 60 percent in all the prospects included in the agreements. AEC and Norsk Hydro will provide funding that Conoco will use to offset its portion of the well cost.
AEC and Norsk Hydro will have the option to place their employees as secondees to Conoco during the term of the joint venture agreements.
"Both Norsk Hydro and AEC gain access to a mature, strategically positioned group of prospects while Conoco is fully compensated for developing that position," commented Glen Bishop, general manager, Gulf of Mexico Business Unit.
Conoco and Norsk Hydro have existing business relationships in Norway, the U.K. and Russia. Conoco and AEC have an existing business relationship in Canada.