EEX said that it has been burdened for the past several years with costly, non-working legacy assets including the Cooper field production unit and pipelines. "The FPS and pipelines in the Llano area have been a substantial financial drag on the company while producing no visible benefit. For example, in 2001 the company spent $70 million -- $14m of which was capitalized -- to buy back the lease equity interest. Because of the buy-back, EEX is now free to market, along with its co-owners, the FPS anywhere in the world as opposed to being restricted to US waters," EEX explained.
EEX took a $82m impairment charge to its latest quarterly earnings related to the semisub and piplines. "The magnitude was determined based upon an estimate of fair market value. This was based, in part, on ongoing discussions with the Llano field operator and the current competitive environment in the Llano area for transportation and processing facilities," EEX explained.
The company said the new book value of these assets is approximately $70m.
Partners in Llano field Garden Banks Blocks 385 and 386 include Enterprise as operator (27.5%), Amerada Hess (27.5%), ExxonMobil affiliate Mobil Producing Texas and New Mexico (22.5%) and PanCanadian Energy (22.5%). Enterprise acquired its interest in the Llano acreage through a 1997 agreement with EEX in which it committed $65m toward's EEX's exploration drilling costs in return for an immediate assignment of 50% of EEX's deepwater portfolio.
Separately, EEX said the Devil's Island well in the Llano area of Garden Banks, commenced on December 29 and is currently drilling below 13,000 feet towards a proposed total depth of 24,500ft.
EEX entered into a joint venture agreement with Amerada Hess for the drilling of this prospect, utilizing the Glomar Arctic I rig at its full day rate. The agreement calls for Amerada to earn an 80% working interest in Garden Banks Block 345 and the east half of Garden Banks Block 344 by participating in drilling the well. EEX will retain a 20% interest after the well is drilled and pay 30% of the costs of the well.
EEX anticipates well results in the later part of April.
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