Ivanhoe and Unocal Form Exploration Joint Venture
Ivanhoe Energy and Unocal have agreed to explore for oil and natural gas in East Texas on a 50/50 joint venture basis. The companies plan to jointly drill Bossier Sand prospects located over approximately 46,000 gross (37,000 net) acres primarily in Henderson, Anderson and Freestone counties amassed primarily by Ivanhoe.
"Our extensive leasehold position offsetting the existing and highly successful Bossier Play gives Ivanhoe and Unocal an excellent opportunity to extend this play to the north and east," said David Martin, Ivanhoe Chairman. "Drilling in such an active oil and gas region provides the added benefit of existing infrastructure. Successful wells in this area can begin producing and generating sales revenues within a month or two of initial discoveries."
Unocal will become operator of the joint venture and will fund the drilling costs for the first several exploration wells to offset the $10 million in leasehold, seismic and processing costs incurred by Ivanhoe. After investment equilibrium is reached, the companies will share exploration and development costs equally. The first well in this program is expected to begin drilling in November 2001 and the transaction is subject to finalization of a joint-venture agreement.
The Bossier sand trend consists of multiple fields and multiple pay zones. Typical Bossier wells will produce between two and four million cubic feet of gas per day at an average depth of approximately 12,000 feet. Anadarko Petroleum, the area's largest operator, has drilled more than 300 Bossier wells, achieving a success rate of virtually 100 per cent. Drilling is expected to begin on Ivanhoe's and Unocal's Lone Star and Creslenn Ranch prospects. Following a successful exploration phase, Ivanhoe intends to project-finance its share of field development costs. Other companies participating in the Bossier trend include Apache, Gastar, Matador, Range Resources, Texaco and XTO Energy.