Shell Signs North Sea Exploration Deals with Apache

Shell U.K. Limited and Apache North Sea Limited have signed a series of farm-out deals to drill two firm plus one contingent exploration wells and have agreed in principle a third firm exploration well near the Shell-operated Nelson and Apache-operated Forties field in the central North Sea.

Under the terms of the agreement, Apache will operate the blocks and firm exploration wells are planned for Block numbers 22/6a, 22/7 and 22/12 with a contingent well possible for 22/11. Block 22/6a is held 50/50 by Shell and Esso Exploration and Production UK Limited (Esso) (an ExxonMobil company) while 22/7, 22/11 and 22/12a were acquired by Shell as part of the Enterprise Oil portfolio in 2002. Block 22/7 is held by Shell and joint venture partners including BP Exploration Operating Co. Ltd.

Rien Herber, Exploration Director of Shell Exploration & Production in Europe, said: "This deal is a great example of cross industry collaboration in realizing Near Field exploration potential. It will help to maximize recovery of hydrocarbons from a mature area like the North Sea, potentially allowing Shell to increase its portfolio of existing oil, and is a further demonstration of our commitment to the area.

"The Forties field is adjacent to the Nelson field, so Apache was the logical partner for Shell. A farm-out deal is a win-win for all companies involved and this example allows an increase in near field exploration activity which will also provide an opportunity to extend the life of existing infrastructure; if hydrocarbons are discovered they will probably be produced over the nearby Shell operated Nelson platform."

John Crum, Managing Director of Apache North Sea Limited, said: "We are pleased to work closely with a premier North Sea operator to expand the potential in the Forties - Nelson area. The Shell and Apache partnership has the potential to make a long term difference in the North Sea through increases in exploration and development activity."

Energy Minister Mike O'Brien commented "This innovative deal is a prime example of how oil majors can and are working with new entrants to maximize recovery from the North Sea for the benefit of all."

Shell drilled an exploration well for Apache in 22/12a, taking advantage of an available Shell contracted rig slot in November 2004 and the results will be announced separately. Apache is expected to start drilling the second and third exploration wells in the first quarter of 2005.