PanCanadian Increases Exploration Acreage in Gulf of Mexico

PanCanadian Energy Corporation confirmed that drilling and evaluation has been completed on its fourth well at the Llano field, located in the deepwater Gulf of Mexico. The well tested the western continuation of the reservoirs.

Garden Banks 385 No. 1 was drilled to a measured depth of 24,813 feet using the Glomar Arctic 1 rig. Logging results confirmed approximately 400 feet of net pay. This is the last well needed to begin evaluation of alternatives for field development. Co-venturers aim to complete the initial concept selection phase of work in the first half of 2002.

"These are very encouraging results for Llano," said executive vice president of exploration Gerry Macey. "The well has the best reservoir quality encountered to date on the structure."

The Llano oil discovery was made in 1997. Current co-venturers are Enterprise Oil (operator), Mobil Producing Texas & New Mexico Inc., an affiliate of Exxon Mobil Corporation, and Amerada Hess Corporation. PanCanadian has a 22.5-percent interest in the field.

Elsewhere in the Gulf of Mexico, PanCanadian has increased its Gulf of Mexico acreage inventory by way of two exploration joint ventures, from 55 to 142 blocks (818,000 acres), with options to further increase its holdings to up to 269 blocks (1,550,000 acres).

The increase in the land position is part of a company strategy to build a core exploration and production area in the deepwater Gulf of Mexico. The two agreements are with strong companies that are industry leaders in the area - ChevronTexaco Corp. and Union Oil Company of California.

The agreement with ChevronTexaco gives PanCanadian access to lands that are situated in the prolific Mississippi Fan-Fold Belt trend. The focus of drilling will be on trend with regional discoveries, including Neptune, Atlantis, Mad Dog and Champlain. The agreement gives PanCanadian access to acreage in one of the most prolific competitive trends in the deepwater Gulf.

Details of the joint-venture agreements are as follows:

• Agreement with ChevronTexaco - PanCanadian will participate in four exploratory wells to earn a 25-percent interest in 71 blocks. The first of these wells has already commenced drilling, at Atwater Valley 194 (Sawtooth). The four-well program is expected to be completed in 2002. The company has an option to participate in subsequent drilling to earn interests in additional blocks in proximity to the Mississippi Fan-Fold Belt trend.
• Agreement with Union Oil Company of California - By participating in the Ponza well (Keathley Canyon 774, which was non-commercial), PanCanadian earned a 25-percent interest in 16 blocks in Southern Keathley. PanCanadian and partners are currently assessing the exploratory potential in this area. The company has an option to participate in subsequent drilling to earn interests in additional blocks.