Pioneer Natural Resources Co., Dallas, reported that it will spend $193 million to acquire working interests in natural gas properties in the Gulf of Mexico and West Texas.
Pioneer said it will purchase an additional 25% working interest in Falcon field and associated acreage in the deepwater gulf from Mariner Energy Inc., Houston. Recently, Pioneer also acquired a 5% working interest in the field from an unidentified minority owner. The purchase of the additional 30% interest in the field totaled $55 million.
Separately, Pioneer inked a definitive agreement to acquire the assets and remaining 23% of the interests that it doesn't already own in West Panhandle field from Colorado Interstate Gas Co. and CIG Production Co. LP, both subsidiaries of Houston-based El Paso Corp. (EPC)In addition, Pioneer will acquire the related West Panhandle field gathering system for a total of $138 million.
Pioneer reported it would offer 10 million newly issued shares of common stock to finance the purchases.
In other company news:
- BG PLC, Reliance Industries Ltd., and Oil & Natural Gas Corp. (ONGC) have agreed to jointly operate Panna-Mukta and Tapti oil and gas fields in India. The agreement resolves a dispute over which company would operate the fields following more than a month of negotiations, often acrimonious, among the three.
- BP PLC and its partner companies will pay Rowan Cos. Inc. $175 million as part of a settlement that resolves a long-standing dispute over Rowan's Gorilla V jack up rig.
Falcon field acquisition
Following the purchase, Pioneer will hold 75% working interest in Falcon field. Within 30 days of the purchase, Pioneer will assume operatorship of the field, which lies in 3,400 ft of water on East Breaks Blocks 579, 580, and 623 about 100 miles east of Corpus Christi, Tex.
Mariner, previously the operator of Falcon, will retain a 25% working interest in the field. Incremental initial production of 50 MMcfd of gas from Falcon is slated for first quarter 2003, with peak rates expected to reach 175 MMcfed. Development plans for Falcon were announced late last year (OGJ Online, Oct. 24, 2001).
Falcon will be Pioneer's first operated deepwater gulf project.
Pioneer will also purchase an additional 25% working interest from Mariner in 11 blocks that surround the Falcon discovery. These blocks were acquired by both companies in August 2001.
Pioneer also will acquire a 100% working interest in 10 deepwater Gulf of Mexico blocks that surround Falcon from El Paso Production GOM Inc., a unit of EPC.
West Panhandle purchase
Following the West Panhandle transactions, Pioneer will hold a 100% working interest in the field and gathering system. Pioneer expects incremental production of about 20 MMcfd from the transaction.
Pioneer said it would continue its horizontal drilling program in the filed, where it has identified about 330 drilling locations.
"Owning and operating 100% of [West Panhandle] field will allow us to drill wells more economically and implement significant cost efficiencies," said Scott D. Sheffield, Pioneer chairman and CEO.
Indian field operations
Following a consensus reached at the meeting of the joint operating committee in Mumbai late last month, BG, Reliance, and ONGC set up a panel to work out details for joint operatorship within 4 weeks.
The two Indian partners had rejected BG's proposal to operate the fields solo in exchange for buying out the stake of bankrupt Enron Corp. in the joint venture (OGJ Online, Feb. 19, 2002).
ONGC Chairman Subir Raha, who had insisted on ONGC being sole operator of the fields, and BG India Chief Executive Nigel Shaw, who had been equally adamant about his company's rights to be sole operator, agreed that it was the only viable solution.
BG initially had made an offer of $388 million for Enron's 30% equity stake in the fields but subsequently revised the offer to $350 million after its condition that it assume operatorship snowballed into the major controversy.
ONGC, which owns 40% of the fields, with Reliance having the other 30% stake, had served a termination notice on BG, which took over operation of the fields from Enron in February, after the failure of talks between the partners.
Gorilla V settlement
The agreement was reached between a group comprising units of BP PLC, Amerada Hess Corp., and Enterprise Oil PLC and a group comprising Rowan LeTourneau Inc. and British American Offshore Ltd. Neither group of companies admitted fault.As part of the agreement, Rowan dismissed a lawsuit in Houston planned against BP and partners. In turn, BP agreed to withdraw any previous negative comments regarding Gorilla V.
The case stems from Amoco (UK) Exploration Co. (now part of BP) terminating its long-term contract for North Sea drilling while the Super Gorilla Class jack up was still under construction. Amoco alleged a breach in equipment performance, according to Rowan (OGJ, Feb. 1, 1999, p. 30).