This year marks the second year in a row that Pogo Producing Co. has made OGJ's list of the fastest-growing independents. The news pleased Pogo Chairman, CEO, and Pres. Paul Van Wagenen but didn't surprise him.
"Given the fact that last year was our 33rd year in the business, we had a number of records," Van Wagenen said. Last year, the Houston-based independent achieved record oil and natural gas production and ended the year with record proven reserves. The firm also had record revenues and discretionary cash flow, Van Wagenen said.
Quick growth
While US independents continue their growth spurt, Van Wagenen noted that while growth is good, growing too quickly could be detrimental.
"Almost everybody can grow if you're willing to overpay; you need to find additional reserves to grow the company, but you need to find it at the right price," he said. "Anyone can have success [at growth] if they don't care what they spend."
In first half 2002, Pogo mostly continued to add production through the drillbit. The company shied away from any big acquisitions in 2002. "We certainly tried—we just didn't make any in 2002, and, nevertheless, we grew our production rate, year-over-year, by 38%, which is remarkably good, I think," Van Wagenen said.
Pogo has indicated publicly that it could grow another 10% even without any acquisitions. "We'd upped that target to 15%, and we won't have any trouble meeting that [target]," Van Wagenen said.
The executive said that Pogo looks for acquisitions all the time, both property and corporate. "Probably, when it comes to acquisitions, we look harder than most," he explained.
He said, however, that the company closes on fewer deals than most of its peers. "What that tells you is I guess we're awfully fussy before we're willing to pay full price," he said.
Recent discoveries
At the end of 2002, Pogo made two natural gas discoveries with two wells in the central Gulf of Mexico, marking the company's first two of four exploration prospects scheduled for the fourth quarter: West Delta Block 54 No. 1 and Main Pass Block 62 No. 3.
Pogo owns a 100% working interest and is operator of this two-block field, which covers about 10,000 gross acres.
"We have one [gas well] in each of the northeast and northwest corners, because that is an oil field—probably [among] the best six or seven oil fields in the last 20 years on the shelf in the Gulf of Mexico. We did have a couple of gas discoveries out in the corners, and those two wells are on stream and together are producing about 11 MMcfd [of gas]," he said. "The one over in West Delta [Block] 54 is producing about 3.5 MMcfd, and it ties back to South Pass 24, which is another one of our blocks.
"We own three blocks just to the south of [Blocks] 61/62 and we're going to be drilling in the fourth quarter on a block just a couple of miles to the west of Main Pass Blocks 61/62 in state of Louisiana waters—Main Pass [Block] 68," Van Wagenen said.
Other activities
Pogo's exploration activity off Thailand is picking up, Van Wagenen said. "We have eight platforms coming out of the yards over the next 6 months or so. Three of them are just about ready and one is, in fact, is moving toward location at the new Tanawan area [in the Gulf of Thailand]," he explained.
The company will then have two more platforms that will come out before yearend and then five more to follow that over the first part of next year, Van Wagenen told OGJ.
