Remington Oil & Gas Corp., Dallas, is committed to cost-effective reserve growth through exploring Gulf of Mexico shallow waters and using an extensive 3D seismic database to generate drilling opportunities and reduce exploratory risk.
"Looking at the 5-year record, reserves have increased from 63 bcfe to 204 bcfe, or a 26% compound annual growth rate. Shareholders' equity has increased from $44 million to $194 million, or a compound annual growth rate of 34%," from 1997 through 2002, said James A. Watt, Remington president and CEO.
Remington concentrates on the GOM deep shelf with about half of its production from below 15,000 ft. Watt expects 2003 production will average 100 MMcfed, a company record.
He joined the company in 1997 and supervised a name change and a turnaround in the company's strategy and bottom line. Remington's predecessor was Box Energy Corp., Dallas, which had one nonoperated field.
Turnaround story
"Today, we have an interest in 36 fields, and we operate 17 of those. As far as our exploratory program goes, we are the operator of 80-85% of those. We typically have one or two partners on all the drilling that we do. We formed a group with Magnum Hunter [Resources Inc., Irving, Tex.] 4 years ago," Watt said. "It's been a help."
Magnum Hunter and Remington have drilled numerous blocks together, he said.
Remington's production is 68% natural gas, and Watt expects that the mix between oil and gas will remain steady moving forward.
"We have the dollars to allow us to drill the prospect inventory over the next few years, and assuming our technology is correct, we should be able to continue delivering 10-20%/year growth in production and reserves over the next 3 years," Watt said.
The prospect inventory includes low, moderate, and high-risk projects. Remington typically drills 20-25 wells/year.
"Usually we will have one rig drilling on a high-risk, high-potential project during any one quarter and have the remaining two to three offshore rigs drilling on lower-to-moderate-risk projects," Watt said.
Financial strategy
Remington focuses on the shallow-water GOM because it can get a return on the dollar invested most quickly there. He emphasizes maintaining cost controls.
"We have typically gone from drilling a well and getting it on production in certainly less than a year, and many projects in less than 6 months," Watt said. "We still see a lot of opportunities in our 3D database for acquiring new leases and prospects. We expect to pretty much continue doing what we've done very successfully in the past."
Remington recently operated two subsea completions in the gulf, and Watt said the company's operations could move more into the deep water as the infrastructure grows.
"But our focus will continue to make sure that we can get a rapid turnaround on our dollar. I don't think you will see us moving out into 3,000-5,000 ft of water where the turnaround of the dollar is 2-4 years out. We will look at opportunities that we can turn around probably within a year," he said.