Oil and gas production continues to change hands in the U.S., with ARCO Oil & Gas Co. shedding 146 producing leases in three hefty transactions valued together at about $360 million.
Anadarko Petroleum Corp., Houston, agreed to spend $208.9 million on a Permian basin reserves purchase from ARCO. Vintage Petroleum Inc., Tulsa, plans to spend $90 million on some of ARCO's California properties. And Snyder Oil Corp., Fort Worth, will pay about $60 million for some of ARCO's Rocky Mountain leases.
ARCO said altogether the leases amount to about 60% of its western district oil and gas fields but only 10% of the district's reserves.
Ken Thompson, senior vice-president of the western district for ARCO Oil & Gas, said, "After these property sales close, we will have only a few more minor fields slated for sale in (our) western district. (The) western district will retain about 60 large fields that have relatively high production rates, profitability, and long field life. ARCO will continue to have a strong asset base and aggressive exploration program in the Lower 48."
ARCO said including these sales, it expects to sell leases valued at nearly $600 million in 1992.
Meantime, ARCO divested 100 producing leases in New Mexico, Texas, and Oklahoma at a sale held Nov. 13 by EBCO U.S.A. Inc., Oklahoma City, that generated $5.1 million in 2 hr of bidding.
ANADARKO BOOSTS RESERVES
Anadarko will acquire proved reserves of about 28 million bbl of oil and 57 bcf of gas under a letter of intent signed with ARCO late last month.
The deal will double Anadarko's proved U.S. crude reserves and increase its 1993 oil production by about 60%. Natural gas reserves and production will increase modestly.
Most of the crude production is from secondary recovery operations in the Permian basin of West Texas and Southeast New Mexico. Anadarko will become operator of leases that hold more than two thirds of the proved reserves.
The purchase also includes deep exploration rights on 54,000 gross acres held by production. ARCO will have the option to participate with Anadarko in exploring certain leases.
Anadarko expects to add reserves in 1992 from all sources--this and other acquisitions, drilling, and revisions--that will be more than double 1992 production. Anadarko said 1992 will be the eleventh consecutive year that it has more than replaced production with proved reserves of oil and gas.
The company said the acquisition will fit well with operations conducted in its Midland, Tex., office and will triple that office's oil production next year to 10,000 b/d.
Anadarko said it would initially finance the purchase through a floating rate credit facility but plans to pursue an equity offering to fund part of the deal when market conditions warrant.
VINTAGE ADDS LEASES
Vintage agreed in principle with ARCO to purchase leases in the San Joaquin basin area of Kern County, Calif., with net production averaging about 4,700 b/d of medium gravity oil and 8.7 MMcfd of gas.
Effective date of the purchase is July 1, 1992, and closing is scheduled for Dec. 31, 1992.
Vintage's agreement provides for additional consideration for ARCO if oil prices exceed certain levels.
As with Anadarko's purchase, the price is to be reduced by revenues net of expenses from the effective date of closing. Vintage plans to use bank loans for the purchase.
Vintage has also increased its ownership in Gulf Coast leases acquired earlier this year from Texaco Exploration & Production Inc. (OGJ, Sept. 7, p. 34) and Texas Crude Exploration Inc., Houston (OGJ, June 8, p. 35).
Through several transactions totaling $3.8 million the company acquired leases producing about 70 b/d of oil and 1.9 MMcfd of gas.
SNYDER GETS ROCKIES LEASES
Snyder has agreed to acquire 14 fields in the Rocky Mountain states from ARCO, with the main interests in four North Central Wyoming fields.
Snyder's independent engineering consultant credited the leases with proved reserves of 17 million bbl of oil equivalent (BOE) as of Dec. 31, 1992, indicating a purchase price of about $3.27/BOE net plus the value of the price participation. The purchased reserves are about 75% oil and more than 95% are classified as proved developed producing.
Snyder expects 1993 production from the purchased leases will be 3,800-3,900 b/d of oil and 7.2-7.5 MMcfd of gas. The deal increases Snyder's proved reserves by about 25% and its production by almost 30%.
The effective date of purchase is July 1, 1992, with a stated purchase price of $63 million that is being adjusted for cash flow subsequent to that date. Snyder estimates the purchase price will be $56 million at yearend 1992.
ARCO will maintain an overriding royalty interest in some of the fields and may receive added payments during the next 5 years if oil prices exceed certain levels.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.