By the OGJ Online Staff
HOUSTON, Apr. 24 -- Kerr-McGee Oil & Gas Corp. and Ocean Energy Inc., Houston, have agreed to jointly explore 181 undeveloped leases that Kerr-McGee holds in the deepwater Gulf of Mexico.
Under the deal, Ocean Energy will acquire working interests in the leases ranging from 16.67% to 50%, while Kerr-McGee will retain working interests ranging from 33.33% to 50%. The leases are in several proven trend plays in water depths up to 8,000 ft.
The two companies expect to drill 15 wildcats in the next 3-4 years on the leases, with Ocean paying a disproportionate share of drilling costs. Kerr-McGee will remain the operator for 75% of the prospects it currently operates, and Ocean will operate the rest. Kerr-McGee is a subsidiary of Kerr-McGee Corp., Oklahoma City.
Kerr-McGee said the agreement is an integral part of its exploration program that includes drilling 8-10 deepwater gulf exploratory wells per year.
Luke Corbett, Kerr-McGee chairman and CEO, said, "We are retaining appropriate interests in these prospects that allow Kerr-McGee to realize meaningful impact when successful, while spreading our exploratory drilling dollars across a broader range of prospects. This agreement covers only 55% of our total deepwater gulf acreage."
Kerr-McGee holds interests in more than 140 additional deepwater leases in the gulf of not covered by the agreement.
The first wildcat under the agreement is expected to spud by the end of the second quarter at the Red Hawk prospect on Garden Banks Block 877.
Kerr-McGee said Red Hawk is a geologic play similar to its recent Gunnison discovery in the Garden Banks area. It said reserve potential at Red Hawk is 200 to 400 million boe. Kerr-McGee will operate the Red Hawk prospect with a 50% share and Ocean will hold the rest.
Kerr-McGee and Ocean are partners on the deepwater Nansen and Boomvang developments under way in the East Breaks area. Installation of the world's first truss spars for Nansen and Boomvang is expected to begin during the second half. Initial production from Nansen field would begin in the fourth quarter and from Boomvang field in the first quarter of 2002. Kerr-McGee operates Nansen with a 50% working interest and Boomvang with a 30% working interest.
Ocean holds the remaining 50% interest in Nansen. Partners in Boomvang are Ocean, 20%, and Enterprise Oil 50%.