INDEPENDENTS TEAM UP TO BUY U.S. PRODUCTION

The quality and quantity of producing oil and gas properties for sale in the U.S. is encouraging the formation of acquisition joint ventures.

Among recent announcements:

Coda Energy Inc., Dallas, and an undisclosed investment banking company are creating a $750 million acquisitions joint venture to include $250 million in equity capital and $500 million in bank financing.
Members of Houston's Cockrell family and GKH Partners LP, Chicago, effective Sept. I formed Cockrell Oil & Gas LP, an equal partnership with equity capitalization of more than $125 million.

Douglas H. Miller, chairman of Coda's board of directors, said Coda will contribute 10% of the $250 million venture capital and institutional investors the other 90%.

Miller said Coda this year has evaluated producing leases valued at about $2.5 billion. He estimates that more than 6 billion bbl of oil equivalent reserves worth more than $25 billion are for sale in the U. S.

Ernest H. Cockrell, president of Cockrell Oil Corp., Houston, said the family contributed $25 million cash to the partnership and transferred most of the Cockrell family's oil and gas holdings to the joint venture.

Conveyed reserves lie mostly in the Gulf of Mexico, about 65% gas and 35% oil, and are valued at about $40 million. Production from the holdings in 1993 is expected to generate about $11.5 million income for the partnership.

GKH is contributing $60 million in cash to the venture.

PRIME TIMING

Miller said Coda decided to form the acquisition venture because of the quality and volume of oil and gas properties for sale and availability of experienced petroleum personnel. In addition, improved operating efficiencies and lower interest rates on borrowed capital have improved operating margins, increasing investors' interest in oil and gas trades.

Coda officials believe opportunities to acquire large volumes of U.S. oil and gas reserves will last for the next several years.

"Ten years ago there was no chance a company our size could have taken this on," Miller said.

The new joint venture will focus its acquisition activities in the Mid-Continent region. Both oil and gas reserves will be acquired, mostly major oil company onshore properties.

Coda is negotiating with several majors for a significant amount of properties, many of them in West Texas.

Properties acquired by the joint venture will not be tied to leases in which Coda already owns interests.

"The properties we already have interests in will stay in Coda," Miller said. "Any producing properties the joint venture acquires will be separate from Coda."

COCKRELL DETAILS

Cockrell LP plans to buy reserves that compliment leases contributed to the joint venture by the Cockrell family. Plans include expanding several Cockrell projects under way in Colorado's Piceance basin, Uinta basin of Utah, and Green River basin in Wyoming.

The partnership also will seek independent companies willing to exchange producing properties for joint venture interests. Early emphasis will be on buying U.S. reserves onshore and offshore and on exploration and development in the Gulf of Mexico.

Cockrell leaseholds in the gulf include undeveloped leases off Louisiana and Texas, mainly in water less than 200 ft deep. The largest field in which the Cockrell family has an interest is Eugene Island Block 330.

The family has production in deeper water operated by other companies.

The partnership plans to continue the Cockrell family's exploration program in the gulf, participate in federal and state lease sales, and do farmins and farmouts with other companies.

"Offshore properties we purchase hopefully will have some exploration romance to them, in addition to the reserves," Cockrell said. "Generally speaking, properties on the Outer Continental Shelf in 600 ft of water or less will fit our operations."

The partnership hopes eventually to expand activities to include international projects, mainly in Russia where Cockrell has a protocol with a production association to study the feasibility of delineating and developing oil and gas reserves in an area where several fields have been discovered but not developed extensively. Well workovers would be a minor part of the project.

Cockrell Oil Corp. will operate most Cockrell LP properties. But in Russia the operator likely will be a joint stock company formed by the partnership and a Russian partner.