Upstream industry meets in Houston to market prospects

Sam Fletcher
OGJ Online

Thousands of oil and gas producers and explorationists crowded into the ninth annual North American Prospects Expo (NAPE) that opened Wednesday in the George R Brown Convention Center in Houston�all looking for that perfect deal and, in many instances, the money to exploit it.

Before NAPE began in 1992, the idea of bringing potential property buyers and sellers together in such an open forum was dismissed by some industry insiders as a �starving artists� distress sale of probably marginal properties in a depressed market.

But NAPE is now the largest exposition dedicated to marketing oil and gas prospects, with an attendance that is expected to exceed 7,500 people this year.

The exposition, presented by the American Association of Petroleum Landmen and the Independent Petroleum Association of America, has long since outgrown its North American limitation, with the endorsement of the Association of International Petroleum Negotiators and the International Oil Scouts Association. Wednesday�s opening of the 2-day exposition was preceded by an international forum Tuesday.

�I see more people in the first hour or two at this expo than in 5 months of normal business contacts. Producers even came last year when commodity prices were still low,� said William B. Parmeter, a contract landman with Chevron USA Production Co.�s new Midcontinent Business Unit Enhancement Team.

Parmeter was talking business at the large Chevron booth beside a sign that proclaimed to passersby, �At least one major hasn�t thrown in the towel as to domestic onshore acquisitions.�

�Our management wants X amount of production added in 2001. That�s what we�re out to do here,� he explained. �We�re not into rank exploration in the onshore US. Any prospect must have some current production, with additional opportunity for development. And we don�t want to have to bid against others for a prospect.�

Chevron is looking for �niche situations� in which it can partner with US independents or financiers.

�It might be a small independent with most of his production concentrated in a few good wells and whose bank is pushing him to spread the risk. He might bring in Chevron as a partner with no working interest,� Parmeter said.

Chevron�s financial clout could help the independent obtain the financing �to drill a well a month instead of one each quarter,� he said.

Chevron�s deep pockets could easily replace expensive mezzanine financing of an independent�s project. The company also could be the answer for a mezzanine lender that�s holding properties from a bankrupt borrower. �They could try to work the properties themselves, but that�s not their primary business,� Parmeter said.

�Chevron�s got the money, but it also has good technology. We�ve got the best fracture stimulation engineers in the business,� he said.

At first, NAPE was envisioned as primarily a market for onshore prospects. But the offshore division of Samedan Oil Corp., a subsidiary of Noble Affiliates Inc., has its own booth at the expo, separate from the land operations.

Samedan has been one of the most active independents participating in federal lease sales in the Gulf of Mexico in recent years. So is it looking to buy or sell prospects now?

�Both,� said Cam Countryman, an offshore landman with the company. �We�re always looking for more prospects, because you don�t know how a property will turn out until you drill it. And we�re looking for partners in some of the properties we have.�

Samedan is seeking �new opportunities� both on the shelf and in deeper gulf waters where it already has interests in 90 leases.

At its NAPE booth, Anadarko Petroleum Corp., one of the biggest independents, hopes to swap interests in its Tarantula and Taurus prospects for interests in other deepwater prospects in the gulf. Tarantula is located in 680 ft of water in South Timbalier Block 308, while Taurus is in 750 ft of water in Green Canyon Block 134.

�We�re not looking to sell out or sell down our interests in these prospects. We like these well enough to drill them 100%,� said Dwight �Clint� Moore, project geologist for Anadarko. �We�re looking to capitalize on these properties by swapping for interests in other deepwater prospects that will help spread the risk and add to our portfolio.�

Ricky D. Cherrington, of Cherrington Oil and Gas Inc. in nearby Stafford, Tex., doesn�t have a booth at the exposition, but he was there to check out potential prospects anyway and perhaps promote some of his own.

�I�ve got some shallow oil prospects that I show on a more discreet basis,� he said. �I�m selling an idea as opposed to having the acreage locked up. But that�s not to say I wouldn�t do a deal here.�

Cherrington knows what it takes to sell a prospect. �You need 3D seismic data and a good size prospect. And it�s got to be good quality,� he said. �A good quality prospect will always get that promotion.�