Duke forms E&P partnership with Houston Energy

By the OGJ Online Staff

HOUSTON, Oct. 8 -- Contributing to the convergence trend, a unit of Duke Energy Corp., Charlotte, NC, has formed an oil and gas development joint venture with Houston Energy Inc.

Duke Hydrocarbons and Houston-based Houston Energy will form a partnership, Elite Exploration LP, that will develop exploration prospects offshore Gulf of Mexico.

Duke will pay for staff and technical data, while Houston Energy will generate the prospects and provide day-to-day oversight of the prospects, the company said.

"Initially it will involve $10-20 million from Duke," said Deborah Witmer, spokeswoman for Duke. "Investment for drilling is not part of the initial deal but will be negotiated."

Duke will own a "majority share" of the gas produced, but specific ownership terms have not been released, she said.

The company does expect to have the marketing rights for most of the gas produced.

Energy companies have been stepping up their activities in the oil and gas sector lately, most notably with Dominion Resources' bid for Louis Dreyfus Natural Gas Corp., Oklahoma City; Tulsa-based Williams Cos. Inc.'s acquisition of Barrett Resources Corp., Denver; and San Jose, Calif.-based Calpine Corp.'s purchase of Encal Energy Ltd., Calgary.

The Duke partnership is on a much smaller scale.

"It's definitely a toe in for us," said Witmer. "But we are looking at this more as a sound investment than a way to add to our gas reserves."