The venture unit of Tenneco Inc.'s gas division has earmarked $120 million to acquire gas reserves in its U.S. core supply areas.
Most of the money-$75 million-is to go to Pennzoil Exploration & Production Co. for interests in 29 leases in the Gulf of Mexico, including 16 fields with 28 platforms and 186 wells that in 1994 have been producing a combined 39 MMcfd of gas and 1,200 b/d of oil. Leases are expected to add as much as 93 bcf of gas equivalent to Tenneco Ventures' reserve base.
In addition, Tenneco will place $45 million in a new Tenneco Ventures energy fund, the second such fund formed to invest in producing and nonproducing leases operated by independent companies. The unit in 1992 set up a $65 million fund financed by institutional investors to acquire interests in independent gas exploration and production on the U.S. Gulf Coast.
Dana G. Mead, Tenneco chairman and chief executive officer, said the two funds support Tenneco's corporate strategy of redeploying capital into higher return, growth opportunities in its natural gas, automotive parts, and packaging businesses.
PENNZOIL ACQUISITION
Pennzoil leases to be acquired by Tenneco Ventures are scattered across Gulf of Mexico federal planning areas off Texas and Louisiana. Tenneco said the size and scope of the deal is to be determined after other parties involved decide whether to exercise preferential rights to buy Pennzoil lease interests,
Tenneco plans to temporarily operate three Pennzoil operated fields in which it is to acquire 100% interests until it can settle on a permanent operating company. Those fields are:
- Galveston 303 off Texas on Galveston Block 303.
- Mustang Island 847 off Texas on Mustang Island Blocks 846 and 847.
- West Cameron 409 off Louisiana on West Cameron Block 409.
"We want to be in the upstream segment of the gas business, but we don't want to operate," Tenneco said.
Other working interests Tenneco Ventures is to acquire from Pennzoil range from as much as 38.5% in Eugene Island 385 field, a Unocal operated property off Louisiana on Eugene Island Block 372, to as little as zero in West Cameron 533 field on West Cameron Block 510 operated by Delmar Operating Inc., Houston, where Pennzoil is to transfer a 2.8% overriding net royalty interest.
Tenneco Ventures plans to boost capital contributed to its second energy investment fund to $150 million by combining its own $45 million with $105 million to be raised from institutional investors.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
