More deepwater exploration slated in gulf

Deepwater exploration continues to advance in the Gulf of Mexico. Enserch Exploration Inc. (EEX), Dallas, and Enterprise Oil plc, London, have agreed to participate in an exploration venture covering about 80 blocks in the deepwater Gulf of Mexico. Disclosure follows earlier word by EEX that the company will step up deepwater exploration in the Gulf of Mexico via joint ventures (OGJ, June 23, 1997, p. 28) The venture covers blocks in the Garden Banks, Green Canyon, and Mississippi Canyon areas.

July 7, 1997

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Deepwater exploration continues to advance in the Gulf of Mexico.

Enserch Exploration Inc. (EEX), Dallas, and Enterprise Oil plc, London, have agreed to participate in an exploration venture covering about 80 blocks in the deepwater Gulf of Mexico.

Disclosure follows earlier word by EEX that the company will step up deepwater exploration in the Gulf of Mexico via joint ventures (OGJ, June 23, 1997, p. 28)

EEX-Enterprise deal

The venture covers blocks in the Garden Banks, Green Canyon, and Mississippi Canyon areas.

Excluded are reserves at Green Canyon Block 254-the Allegheny Project-and production infrastructure at the Cooper Project at Garden Banks Block 388.

The EEX-Enterprise deal is similar to a 1996 agreement between Enterprise and Pennzoil Co. covering 102 of Pennzoil's leases in the gulf, made when Tom M. Hamilton, now chairman, president, and CEO of EEX, was president of Pennzoil Exploration & Production Co. That agreement involves acreage in federal waters in the western planning area in depths to about 650 ft (OGJ, Jan. 20, 1997, p. 37).

Under the EEX-Enterprise agreement, approved by the boards of both companies and subject to government approvals and certain preemption rights, Enterprise will pay $65 million to fund EEX's exploration drilling costs; Enterprise will receive an immediate assignment of 50% of EEX's deepwater portfolio.

"Bringing a partner into our deepwater program substantially accelerates the evaluation of a potentially valuable asset by several years while substantially reducing our drilling costs," Hamilton said.

An additional $35 million, to be funded by Enterprise, is contingent upon drilling successes and announcement of a commercial development.

Enterprise will immediately become a full partner in relevant joint operating agreements.

EEX and Enterprise intend to conduct a 10-12 well drilling program during the next 21/2 years using two contracted rigs that are or soon will be capable of drilling in 3,300 ft of water.

Diamond Offshore Drilling Inc.'s Voyager semi is currently 3,300-ft rated, while the R&B 41 semi is undergoing yard upgrading. Both units are under contract to EEX at below-market day rates.

The first well has been spudded on EEX's Llano prospect on Garden Banks Block 386 in about 2,200 ft of water.