Anadarko, Mobil form deep Hugoton alliance

Anadarko/Mobil Hugoton Embayment Acreage [117,073 bytes] Anadarko Petroleum Corp., Houston, and Mobil Exploration & Producing U.S. Inc. (Mepus) have formed a strategic alliance combining much of their deep Hugoton embayment acreage in southwest Kansas and the Oklahoma panhandle. The companies will jointly exploit about 630,000 acres. A planned drilling program will target potential hydrocarbon zones below shallow gas production from supergiant Hugoton gas field.

Dec. 1, 1997

3 min read

Anadarko/Mobil Hugoton Embayment Acreage [117,073 bytes]

Anadarko Petroleum Corp., Houston, and Mobil Exploration & Producing U.S. Inc. (Mepus) have formed a strategic alliance combining much of their deep Hugoton embayment acreage in southwest Kansas and the Oklahoma panhandle. The companies will jointly exploit about 630,000 acres.

A planned drilling program will target potential hydrocarbon zones below shallow gas production from supergiant Hugoton gas field.

Alliance terms

"Both companies will contribute acreage, capital, and technical resources," said Anadarko. Mobil will contribute about 484,000 acres, and, later, the companies will partner on about 150,000 acres that revert to Anadarko in 1999 (see map, this page).

Anadarko has about 500,000 lease acres in Hugoton embayment. During the last 3 years, the company has acquired more than 400 sq miles of 3D seismic on the acreage.

Anadarko will invest at least $24 million over 4 years in exploration on Mobil's acreage. This will include 3D seismic and exploratory drilling, says Anadarko.

Once the initial investment is made, the companies will hold equal working interests in a continuing program of exploration, exploitation, and development drilling.

"The alliance will apply new technology in drilling, well completion (hydraulic fracturing techniques), and 3D seismic acquisition and processing to exploring and developing deep Hugoton acreage," said Anadarko. "A joint 3D seismic acquisition program should begin later this year."

The combine

Mobil and Anadarko hope the alliance will allow them to significantly increase oil and gas production and reserves in the Hugoton embayment. They will do this by combining Mobil's strong acreage position, large technical database, and operating experience in the area with Anadarko's drilling experience in this deep play and its track record of increasing production and reserves in the mature basin.

Anadarko Chairman and CEO Robert J. Allison, Jr., described his company's successes in the play: "Over the past 5 years, Anadarko has invested about $93 million to drill 473 wells in the deep Hugoton embayment, which added reserves of 38 million boe at a finding cost of $2.44/boe."

Anadarko's gas production from multiple deep zones there has increased 30% to 60 MMcfd, while oil production has increased 15% to 3,900 b/d.

J. Michael Yeager, president and general manager of Mepus, said Mobil will contribute a "large operating position" in Hugoton. "This alliance will maximize that position consistent with our strategy of building advantage into each of our E&P regional businesses," said Yeager.

The companies will form a joint technical team under the direction of an Anadarko project manager. It is through this multidisciplinary team that the companies will combine their expertise.

"We believe this alliance holds tremendous opportunity for discovery and development of reserves in the future," said Allison.