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BP Amoco, ARCO merge in major stock deal

BP Amoco and the Atlantic Richfield Co. have agreed to merge in a $26.8-billion stock deal. The combination will give BP Amoco the highest oil output of any non-state company, and a market capitalization of about $190 billion. After ARCO sold its chemical and coal-mining operations, and oil prices began to drop, Chairman and Chief Executive Mike Bowlin and BP Amoco Chief Executive John Browne began to explore ways the two companies could cooperate.

Production cuts raise oil prices

In an agreement ratified on March 23, 1999, 10 OPEC members agreed to cut oil production by 1.7 million bpd, causing a much-anticipated uptrend in oil prices. Mexico, Norway, Russia and Oman also have agreed to shave output by another 388,000 bopd, bringing total reductions to 2.1 million bopd. Coupled with West Coast refinery fires in California, the cuts caused WTI crude oil for May delivery to soar to $17.05/bbl on the NYMEX. Since that time, however, prices have fluctuated around $16.50/bbl.

GOM lease sale down from last year

The U.S. Minerals Management Service (MMS) held offshore Central Gulf of Mexico Lease Sale 172 on March 17, 1999. The sale attracted $171.8 million in high bids from 67 companies. Last year’s Sale 169 received 1,188 bids on 794 tracts, compared to this year’s 272 bids on 207 tracts. MMS Acting Director Tom Kitsos said, "This is an accurate reflection of today’s low oil prices and an indicator that companies are still interested in prospects in the Gulf, yet they are being judicious about adding to their existing inventory of leases." Marathon Oil and Kerr-McGee Oil & Gas submitted the highest bid of $16.6 million for Walker Ridge, Block 121. About 43% of the tracts that received bids were in ultra-deep water, with the deepest tract in 8,740 ft of water.

Indonesia yields positive drilling results

Santa Fe Energy Resources successfully completed three wells offsetting its original Gemah discovery on the Jabung Block onshore Sumatra, Indonesia. The wells tested at a combined rate of 39 MMcfgd and 5,075 bpd of oil and condensate. The success of this delineation program could double the reserves of the Betara Complex, comprising three fields in an 86-sq-mi area of Jabung Block. Santa Fe Chairman James L. Payne believes gas reserves are in excess of 700 Bcf, with the potential to grow to 1 Tcf. Meanwhile, Gulf Indonesia Resources announced positive results from a gas delineation well drilled in South Jambi B, located onshore southern Sumatra. The Teluk Rendah 2 well tested two zones at a combined rate of 14.1 MMcfgd and 292 bcpd.

Serbian refineries hit in NATO attacks

NATO air strikes hit bridges, fuel depots and Serbia’s only two refineries, the 107,000-bpd facility in Pancevo near Belgrade, and the 60,000-bpd unit in Novi Sad, in northern Serbia. At press time, extent of the damage had not yet been determined, although television reports showed severe damage at Pancevo. A railway bridge over the Danube River also was hit, impeding deliveries of oil products by barge from the Black Sea. Yugoslavia produces only 20,000 bopd, relying on imports for another 60,000 bopd.

Ocean Energy, Seagull wed officially

Shareholders of Seagull Energy and Ocean Energy approved the merger of the two companies at the end of March. The combined company, called Ocean Energy, Inc., and headquartered in Houston, will be the ninth-largest independent E&P company, based on a market capitalization of $3 billion. Proved reserves are 2.98 Tcf of gas equivalent.

Texas provides assistance to unemployed

The Texas Railroad Commission (TRC) and Texas Workforce Commission (TWC) are making a statewide effort to inform unemployed industry workers of job transition programs offered to them. More than 37,500 Texans have lost their jobs, due to sloping oil prices. The TWC offers job search and relocation allowances to help skilled workers relocate, if needed, to gain employment. Up to 90% of necessary transportation and living costs may be paid, while searching for a job. Retraining programs are also available, along with remedial education for those who qualify. For more information, the TWC can be contacted at 1-888-JOBS4TX, or on the Internet at www.twc.state.tx.us.

Deepwater GOM discoveries grow

Unocal Corp.’s Spirit Energy 76 unit and BP Amoco (operator) made a discovery on the Gulf of Mexico’s Green Canyon Block 826 in the Mad Dog prospect. The well encountered 300 ft of hydrocarbons, primarily crude. The company believes the resource potential for the Mad Dog unit could be more than 100 million boe. If this proves to be true, Mad Dog could be one of the largest finds in the Gulf of Mexico. Meanwhile, Elf Exploration drilled a well on the Aconcagua prospect in 7,073 ft of water, on the Mississippi Canyon Block 305 off the coast of Louisiana. The well was drilled to a 14,000-ft depth and encountered a hydrocarbon-bearing section of more than 200 ft. Elf is prominent in deepwater basins worldwide and recently acquired eight deepwater blocks in the 1999 GOM offshore Louisiana Lease Sale 172.

Exxon now active offshore Azerbaijan

Exxon South Caspian Ltd.’s participation in a production sharing agreement to explore the Araz-Alov-Sharg block in the Azeri section of the Caspian Sea became effective on March 23. The block is about 110 mi south of Baku, and covers a 550-sq-mi area in water depths ranging from 1,300 to 3,000 ft. Partners include SOCAR, BP Amoco, Statoil, TPAO and Alberta Energy. Exxon is also active in other areas offshore Azerbaijan, including the Azeri Chirag tract, the deepwater Guneshli fields complex, and the deepwater Nakhchivan prospective structure, where drilling is scheduled to begin this year or in 2000.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company