Looking ahead

Vista Energy Resources and Prize Energy merge to create mid-size oil and gas company. In a transaction that will create a company with assets in excess of $450 million, Vista Energy Resources and Prize Energy Corp. have signed a definitive agreement to combine. Under the terms of the agreement, privately held Prize will become a wholly owned subsidiary of Vista, in exchange for about 58.2 million shares of Vista common stock. On a combined basis, as of July 1, 1999, the companies had total proved reserves of about 286 Bcfg and 47 million bbl of oil and liquids, or 95 million boe. The new company, to be called Prize Energy Corp., will concentrate on acquisition and exploitation of oil and gas properties in the Permian basin, southeastern New Mexico, the onshore Gulf Coast area of Texas and Louisiana, the mid-continent area of western Oklahoma and the Texas panhandle. Completion of the deal is expected by the end of this year.

Tesoro to sell domestic E&P operations. EEX Corp. will purchase Tesoro Petroleum’s domestic E&P business for $216 million. The transaction will be structured as a stock purchase and is scheduled to close at the end of this month. The business being sold comprises Tesoro’s four core areas of domestic E&P operations located in Texas and Louisiana. Chairman, President and CEO of Tesoro, Bruce A. Smith, said the sale is part of a long-term strategy to focus on downstream operations by improving the company’s capital structure. Proceeds of the sale will be used to reduce Tesoro’s debt.

Federal Energy Regulatory Commission (FERC) approves GRI’s 2000 budget. FERC has approved GRI’s research, development and demonstration (RD&D) program application and budget for 2000. The $98-million budget is for the FERC-funded portion of the GRI budget and is earmarked for 65 projects in the organization’s Core and Non-Core RD&D Programs. The Core Program will have a $72.6-million budget for 43 projects, while the Non-Core Program budget will be $25.4 million for 22 projects targeted to specific RD&D activities and major market segments. All 65 projects are continuations of plans that were started in previous years. In addition to the FERC-approved portion of the budget, GRI anticipates about $53 million in co-funding from industry and government sources in 2000. GRI’s 2000 program application, filed with FERC on June 1, 1999, marks the third year of the seven-year transition to an all-voluntary research, development and commercialization program. GRI manages such a program for the natural gas industry. Its goal is to deliver high-value technology, information and technical services to gas and related energy markets.

Ivanhoe Energy to conduct region’s largest 3-D seismic survey in San Joaquin basin. As part of Ivanhoe’s plan to identify new oil and gas prospects in the area, the company will team with Houston-based Prime-X Oil and Gas to conduct the largest 3-D seismic survey ever undertaken in the southern San Joaquin basin, in Kern County, California. The survey will target untapped deep zones from 8,000 to 20,000 ft, as well as shallower targets, covering about 80,000 acres. The companies have signed a contract with Grant Geophysical Corp., also of Houston, to acquire the seismic data. Preliminary work is underway, and actual data recording is expected to start this month. Drilling is slated to begin by the middle of next year. Ivanhoe Chairman, David Martin, says the company expects to map a number of plays from the survey, some of which could be similar to the recent Bellevue gas discovery east of Lost Hills. The cost of the survey, including leasing costs, will be about $7.5 million, which will be shared equally by Ivanhoe and Prime-X.

Apache and partners to develop Western Australia oil field. Apache Corp., along with Woodside Energy and Santos, have approved a plan to develop the Legendre oil fields on the Northwest Shelf in Western Australia. The project will cost about $70 million. Legendre South and North fields contain probable reserves of 40 million bbl. The fields will be developed through horizontal production wells, three in the north and one in the south. Gas produced beyond requirements for powering production facilities will be re-injected. First oil is slated for mid 2001. Houston-based Oceaneering International will provide a mobile offshore production unit (MOPU) for the development project. While the agreement is being finalized, the company will convert its Marine 7 jackup to serve as the Legendre MOPU.

Venezuela plans to raise oil royalty rates. Venezuela aims to raise the minimum royalty rate on all future oil contracts to 20%, up from the existing 16.7%. Energy and Mines Minister Ali Rodriguez said that the government would respect existing contracts, and that the new law is not retroactive. Income tax on oil industry projects is currently 67.7%, but it will be reduced to 34% in refining and possibly other areas. However, some industry experts feel that raising the royalty and reducing income tax would not be an incentive to investment.

Unocal continues to explore off Thailand. Since Unocal was awarded exploration rights to Blocks 10A and 11A in 1997, the company has made an important oil, gas and condensate discovery in the prolific Pattani basin in the Gulf of Thailand. The 10A-1 discovery well was drilled to a 12,280-ft depth and tested 14.8 MMcfgd and 250 bcpd. A follow-up well, Yala-3, was drilled adjacent to Block 10, and two tests resulted in 3,152 bopd, and more than 18 MMcfgd and 485 bcpd. The company plans further delineation drilling on the block. Two appraisal wells were drilled on the adjacent Block 11 that confirmed the potential of the area. The discovery well, 11A-1, recently came onstream. Unocal Thailand operates 13 fields in the Gulf. The company is currently averaging more than 1 Bcfgd and 38,000 bcpd.

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Copyright © 1999 Gulf Publishing Company