Pogo Cuts Back But Wades Deeper in Gulf
In step with the rest of the industry as it deals with super
soft commodity prices, Houston-based Pogo Producing Co. also has
cut back spending. In recent years the company's annual exploration
budgets have been between $230 million and $250 million. Last
year's allocation was $230 million and was set to grow to between
$260 and $270 million, said CEO Paul Van Wagenen. Instead, the
company cut back considerably. This year Pogo is planning to spend
about $170 million.
"We've refocused our attention from drilling discretionary wells
to drilling the occasional very well defined exploration play
domestically." Pogo has done about 50 workovers and recompletions
of late as well.
Despite the tough times, Pogo is wading deeper into the Gulf of
Mexico. Last month, Pogo and partners were the high bidders on two
tracts, South Marsh Island 64 and Viosca Knoll 1003. In each Pogo
has a one-third interest. "This new Viosca Knoll Block 1003(which
has a water depth of 4,800 feet) was very competitive, and our
exploration group was successful in outbidding the others by just a
few dollars," Wagenen said at the time of the sale. He told
attendees at a Tuesday Texas Independent Producers and Royalty
Owners luncheon in Houston that Pogo expects to have some
production on stream next year in Viosca Knoll in more than 1,000
feet of water. "So we're off the Shelf and we're drilling deeper.
We're buying leases deeper all the time because that's where some
of the bigger projects are."
Since coming into existence 30 years ago, Pogo has produced 106
million barrels of oil and 1.35 Tcf of gas net to its shareholders,
Wagenen said. "We ended the year with a record 845 Bcfe of proven
reserves.. At the present time we have an active ownership in 104
OCS [Outer Continental Shelf] leases, and in 27 of those we serve
as operator. We've had partnerships with all of the better
companies and best companies and many of the other companies in
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