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Amoco Focuses on WY, Swaps With Snyder

Amoco Focuses on WY, Swaps With Snyder

Amoco Corp. and Snyder Oil Corp. traded interests in Wyoming properties to help each company focus its gas businesses in the state's Green River Basin. Amoco acquired Snyder's interest in a substantial portion of the Jonah field in Sublette and Sweetwater counties in Wyoming. In exchange, Amoco gave Snyder 75% of its interest in the Beaver Creek Unit in Fremont County, WY. Amoco retained 25% interest in Beaver Creek. The deal is the capstone on Amoco's year-long divestiture plan.

Last year, Amoco said it would sell up to one-third of its domestic oil and gas holdings to focus on its most profitable operations in the United States and abroad. Amoco said it received about $1.9 billion from the divestitures. The Snyder deal wraps the plan up.

"Amoco is excited about the acquisition of additional interests in the Jonah field in the Green River Basin, which is one of the core areas of Amoco Energy Group North America," said Richard Flury, executive vice president of Amoco's exploration and production sector.

In 1996, Amoco acquired 50% of Snyder's interest in the Jonah field. This deal increases its interest in key areas of the field. Amoco and Snyder wells recently drilled in the Jonah field have initial sustained production rates of more than 10 MMcf/d. Production in the field is approximately 160 MMcf/d gross.

Between September and May, 37 wells have been drilled in the Jonah field. "We've been stopped by environmental impact statement requirements from the Bureau of Land Management," said Amoco spokesman John Lloyd. "We just got that cleared up, and we're going on with our drilling plan. The current plan is to have 20 to 25 wells drilled throughout the remainder of 1998. The net right now to Amoco in Jonah is 14 MMcf/d, and we expect that to double to about 28 MMcf/d by the end of the year." Estimates of reserves were not disclosed.

The trade also resolves litigation concerning Amoco's prior agreement to sell the Beaver Creek assets to Howell Petroleum Corp. Howell and Amoco terminated the purchase and sales agreement for Beaver Creek, with Howell agreeing to purchase Amoco's interests in other outside operated properties in Utah and Wyoming. Snyder had sued Amoco and Howell to block the Beaver Creek sale, saying it had preferential rights to the Beaver Creek assets.

In other news, Snyder signed an agreement with Texaco covering six prospects in the Flex Trend area of the Gulf of Mexico. Under the agreement, Snyder will obtain working interests ranging from 22.5 to 30% in prospects in East Breaks, Garden Banks and Mississippi Canyon. Snyder expects to invest $25 million in 1998 on these prospects through a continuous drilling program slated to begin late next month.

The company said planned 1998 exploration and development expenditures have been increased by 40% to $200 million, reflecting Snyder's growing portfolio of opportunities in the Gulf. This year, Snyder completed agreements with Shell, British-Borneo and now Texaco, to participate in the exploration of eight prospects in water depths ranging from 1,000 to 2,500 feet.

"Participating in these projects allows us to utilize our strong capital base today, and still maintain our financial flexibility to do high impact acquisitions that fit our operating and growth strategies," said John C. Snyder, Snyder CEO. "With the potentially attractive rates of return afforded from these prospects, we will be shifting some capital from our acquisition budget to these opportunities."

Joe Fisher, Houston

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