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Pogo Cuts Back While Wading Deeper Into The Gulf

Pogo Cuts Back While Wading Deeper Into The Gulf

Although like the rest of the industry, Houston-based Pogo Producing Co. has been wrangling with super soft commodity prices, the company is wading deeper into the Gulf of Mexico with a focus on future growth.

In recent years Pogo'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." 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 Texas Independent Producers and Royalty Owners luncheon in Houston last week 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 this business." About nine years ago Pogo had 90 employees. That number has grown to about 170 currently.

Joe Fisher, Houston

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