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ARCO, Chevron Combine Permian Basin Assets
A deal to joint venture the Permian Basin oil and gas producingassets of ARCO Permian, an ARCO subsidiary, and Chevron USAProduction will save the companies money and serve as a platformfor the addition of other Permian interests.
This new, yet-to-be-named company will be evenly split by ARCOand Chevron and based in Midland, TX. ARCO said it expects the newentity to produce 500 MMcf/d once operational. The oil and gaspipeline businesses of the two companies are not included in thecombination.
Once formed, the company will manage 7,000 wells and 150 fieldsin West Texas and Southeast New Mexico, Chevron said. Each companyhad equal numbers of these assets going into the combination. Thenew entity will develop, produce and market crude oil, natural gas,natural gas liquids, and related products. It will also produce,transport, and market carbon dioxide from Chevron and ARCO’s assetsin Colorado.
“We’re confident that combining our Permian assets as a jointventure will provide much better operating and financial resultsthan Chevron and ARCO could continue to achieve separately,” saidPeter Robertson, president of Chevron USA Production.
Tom Holland, an ARCO spokesman, said this could be the beginningof something larger. “We’d love to combine with even morecompanies, but we want to get this one finalized first. Thisagreement gives us a good platform.”
Holland said Tuesday a memorandum of agreement has been reachedbetween the two companies, but no official contract has beensigned. Preparation of legal documents, final agreements, andgovernment approvals are expected to be completed by July 1. Thecompanies together employ 850 people in their Permian Basinoffices. Consolidation is expected to cut the workforce by 15% to20%.
“We announced our plans publicly because it will affect so manypeoples’ lives and we wanted to give them as much time aspossible,” Holland said.
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