A property swap between an ARCO subsidiary and Mobil wouldresult in Houston-based Vastar Resources picking up 1999 Gulf ofMexico production estimated to be 180 MMcfe/d.
ARCO subsidiary Western Midway Co. agreed with Mobil Exploration& Producing U.S. to exchange all its oil and gas producingproperties and associated facilities in California’s San JoaquinValley for certain Mobil oil and gas properties in the Gulf ofMexico. The exchange is contingent upon completion of duediligence. The effective date of the transaction is July 1, withclosing scheduled for Oct. 30.
In a separate agreement between ARCO and Houston-based VastarResources, ARCO agreed that, upon completion of the exchange withMobil, it will sell Western Midway, including its newly acquiredGulf of Mexico properties, to Vastar for $470 million. ARCO owns an82.2% interest in Vastar. “This is a value-enhancing exchange forall parties,” said ARCO CEO Mike R. Bowlin. “It provides ARCO witha great opportunity to increase high-value reserves in the Gulf ofMexico where we are a major player through our interest in Vastar.”
ARCO’s California properties include five fields in Kern and LosAngeles counties and an interest in a cogeneration facility in theMidway-Sunset field in Kern county. Net production from the fieldsis 40,000 barrels/d of oil and 10 MMcf/d of gas. Proved reservestotal about 160 million boe.
Mobil’s properties include working interests in 23 producingfields and 93 platforms, as well as interests in more than 80 leaseblocks in the western and central Gulf of Mexico. The majority ofthe net production attributable to the planned exchange is naturalgas, with 1999 production, net of divestitures, estimated toaverage 180 MMcfe/d. As of July 1, 1998, net proved reserves are360 Bcfe of gas, with substantial future potential. Also includedin the proposed exchange are interests in pipelines, gatheringlines and a shore base in Cameron, LA.
“The exchange agreement is consistent with ARCO’s goal offocusing its oil and gas efforts on core producing areas, in thiscase, the Gulf of Mexico,” said Bowlin. “While our San JoaquinValley assets are of high quality, Mobil, through its partnershipwith Shell, is a more significant producer of heavy oil inCalifornia.”
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