Conoco added about 101 Bcf of proved reserves and production of 12.5 MMcf/d when it exercised its right to buy gas production and storage acreage in New Mexico’s San Juan Basin from Amoco for $56.9 million. The company also gains 23,000 exploration acres.

“This acquisition fits our North American strategy of enhancing our position in core areas of the United States,” said CEO Archie W. Dunham. “The San Juan Basin in northwest New Mexico and the Lobo Trend in South Texas are Conoco’s two major onshore core areas for natural gas in this country. In 1997, we acquired properties that make us the largest producer in the Lobo Trend. The San Juan acquisition, although on a smaller scale, further enhances our position and moves us closer to our goal of doubling the value of Conoco by 2003.” The deal results from Amoco’s sale of assets in the area to Cross Timbers Oil, with Conoco exercising its preferential right to acquire certain of those assets.

In May, Conoco announced plans to spend $1 billion over five years to develop proved and estimated reserves in its Lobo Trend acreage. The goal is to achieve a five-fold increase in Conoco’s daily gas production from Lobo. Announcement of the exploration and development program followed Conoco’s acquisition of additional Lobo Trend properties. That deal increased Conoco’s domestic gas production to about 1 Bcf/d. Conoco paid $900 million for the properties, which were formerly owned by TransTexas Transmission.

Conoco said it will spend about $2.4 billion for capital projects and cash exploration expense this year, which is about equal to last year’s amount after excluding about $900 million for the TransTexas asset acquisition. “In the United States, we will be drilling over 200 wells in the Lobo Trend in South Texas to develop major natural gas reserves,” said CEO Archie W. Dunham. “We also will invest significantly in the deep-water Ursa Oil and gas field in the Gulf of Mexico, where Shell is the operator.”

Joe Fisher, Houston

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