ExxonMobil Corp. and Apache Corp. on Monday announced a joint exploration and production agreement to capitalize on their strengths and assets both onshore and offshore North America. Among other things, Apache will take over ExxonMobil’s 28 producing oil and gas fields in West Texas and New Mexico and begin exploration of 300,000 undeveloped acres in Alberta.

Jointly, the major and super independent will explore for deep natural gas on more than 800,000 acres of Apache onshore and offshore properties for at least five years.

Apache’s participation includes a cash payment of $385 million, and the companies now are working on more definitive agreements.

Harry J. Longwell, ExxonMobil executive vice president, said the agreement “allows us to create more shareholder value from mature producing properties and large undeveloped acreage positions, and gives us access to new deep gas prospects in Louisiana both on and offshore.”

Apache CEO G. Steven Farris added that the companies had been working on the agreement for several months. “It is apparent why ExxonMobil is the largest and most respected energy company in the world, and we look forward to working with them in our expanded relationship to add value for our respective shareholders.”

The announcement sent both of the energy companies’ stock up slightly on a day when most of the market was down. Apache edged up 4.7%, gaining $1.83, while ExxonMobil gained half a percentage, or 20 cents.

In a research note on the agreement, Wayne Andrews and Jeffrey Mobley, Raymond James research analysts, said the agreement is a “clear positive for Apache and shows the company’s ability to leverage its long-standing relationships with integrated majors.”

According to the initial agreement, ExxonMobil agreed to transfer its interests in 28 mature producing oil and gas fields in West Texas and New Mexico currently producing 10,000 boe/d. ExxonMobil will retain a revenue interest indexed to oil price through 2009, and it will retain a 50% working interest in all properties beneath the currently producing intervals.

In Alberta, ExxonMobil Canada Energy will farm out 300,000 undeveloped acres to Apache Canada Ltd. to drill and operate more than 250 wells over an initial two-year period, with upside for further drilling. ExxonMobil Canada will retain a 37.5% lessor royalty on fee lands and 35% of its working interest on leaseholds for any production from the drilling program.

Onshore Louisiana and in the Gulf of Mexico shelf acreage, the parties jointly will explore for deep gas on more than 800,000 acres of Apache onshore and offshore properties initially for five years, with provisions for extension. To expedite exploration, the agreement provides flexibility on participation and operatorship. ExxonMobil will operate high-cost, deep-gas prospects that rely on state-of-the-art technology, and Apache may pursue and operate shallower prospects whether ExxonMobil chooses to participate or not.

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