Hess Corp. said it has completed an appraisal well at its Pony discovery on Green Canyon Block 468 in the deepwater Gulf of Mexico. Recoverable resources in the prospect are estimated to be 200 million boe. The Pony #2 sidetrack well encountered the same objective sands as the Pony #1 and #2 wells, Hess said. The sidetrack appraisal well reached a measured depth of 33,362 feet from a surface location 7,400 feet northwest of the discovery well. The main pay sand was oil-filled throughout the interval drilled. The appraisal well is part of an ongoing data gathering program that is being conducted over the Pony prospect, which is 100% owned by Hess. The company said it is evaluating development concepts for production from the Pony prospect before making a final investment decision.

Concho Resources Inc. has agreed to pay $565 million in cash to acquire all of the partnership stakes of privately held Henry Petroleum and affiliated entities. The transaction includes 163 Bcfe of proved reserves and current production of 33 MMcfe/d. Henry, based in Midland, TX, focuses its exploration efforts in the Permian Basin of West Texas and southeastern New Mexico, including the Spraberry/Wolfcamp play in West Texas where it has drilled more than 500 wells since 2002. The acquisition is 70% weighted to oil, 62% proved developed, with a reserve-to-production ratio of 13.5 years. Henry’s technical and operational staff will be retained, Concho said. Concho said it has identified 1,651 drilling locations in the new assets, 312 of which are proved undeveloped and including 1,420 in the Wolfberry play. Henry currently is running eight rigs in its Wolfberry play. “Henry’s properties are a perfect complement to our existing southeast New Mexico core asset,” said Concho CEO Timothy A. Leach. “This acquisition establishes a second proven growth engine within the Permian Basin for Concho by increasing our portfolio of identified opportunities by 60%. The transaction provides an additional consolidation opportunity in a second resource play and will add a multi-year drilling inventory with significant upside potential.” In connection with this acquisition, Concho agreed to purchase additional nonoperated rights and interests in Henry’s properties from “certain persons” affiliated with Henry for aggregate cash consideration of $44 million. The transaction is expected to be completed by the end of July. Concho plans to enter into derivative contracts for a “significant portion” of the current unhedged proved developed producing reserves estimated to be produced in the last five months of 2008 and for 2009 through 2012.

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