An oil and natural gas asset exchange between Occidental Petroleum Corp. (Oxy) and BP plc will give Oxy some properties adjacent to its existing Permian Basin operations and give BP 100% control of the deepwater Horn Mountain block in the Gulf of Mexico (GOM).
Oxy said it also will pay BP a net cash payment of about $100 million when the transactions close, which is expected in 3Q2007. The asset exchange is in addition to Oxy’s purchase of BP’s West Texas oil pipeline system and BP’s acquisition of Oxy’s interests in Pakistan, which are currently operated by BP. That transaction exchange was announced in April.
In the deal, BP will receive Oxy’s 33% interest in the BP-operated Horn Mountain property, giving it 100% ownership. At year-end 2006, Oxy’s net proved Horn Mountain reserves were 21 MMboe, with current average production of 8,000 boe/d net. Horn Mountain is located about 100 miles southeast of New Orleans in the Mississippi Canyon in 5,400 feet of water, and it produces from the deepest free-floating spar in the GOM.
When the Horn Mountain field ramped up, it flowed at an average rate of 15,000 bbl/d of oil and 12 MMcf/d of gas. In 2003, peak production was more than 65,000 bbl/d and 68 MMcf/d. The production facility can accommodate additional incremental production if new discoveries are made in the region.
Oxy’s acquired properties include BP’s interests in the Seminole San Andres Unit, Sheep Mountain and the Cowden area, which complement the Los Angeles-based producer’s basin operations. The acquired assets will add an estimated 39 MMboe of net proved reserves and net production of 8,000 boe/d.
Oxy already operates or has an interest in six of the seven largest Permian Basin fields. Its Permian assets accounted for about one-third of the company’s worldwide net production and 44% of its reserves at year-end 2006.
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