Phillips Petroleum entered a new production area last week whenit announced a 50% acquisition of Yates Petroleum Co.’s coal-bedmethane acreage in Wyoming’s Powder River Basin. Financial termswere not disclosed. The announcement came just days after rumorscirculated throughout the industry concerning a potential Chevronmerger with Phillips (see related story).

The agreement establishes a joint development partnershipbetween the two companies for 340,000 gross acres and 90 existingcoal-bed methane wells. Yates will serve as operator for theproject. Phillips expects to see production from the acreagebeginning in 2000. The Oklahoma-based company would not discloseproduction forecasts, but did say it expects to drill as many as2,000 wells in the area depending upon the success of the program.

“This acquisition meets our strategy to target gas-producingareas where we can capitalize on our technical strengths in alow-cost commercial development with high growth potential,” saidJim Bowles, vice president of Phillips’ Americas division,exploration and production. “The partnership gives Phillips earlyentry into a basin-wide development that has significant productionand reserves potential.”

Although this marks the entry of Phillips into the Powder RiverBasin, it does not mark the beginning of its coal-bed methaneproduction. The company has been producing coal-bed methane fromNew Mexico’s San Juan Basin since 1989. The company currentlyproduces approximately 350 MMcf/d from more than 230 wells there.In addition, Phillips is actively exploring for coal-bed methane inChina’s Shanxi Province. John Norris

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