In step with the rest of the industry as it deals with supersoft commodity prices, Houston-based Pogo Producing Co. also hascut back spending. In recent years the company’s annual explorationbudgets have been between $230 million and $250 million. Lastyear’s allocation was $230 million and was set to grow to between$260 and $270 million, said CEO Paul Van Wagenen. Instead, thecompany cut back considerably. This year Pogo is planning to spendabout $170 million.

“We’ve refocused our attention from drilling discretionary wellsto drilling the occasional very well defined exploration playdomestically.” Pogo has done about 50 workovers and recompletionsof late as well.

Despite the tough times, Pogo is wading deeper into the Gulf ofMexico. Last month, Pogo and partners were the high bidders on twotracts, South Marsh Island 64 and Viosca Knoll 1003. In each Pogohas a one-third interest. “This new Viosca Knoll Block 1003(whichhas a water depth of 4,800 feet) was very competitive, and ourexploration group was successful in outbidding the others by just afew dollars,” Wagenen said at the time of the sale. He toldattendees at a Tuesday Texas Independent Producers and RoyaltyOwners luncheon in Houston that Pogo expects to have someproduction on stream next year in Viosca Knoll in more than 1,000feet of water. “So we’re off the Shelf and we’re drilling deeper.We’re buying leases deeper all the time because that’s where someof the bigger projects are.”

Since coming into existence 30 years ago, Pogo has produced 106million barrels of oil and 1.35 Tcf of gas net to its shareholders,Wagenen said. “We ended the year with a record 845 Bcfe of provenreserves.. At the present time we have an active ownership in 104OCS [Outer Continental Shelf] leases, and in 27 of those we serveas operator. We’ve had partnerships with all of the bettercompanies and best companies and many of the other companies inthis business.”

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