A deal reached last year that transferred all of Chevron’s oiland gas assets in Utah’s Uinta Basin to the newly formed ShenandoahEnergy (SEI) in exchange for an equity ownership interest is payingoff big time for the energy giant, said Chevron North AmericaPresident George L. Kirkland.

Kirkland told a Houston audience of the Independent PetroleumAssociation of America yesterday that the SEI venture, which beganfrom a “cold start” on Jan. 1,had been “very successful,” andsaid the change from owner to equity affiliate was a good fit withChevron’s worldwide growth plan.

Shenandoah CEO Mitchell L. Solich said that the Denver-basedindependent, which focuses its E&P in the Rockies, currentlyhas total proved reserves of 514 Bcfe, with about 73% of that innatural gas. Probable reserves from the three basins total 574Bcfe, with 80% in natural gas. There are 335 producing wells, and95% are operated.

“Being a part of the creation of SEI has put more value in theground than if we had sold the property outright,” Kirkland said.

Kirkland, responsible for Chevron’s exploration and productionoperations in the United States and Canada, has been president ofthe division since January, about as long as SEI has been inbusiness. The new company was officially formed Dec. 30, 1999 (seeDaily GPI, Sept. 2, 1999). It only drilled its first well sixmonths ago on Jan. 30.

Created by The Chandler Company, its core operations are in theUinta Basin. It also has operations in Colorado’s Raton Basin, andsignificant gas storage in the Piceance Basin of Colorado. Solichsaid that there also is “wanna be” land in Wyoming.

Currently, Shenandoah is on a growth plan to have more than1,000 drilling operations — nearly all gas wells — with 869 onits Wasatch properties. Long term, he said that Wasatch would have1,250 Bcf of reserve. The Green River properties have ultimaterecovery of about 0.36 Bcf at 51 wells, costing $400,000, and theRaton’s 82 wells will produce 2 Bcf for about $273,000. All of thewells should pay out in less than two years, said Solich.

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