Norwegian-based Statoil ASA has staked out a bigger portion of the deepwater Gulf of Mexico (GOM) following an agreement with Houston-based Plains Exploration & Production Co. (PXP), in which it agreed to pay PXP $700 million to acquire the working interests in two discoveries and one deepwater prospect.

PXP, whose remaining GOM deepwater portfolio consists of 15 prospects, also agreed to give Statoil first rights on any future sales of its GOM properties. The potential production from the acquisition was not disclosed, but Statoil estimated that the PXP purchase will contribute to its target of 100,000 boe/d from the GOM after 2012.

“This is a milestone for PXP,” CEO Jim Flores said in a conference call with financial analysts last week. “On an operational basis, this may seem premature in not knowing how big these prospects will be, but on a financial basis, this will allow PXP to buy stock, and it was too compelling an argument to not do so.”

The deepwater GOM has become a strategic focus for Statoil. Earlier this month, Statoil, Chevron Corp. and Devon Energy Corp. announced a record deepwater find at the Jack appraisal well in the Lower Tertiary, which is close to the Norwegian company’s new assets (see NGI, Sept. 11).

“The next step will be to acquire operatorship in the Gulf of Mexico,” said Statoil Executive Vice President Peter Melbye. Of the newest assets, Melbye said, “We believe the value creation potential is significant.”

“PXP has a record of successfully gaining access to high quality prospects, and we look forward to an ongoing dialogue with this company as its Gulf of Mexico portfolio matures,” said Oeivind Reinertsen, senior vice president for Statoil’s activities in the GOM.

Statoil is acquiring ownership in two discoveries, Big Foot and Caesar, and one exploration prospect, Big Foot North. They comprise four deepwater lease blocks, Green Canyon Blocks 683 and 952 and Walker Ridge Blocks 28 and 29. The assets are located in the Greater Tahiti area and include a 17.5% stake in the Caesar discovery, operated by Royal Dutch Shell. Statoil also gains a 12.5% stake in the Chevron-operated Big Foot discovery. Caesar is located between the Chevron-operated Tahiti and Tonga discoveries, two assets in which Statoil owns a 25% stake. Tahiti is expected to come on stream in 2008; Caesar will ramp up in 2010 or 2011. The Big Foot discovery lies in the Walker Ridge area close to the Jack and St. Malo discoveries operated by Chevron.

PXP entered the deepwater GOM about 18 months ago, but Flores noted that the company’s stock price has not reflected its deepwater efforts.

“We’re focused on moving the needle of PXP stock and getting large, economic, intensive projects, large reserves versus costs and staying ahead of the cost curve in the service industry,” Flores said. By giving Statoil first rights on any future GOM sales, PXP has the “opportunity to further monetize our assets if we so need going forward in the future.”

The agreement, Flores added, also allows PXP to accelerate the early stage development of its remaining prospects in the Miocene trend in the deepwater GOM.

Just last month PXP agreed to sell some of its noncore assets in California and Texas to Occidental Petroleum Corp. (Oxy) for $865 million in cash (see NGI, Aug. 14). Together the Statoil and Oxy sales will generate about $1.4 billion in after-tax proceeds, which PXP will use to repurchase stock and to reduce debt.

The transaction has an effective date of Sept. 1, and it is expected to close in early November. PXP expects to recognize a material gain in the fourth quarter in connection with this transaction. It was advised by Lehman Brothers Inc., J.P. Morgan and Harrison Lovegrove LP.

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