Exploration

Contrary to reports that Devon Energy Corp.’s plans to acquire Mitchell Energy & Development Corp. as well as Anderson Exploration Co. are falling apart as its stock falls, Devon CEO Larry Nichols assuaged investors on Wednesday during a conference call and reaffirmed his company’s commitment to completing both deals. When the deals are consummated — expected within the next three months — Oklahoma City-based Devon would become the largest independent in the United States.

San Antonio-based Abraxas Petroleum Corp. has extended its share exchange offer for Grey Wolf Exploration Inc. until Sept. 28. A total of 5.9 million shares of Grey Wolf, representing 88% of what Abraxas and its Canadian Abraxas did not own, have now been tendered and taken up, giving Abraxas 94% of the common outstanding shares of Grey Wolf.

Esenjay Exploration Inc. has completed and tested its Runnells #5 well in the deep geo-pressured Frio Trend in Matagorda County, TX, which production tested at an unstimulated daily flow rate of 21 MMcf and 710 bbl of condensate, with flowing tubing pressure of 7,436 pounds per square inch through a 25/64-inch choke. Esenjay, headquartered in Houston, is the generator and operator, and owns a 33% working interest. Esenjay turned the Runnells #5 well to sales and it is currently producing at a daily rate of 18 MMcf and 580 bbl of condensate. Combined, the company’s Runnells #5 and #3 wells are producing 31 MMcf/d and 1,052 bbl/d of condensate. Both wells have additional pay behind pipe.

Gastar Exploration Ltd. has acquired, in arms-length transactions, a 75% working interest in about 4,000 net acres of leases in Campbell County, WY, as well as 11 pilot test wells and other acreage in the Appalachian Basin. The Wyoming acreage, located in the Squaw Creek area, is part of the Powder River Basin, which is rich in coalbed methane (CBM) deposits. It already has 65 CBM wells in the initial stages of dewatering and production, with several realized production rates approaching 75 Mcf/d after less than two months of dewatering. No financial details were disclosed for either deal.

In the next five years, Mexican oil monopoly Petroleos Mexicanos (Pemex) needs to spend up to $33 billion on exploration and production activities or its crude and natural gas production could decline by as much as one third, forcing the country to become more of an importer than an exporter, according to the company’s director. Mexico currently is the seventh largest oil producer in the world, and is one of the top three exporters to the United States.

BP Exploration (Alaska) Inc., the second largest energy company in Alaska behind Phillips Petroleum Corp., said last week it would shake up its Alaska business unit, with among other things, a plan to install a new president in September. Richard Campbell, president since January 1997, will retire Sept. 30.

Due to the strong upcycle in worldwide natural gas exploration and production, drilling contractors and oil field service companies are reaping the benefits and padding their 2001 earnings significantly. Even though every surge has its limit, the recovery of the industry and the “corresponding financial improvements” when compared to late 1998 and 1999 will be sustainable for “at least the next 18-24 months,” according to Fitch IBCA, Duff & Phelps.

Due to the strong upcycle in worldwide natural gas exploration and production, drilling contractors and oil field service companies are reaping the benefits and padding their 2001 earnings significantly. Even though every surge has its limit, the recovery of the industry and the “corresponding financial improvements” when compared to late 1998 and 1999 will be sustainable for “at least the next 18-24 months,” according to Fitch IBCA, Duff & Phelps.

As exploration and production companies scurry to extract higher volumes of natural gas from the ground to meet the nation’s voracious demand, coalbed methane production in the Powder River Basin of Wyoming and southern Montana continues to increase as conservative estimates of the basin’s reserves from the late 1980s through the mid-1990s continue to fall by the wayside, according to Energy and Environmental Analysis (EEA).