Producing

Despite divesting a number of producing properties during the year, Williams said last week that as of Dec. 31, 2003 it had 2.7 Tcfe in proved U.S. natural gas reserves, slightly less than the 2.8 Tcfe the company logged at the end of 2002. Williams noted that its 2003 divestitures totaled 390 Bcfe of proved reserves.

Despite divesting a number of producing properties during the year, Williams said Tuesday that as of Dec. 31, 2003 it had 2.7 Tcfe in proved U.S. natural gas reserves, slightly less than the 2.8 Tcfe the company logged at the end of 2002. Williams noted that its 2003 divestitures totaled 390 Bcfe of proved reserves.

Negotiations to sell Vintage Petroleum Inc. some of El Paso Corp.’s producing properties in the Uinta Basin of Utah have ended after the two companies failed to reach an agreement before the scheduled closing date. The $52.5 million acquisition, announced in November, would have given Vintage an 80% operated working interest in about 200,000 net acres (see Daily GPI, Nov. 12, 2003).

The hunt for natural gas on the east coast of Canada is poised to step out to a new frontier offshore

New Orleans-based independent McMoRan Exploration Co.’s test results on an exploratory well offshore Louisiana indicate it has the potential of producing 50 MMcfe/d. Production is scheduled to begin in the third quarter.

Pogo Producing Co. became one of the first independents to report second quarter numbers on Tuesday, with natural gas and liquid hydrocarbons production both up for the quarter, and earnings more than doubled from a year ago. Encouraging production results in the Gulf of Mexico also convinced the Houston-based producer to increase its ’03 capital budget 11%.

Apache Corp. has closed the Gulf of Mexico portion of its $1.3 billion acquisition of producing properties fomerly owned by BP. The United Kingdom North Sea portion of the transaction is expected to close within the next two months. Apache paid an adjusted price of $509 million for the Gulf of Mexico properties, which have estimated proved reserves of 72.2 million boe. The price was adjusted from the originally announced $670 million to account for the exercise of preferential rights by third parties involved in some of the properties (a reduction of $70 million), production since the Jan. 1, 2003, effective date of the transaction, and other minor adjustments. The Gulf of Mexico properties are located offshore Texas and Louisiana in areas where Apache has substantial existing operations. Net current production from the acquired properties, after adjustments, is 200 MMcf/d and 19,000 bbl/d of liquids.

Williams sold a small package of Rocky Mountain region producing properties in the Denver-Julesberg (D-J) basin in northeastern Colorado to Bridgeport, WV-based Petroleum Development Corp. for $28 million. The D-J Basin properties were among those announced for sale earlier this year as part of Williams’ financial-strengthening plan.

Houston-based independent Carrizo Oil & Gas Inc. said Thursday that its Hankamer No. 1 well in Liberty County, TX, has begun producing at a gross rate of 15,122 Mcfe/d and 772 bbl/d. The well, in which Carrizo is operator and 40% partner, was drilled in the fourth quarter. The company said the well, which was successfully completed in the Cook Mountain interval, had a flowing tubing pressure of 7,166 psi. Carrizo is monitoring the well’s performance and has increased the production rate to a current rate of approximately 525 bbl and 7,000 Mcf (10,50 Mcfe) a day. Carrizo also announced that the Pauline Huebner A-382 #2 well in the company’s Matagorda Project Area, which targeted a previously untested structure near successful wells in the Providence Field, has now been drilled, reaching a total depth of 12,500 feet earlier this month. The well logs indicate 74 feet of apparent net pay in three potential pay intervals. Carrizo is the operator of the well and owns working interests ranging from 46.5-52.5% in the primary well objectives, depending upon the actual depth of the zone to be produced. Completion operations are in process and Carrizo expects to be able to test the well in the next seven to 10 days. Carrizo also is currently drilling another follow-up well to the company’s successful wells in the Providence Field, the Pauline Huebner A-382 #3, which is expected to reach total depth in the next seven to 10 days.