Unocal Corp. said yesterday that Ocean Energy Inc. and anunnamed company have agreed to participate in multiple prospects inits Keathley Canyon leases in the deepwater Gulf of Mexico. Theprospects are south and west of the Green Canyon area, and Unocalsaid the first wildcat would be on the Ponza prospect.

Under the agreement, Unocal will hold a 50% working interest inPonza and several related prospects. Ocean Energy will hold a 25%working interest in Ponza. In a separate multi-prospect agreement,an unnamed company will hold the remaining 25% working interest.

“Ocean Energy brings special skills and expertise to ourdeepwater exploration program,” said Unocal CEO Charles R.Williamson. “Their participation makes good financial sense giventhe wildcat nature of the plays. This allows Unocal to moderate itscost exposure while retaining a significant interest.” He saidUnocal expected to “pursue similar deals in the future on otherprospects.”

Currently, Unocal holds leases on 226 blocks in the Gulf ofMexico deepwater, with 137 blocks in water deeper than 5,000 feet.The Discoverer Spirit drillship, which is being moved to the Ponzalocation, is capable of operating in water depths up to 10,000feet.

Along with its partnership news, Unocal reported that itsDendara deepwater exploratory well in the Gulf on Green CanyonBlock 785 was dry, and said it had been plugged and abandoned. Thewell “reached its objectives,” said Unocal, but did not findcommercial quantities of hydrocarbons. The well was drilled to7,200 feet of water in 49 days for an estimated gross cost of $22million.

“Exploration has inherent risks,” said Mike Bell, vice presidentof Unocal Deepwater USA. “Dendara was a quality prospect, but itdid not come in as a discovery.” He said Unocal was “eager to moveon to our next prospect.”

Unocal held a 75% working interest in the Dendara well, whileNexen Petroleum USA Inc. and TotalFinaElf E&P USA each held a12.5% interest.

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