Norsk Hydro USA Oil & Gas Inc., a wholly-owned subsidiary of Norsk Hydro Americas Inc., have entered into a joint venture with Conoco Inc. providing Hydro with the opportunity to acquire a 25% working interest participation in five firm and three contingent exploration wells in deepwater Gulf of Mexico.
Norsk Hydro has been assigned title interest in 55 leases covering the subject prospect areas.
The first two firm wells began drilling in July. The drilling program has resulted from Conoco’s continuous high grading of its deepwater exploration portfolio over several years. The majority of this portfolio was acquired in 1996-1997.
Hydro has options to participate in future exploration wells resulting from further mapping of 178 leases in Conoco’s existing portfolio through 2005. Hydro personnel will support Conoco’s organization as secondees, while Conoco will remain operator of all the prospects it currently operates.
Hydro expects a total expenditure in the order of USD 130 million for acquisition, exploration drilling, data purchases and organizational costs related to this deal during the 2001-2002 period. A new business unit will be established in Houston, Texas to manage the activities and further develop the initial portfolio.
The two companies will also evaluate further joint business development activities, according to a press release.
Frank Pedersen, Senior Vice President, New Ventures, Hydro Exploration and Production International, comments that Norsk Hydro regards entry into deepwater Gulf of Mexico as a strategic move that will create opportunities for long-term profitable growth and good prospects for value creation.
“This area offers many attractions as a potential new core area for Norsk Hydro’s exploration and production activities. These include high quality exploration opportunities with large undiscovered resource potential, a favourable fiscal framework and the opportunity to further build on Hydro’s offshore competency from the Norwegian Continental Shelf. The Gulf of Mexico is considered to be a prime arena for further development of deepwater oil and gas technology,” he says
“This transaction is a win-win proposition for both companies as Norsk Hydro gains access to a mature, strategically positioned portfolio while Conoco is fully compensated for developing that position,” comments Glen Bishop, General Manager of Conoco's Gulf of Mexico Business Unit.
“Norsk Hydro is a highly respected global company that will certainly complement the staff we have dedicated to exploration and production activities in the deepwater Gulf of Mexico. We look forward to working together,” he says.
Norsk Hydro and Conoco have long standing business relations from previous and existing joint ventures in Norway, the UK as well as in Russia. Hydro will contribute competencies and experience from project developments in Norway and complement Conoco’s knowledge and strengths.
Attractive international portfolio (PDF 71KB)