2 May 2007 - 10:52
  • News Code: 103669

HOUSTON -- Occidental Petroleum Corp. said May 1 it will swap its third interest in the Horn Mountain deepwater development project in the Gulf of Mexico to BP PLC in exchange for properties adjacent to Oxy"s Permian basin operations in West Texas and southeast New Mexico.

BP is operator with a 67% share in the Horn Mountain development in 5,400 ft of water on Mississippi Canyon Blocks 126 and 127 some 100 miles southeast of New Orleans. Oxy has the remaining 33% equity.


Leases for the Horn Mountain field were acquired in 1997 and 1998. Exploration drilling began in July 1999 and the discovery was announced in August of the same year, when the semisubmersible drilling rig Ocean Victory drilled to 14,600 ft and encountered 300 ft of pay from four Miocene intervals. A sidetrack revealed a column of 550 ft, officials said. Eight production wells and two injection wells were drilled in 2001. The project went from discovery to production in just under 40 months.


When it came online, the field produced 15,000 b/d of oil and 12 MMcfd of natural gas. Production peaked at 65,000 b/d and 68 MMcfd in 2003. The Horn Mountain production facility can accommodate incremental production if new discoveries are made in the region.


In exchange for its interest in Horn Mountain, Oxy will receive BP"s oil and gas interest in the Seminole San Andres Unit, Gaines County, Tex.; Sheep Mountain; and numerous interests in the Cowden area that are complementary to Oxy"s existing Permian basin operations. The acquired properties are estimated to add 39 million boe in net proved reserves, and net production equivalent to 8,000 b/d to Oxy"s Permian operations. The Sheep Mountain property will strengthen Oxy"s position as a leader in carbon dioxide enhanced oil recovery in the Permian basin, official said.


At the close of 2006, Oxy"s net proved Horn Mountain reserves were 21 million boe, with net production of 8,000 boe/d.


The transaction is expected to close in the third quarter, subject to government approvals. BP then will receive from Oxy a cash payment of about $100 million, subject to adjustments. Oxy will reclassify its Horn Mountain assets as discontinued operations.


This exchange is in addition to the Apr. 23 announcement of Oxy"s purchase of BP"s West Texas pipeline system and BP"s acquisition of Oxy"s interests in Pakistan currently operated by BP.



News Code 103669

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