UPDATE: Anadarko, Exxon To Develop Deepsea Gulf Of Mexico Field

Anadarko Petroleum Corp. (APC) said Monday it has finalized an agreement with Exxon Mobil Corp. (XOM) to jointly develop the Lucius field in the deepwater Gulf of Mexico.

The project would bring the two oil producers together in an oil field where they are close neighbors. Exxon Mobil, the world's largest publicly traded oil company, in June unveiled three oil-and-gas discoveries located a few miles from Anadarko's Lucius discovery, which the independent company announced in 2009. Exxon's find included the oil-rich Hadrian North prospect.

Anadarko said it will take a 35% working interest in the unit, which will extend to four blocks in the Keathley Canyon field about 250 miles southwest of New Orleans. Anadarko already has placed an order for a floating production facility that it says will have capacity of 80,000 barrels of oil a day and 450 million cubic feet of natural gas a day.

"We expect Lucius to be among the most economically efficient projects in our portfolio," Anadarko chief operating officer Al Walker said in a statement.

Lucius is estimated to contain more than 300 million barrels of oil equivalent. Oil-quality tests revealed the crude to be high quality, with an API gravity of 29 degrees, Anadarko said.

Exxon will take a 15% working interest in Lucius. Other partners include Plains Exploration & Production Co. (PXP) with 23.3%; Apache Corp. (APA) subsidiary Apache Deepwater LLC with 11.7%; Petrobras with 9.6% and Eni Petroleum with 5.4%.

The partners also agreed to process gas from the Hadrian South field in return for fees and facility-upgrade reimbursements, Anadarko said. Analysts at Simmons & Co. estimates that would result in about $100 million a year, enough to cover most of Lucius's operating costs.

Anadarko wouldn't comment on the amount it expects for handling Hadrian gas, but Anadarko spokesman John Christiansen said the processing agreement "certainly enhanced" the deal.

"That's a big reason why it's an attractive deal," Christiansen said.

Although the deal means that Hadrian South most will likely share Lucius's expected start-up date of 2014, it isn't yet known what the partnership might mean for the Hadrian North oil field, said Mohammad Rahman, analyst at Wood Mackenzie.

"We don't yet know Exxon's plan on that," Rahman said.

An Exxon spokesman was not immediately available.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com

Plains Exploration (NYSE:PXP)
Historical Stock Chart
From May 2024 to Jun 2024