Canada-based Nexen Inc. and China-based CNOOC Limited have finalized a joint venture that will give CNOOC a working interest in up to six deepwater exploration wells in the Gulf of Mexico. CNOOC is China’s largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world.
Among the prospects included in the deal are the Kakuna well, which is currently drilling, and the Angel Fire well, which is expected to spud in 2012. CNOOC Limited will participate in Kakuna, Angel Fire, and Cypress with a 20% working interest. CNOOC Limited may also participate in three additional exploration wells with a 10% to 25% working interest. The venture does not include any interest in Nexen’s Appomattox discovery or related Norphlet formation prospects.
This agreement is the culmination of an extensive process to recognize some of the value our exploration team has created in the Gulf of Mexico. We are seeing a gradual return to normal activity in the Gulf and this deal is a reflection of the fact that the basin remains a very exciting one for deepwater exploration prospects.
Nexen’s strategy in the Gulf of Mexico is to mature prospects at a high working interest, and then utilize joint venture agreements like this one to reduce our interest to our target level of 25%-30%, while recognizing the potential of our exploration portfolio.—Marvin Romanow, Nexen’s President and CEO
Nexen currently produces approximately 20,000 barrels of oil equivalent per day in the Gulf of Mexico and is one of the top leaseholders in the deepwater Gulf. The discovery at Appomattox contains at least 250 million barrels of contingent recoverable resource; Nexen is currently drilling its first appraisal well. Nexen has a 20% interest in Appomattox, the remainder is held by Shell, who is the operator.
CNOOC Limited has also become Nexen’s partner on the Long Lake project in Alberta’s Athabasca oil sands following the transaction to purchase OPTI Canada Inc. (Earlier post.)