Unocal's Spirit Energy 76 to participate in Gulf of Mexico deepwater Mirage prospect
Sugar Land, Texas, Nov. 11, 1997 -- Spirit Energy 76, Unocal Corporation's U.S. exploration and production unit, today announced the signing of a letter of intent to trade its interests in certain Oklahoma and Texas panhandle oil and gas properties for a 25 percent interest in Vastar Resources, Inc.'s deepwater Gulf of Mexico Mirage prospect, as well as Vastar's existing production in another field on the Gulf of Mexico shelf. Specific terms of the letter of intent were not disclosed, and the transaction is subject to the execution of definitive documents.
Under the proposed arrangement, Spirit Energy 76 will participate with a 25 percent interest in the Mirage deepwater prospect, which is located in Mississippi Canyon Block 941 at a water depth of approximately 4,000 feet. Drilling operations are expected to begin on the first well of the prospect by mid-1998. If the well is successful, it's estimated that Mirage has a gross resource potential in the range of 200 to 600 million barrels of oil equivalent.
Spirit Energy 76 will also receive a producing property on the Gulf of Mexico shelf. The field is close to existing infrastructure and will provide operating synergies with Spirit Energy 76's current operations in the South Marsh Island and Vermilion areas.
Spirit Energy 76 will assign to Vastar its working interest in numerous fields located in Oklahoma and the Texas panhandle. "Spirit Energy 76 is actively seeking equity trades, joint ventures, alliances and acquisitions which help promote growth in our core strategic areas the Gulf of Mexico and Gulf Coast," said Jack Schanck, president of Spirit Energy 76. "This further demonstrates our commitment to growth opportunities in deep water." Spirit Energy 76's deepwater campaign is targeted to find 400 million barrels of oil equivalent in reserves by 2002.
In 1997, Spirit Energy 76 acquired 90 deepwater tracts through U.S. Minerals Management Service (MMS) lease sales, bringing the total inventory of deepwater blocks to 123 (23 are pending final MMS approval).
The sale of its downstream assets earlier this year allowed Unocal to rechannel spending into higher return growth opportunities. The company's intensified focus on the U.S. Gulf is boosting projected capital investment in the Lower 48. Between 1998 and 2001, Spirit Energy 76's annual capital spending is projected to average over $500 million, an increase of nearly 70 percent over 1997 levels.
Spirit Energy 76 employs approximately 1,300 people and operates 300 offshore platforms and approximately 2,700 active wells in 355 fields.
Unocal is a leading global energy resource and project development company, with petroleum reserves of more than 9.8 trillion cubic feet of natural gas equivalent (1.6 billion barrels of oil equivalent) and major oil and gas production activities in Asia and the U.S. Gulf of Mexico. The company maintains twin headquarters in California and Malaysia.
Forward-looking statements and estimates of reserves, drilling success and capital spending in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.
Updated: November 1997