Scotia Waterous (USA) Inc. (“Scotia Waterous”) has been retained as exclusive financial advisor by ConocoPhillips (“ConocoPhillips” or the “Company”) for the divestment of their 57.3% non-operated working interest (43.7% NRI) in the producing Eugene Island 24 field (“Eugene Island 24” or the “Offering”) located in shelf waters in the Gulf of Mexico.
BACKGROUND TO SALE
ConocoPhillips is the third-largest integrated energy company in the United States and has major worldwide exploration and production operations. The Company is selling its interest in Eugene Island 24 in line with their ongoing portfolio management process and objectives to focus resources on larger, operated working interest assets.
OFFERING OVERVIEW
The Eugene Island 24 field, operated by Chevron, is located South of Iberia Parish, Louisiana in the shallow shelf waters (roughly 11 ft) of the Gulf of Mexico . The block is a federal lease but is close to Louisiana state leases and lies in the heart of the prolific Cib Op producing trend. Burlington Resources, since acquired by ConocoPhillips, entered the field in 2001 by taking an interest in 5,000 gross acres (2,865 net acres) that comprise the field.
This field produces from the Middle Miocene Cib Op sands on an upthrown fault closure. The trapping fault system works at multiple levels from the Cris I through the Cib Op 2 and 3 sands. Prior well analysis (production and pressure data) suggests partial to strong water drive reservoirs throughout.
Eugene Island 24 (OCS-G 2893) is a gas-condensate field producing approximately 2.2 MMcfe/day (net Dec. 2007 sales) from two wells (#10 and #11), with another well (#9) shut-in. Operations provide an estimated monthly cash flow of nearly $418.5M. Reserve potential is under evaluation; additional upside may be realized through known behind pipe opportunities; Probable and Possible reserves have also been identified.
INVESTMENT HIGHLIGHTS
- ConocoPhillips has 57.3% working interest; 43.7% NRI
- 2007 sales of more than 160 Mboe ; net income of $4.3 million (~$40/bbl before tax)
- Lifting cost averaged ~$5.50/boe
- Two wells producing (#10, #11); the #9 well is shut-in
- Depletion drive production mechanism involves partial to full aquifer support
- #9 well has workover potential in Cib Op 3; contains Cib Op 2A behind-pipe reserves;
- #10 is producing from the Cib Op 3 sand (~15,000 ft TVD); behind-pipe reserves identified in Cib Op 2A; in the same fault block as #9, but in a different location on structure
- #11 has PDNP reserves; stacked pay reservoir
- Additional potential in the Harang and Rob L sands
- Production Handling Agreement (“PHA”) with Contango Oil & Gas provides third party revenues to compensate for LOE
- Additional facility capacity allows for PHA expansion
- Deeper potential; extension of northern trend may lend additional Probable/Possible reserves
- Regional seismic available for review in the physical data room
TRANSACTION PROCESS
Interested Parties will be required to execute the ConocoPhillips Confidentiality Agreement (“CA”) and may be required to provide sufficient evidence of financing capability. The executed CA should be sent to Ignacio Scuseria via e-mail (Ignacio_Scuseria@ScotiaWaterous.com ) or by fax to +1 713 437 5040; two original executed hard copies should follow to Scotia Waterous' office in Houston , Texas . Approved Interested Parties shall be provided access to the online Virtual Data Room (“VDR”), the physical Data Room, and other confidential materials. The anticipated timetable for the transaction is as follows:
| Milestone |
Date |
VDR Access |
Week of March 17, 2008 |
Data Room opens in Houston |
Week of March 24, 2008 |
Bids due at 12:00 pm Central (Houston) Time: |
May 1, 2008 |
Closing: |
May 15, 2008 |
The physical Data Room will be located in Scotia Waterous' Houston office. There, interested parties may review otherwise unavailable evaluation material (including seismic data), and take part in a Data Room presentation given by Scotia Waterous technical staff. The presentation may also be available via teleconference for those unable to attend in person.
Proposals for the subject asset shall be accepted on or before May 01, 2008. Select companies shall participate in a brief due diligence period shortly thereafter.
At no time should any Interested Party contact ConocoPhillips staff regarding the Offering, unless otherwise directed by Scotia Waterous. Please direct questions or concerns regarding the Offering to one of the Scotia Waterous representatives below.
CONTACTS
Scotia Waterous ( USA) Inc.
Pennzoil Place - South Tower
711 Louisiana, Suite 1400
Houston, Texas
USA 77002-2716
Tel: (713) 222-0546 Fax: (713) 222-0572
Email: houston@scotiawaterous.com
