HOUSTON EXPLORATION LAUNCHES OFFSHORE JOINT VENTURE DRILLING PROGRAM.
"We are pleased with this structure," said James G. Floyd, President and Chief Executive Officer of The Houston Exploration Company. "This offshore joint venture drilling program will allow us to accelerate drilling the undeveloped acreage while increasing our exposure to a greater number of prospects on a timely basis. These are two important operating criteria for our continued success. In addition, this structure helps satisfy our capital needs on an upfront basis, which is particularly helpful as the capital markets have become more constrained."
Mr. Robert B. Catell, Chairman and Chief Executive Officer of The KeySpan Energy Corporation, said, "KeySpan's participation in this joint venture program is an excellent complement to the company's 64 percent equity ownership in The Houston Exploration Company. Since we started Houston Exploration in 1986, its staff of experienced professionals has established an outstanding record of success and operational expertise in the offshore Gulf of Mexico. By participating in this joint venture program, we have a direct investment in assets in the Gulf of Mexico, which should enhance our returns to shareholders and support our strategy of developing reserves."
Under the terms of the joint venture program, KeySpan Energy Corporation will reimburse The Houston Exploration Company for its 45 percent interest in 55 undeveloped federal leases in the Gulf of Mexico held by Houston Exploration. The leases were principally acquired through federal lease sales. Prior to this program, Houston Exploration held a 100 percent working interest in a majority of the 55 undeveloped leases. Houston Exploration will serve as operator and manager for all activities and operating costs will be shared on a working interest basis in accordance with COPAS.
The term of the program will be three years, with an annual 60-day cancellation provision whereby each company retains the right to conclude the program. At the conclusion of the program, any remaining undeveloped leases will be reassigned back to Houston Exploration and developed leases will be owned on a working interest basis and operated under customary offshore operating agreements. Offshore leases acquired in lease sales subsequent to the start of the joint program will not be part of the program.
"We are excited about this program," said Mr. Floyd, "which will enable us to pursue these potential reserves on a more efficient basis. The timing is excellent given today's lower operating-cost environment."
"There is tremendous potential in this program to develop the natural gas resource base which will be a critical supply area of the growing Northeast gas market," added Mr. Catell. "As both an energy distribution company and shareholder in Houston Exploration, we are very pleased with this joint drilling program."
The Houston Exploration Company (NYSE:THX) is a Houston-based independent natural gas and oil company engaged in the exploration, development and acquisition of domestic natural gas and oil properties. The company's offshore properties are located in the Gulf of Mexico and its onshore properties are located in South Texas, the Arkoma basin, South Louisiana, East Texas, and West Virginia. Information on the company can be found on the company's web site at ( www.houstonexploration.com ).
This news release contains forward-looking statements within the meaning of the Securities Litigation Reform Act that involve risks and uncertainties, including price volatility, development, operational, implementation and opportunity risks, and other factors described from time to time in the company's publicly available SEC reports, which could cause actual results to differ materially from those expected.