Apache Corp. (NYSE: APA) and ExxonMobil Corp. plan a North American joint venture on prospective and mature properties in West Texas, Western Canada, onshore Louisiana and the Gulf of Mexico shelf.

"This allows us to create more shareholder value from mature producing properties and large undeveloped acreage positions, and gives us access to new deep gas prospects in Louisiana both on and offshore," says Harry J. Longwell, ExxonMobil director and executive vice president.

Apache will pay $385 million in cash as part of the deal. ExxonMobil agreed to transfer its interests in 28 mature producing oil and gas fields in West Texas and New Mexico with current gross production of about 10,000 barrels of oil equivalent per day. The major will retain a revenue interest indexed to oil price through 2009, as well as a 50% working interest in all properties beneath the currently producing intervals.

In Alberta, ExxonMobil Canada Energy will farm out its interest in approximately 300,000 acres of undeveloped property interests in mature areas to Apache Canada Ltd. Apache will drill and operate more than 250 wells over an initial two-year period with upside for further drilling.

ExxonMobil Canada will retain a 37.5% lessor royalty on fee lands and 35% of its working interest on ExxonMobil leasehold as to any production resulting from the drilling program.

Onshore Louisiana and on the Gulf of Mexico shelf, the parties will jointly explore for deep gas on more than 800,000 acres of Apache properties for an initial period of five years. To expedite exploration, the agreement provides flexibility on participation and operatorship. ExxonMobil will operate high-cost, deep-gas prospects that rely on state-of-the-art technology, and Apache may pursue and operate shallower prospects.

Paul Y. Cheng, an analyst with Lehman Brothers, views the transaction as a positive for ExxonMobil, and thinks it could serve as a model for other majors to maximize value in mature basins.

"ExxonMobil appears to have received good value for their producing properties," Cheng says. "In addition to a cash payment of $385 million, representing $6.42 per barrel equivalent of proven reserves, ExxonMobil will receive options to share future upside from current producing properties as well as future development opportunities."

Also, Cheng adds, by farming out its Canadian acreage position, ExxonMobil will enable a higher utilization rate of those assets while reducing its capital commitment. "Finally, by farming into Apache's deep shelf gas prospects, ExxonMobil could further strengthen its position in this emerging new play," he concludes.

In the Gulf of Mexico, Cheng does not expect this deal to greatly accelerate ExxonMobil's planned drilling program. "Although this new alliance may potentially lead to a slightly more active drilling program, [ExxonMobil] management thinks that any increase will be relatively modest...this new alliance may increase the Gulf of Mexico drilling program at most by an additional one or two wells per year."

Rehan Rashid, an analyst with Friedman Billings Ramsey, praised the deal from Apache's point of view. The agreement adds nearly 4% to existing reserves at an attractive acquisition cost, enables Apache to begin to monetize the deep shelf potential of its Gulf assets, and provides access to a substantial undeveloped acreage position in mature areas of North America, Rashid says.

"In our opinion, the true benefit of the transaction is the opportunity for Apache to monetize its interest in deep shelf Gulf of Mexico assets. With ExxonMobil's technical expertise, Apache should be able to kick-start an exploration program that could provide meaningful reserve and production exposure."

In addition, the access to 300,000 undeveloped acres in Canada and the receipt of 63.3 million barrels equivalent of Permian Basin proved reserves at a cost of $6.08 per barrels equivalent, deepen the company's reinvestment opportunities, he says.

Energas Resources Inc., Oklahoma City, (OTCBB: EGSR) has reached an agreement through subsidiary AT Gas Gathering Systems Inc. with Double G Energy Inc. to drill up to 200 wells within Energas' Pulaski County leases in eastern Kentucky. Double G will advance up to $200,000 to cover enhancement costs for gathering systems and compressor stations while Energas will retain ownership.

Until pay-out, Double G will own 80% working interest in each of the wells and Energas will own the remaining 20%. After pay-out, Energas and Double G will each own 50% working interest. Energas will be operator through its Kentucky-based subsidiary TGC Inc.

EnerGulf Resources Inc., Houston, (Toronto Venture: ENG) will participate in an upcoming South Texas drilling program to be operated by Laredo, Texas-based Killam Oil Co. EnerGulf will have the right to participate for a 10% working interest in the Longoria prospect in Webb and Duval counties, and a 5% working interest in the Gutierrez prospect in Zapata County.

LongBow Energy Corp., Calgary, has entered into an agreement with two parties to participate in a joint venture in the Altares area in northeast British Columbia. Longbow's interest will be 33.33%. The partners intend to spud a test well this summer.

Lundin Petroleum AB, Vancouver, and OMV Aktiengesellschaft, Austria, have signed a contract with the Albanian government for exploration and production in a new offshore Albania block, Durresi. Each will be 50% operator.

Mart Resources Inc., Calgary, (Toronto Venture: MMT) has entered a joint venture with Midwestern Oil and Gas Ltd. that grants Mart the right to participate in the development of the Umusadage Field, Nigeria.

The field is onshore Nigeria's Niger Delta region. It is one of 24 proven oil and gas fields that have been granted to indigenous companies under an allocation program.

Montana Oil and Gas Inc., Vancouver, (Pink Sheets: SRKG) has entered into a joint venture with Energy 51 of Calgary AB and West Peak Ventures of Canada Ltd. for the acquisition and exploration of oil and gas reserves in central Alberta.

Pioneer Natural Resources Co., Dallas, (NYSE: PXD) has entered into a joint exploration program with ConocoPhillips and Anadarko Petroleum Corp. in the National Petroleum Reserve-Alaska, on the North Slope.

Pioneer will participate with a 20% to 30% working interest in the 63 tracts covering approximately 717,000 acres in the NPR-A Northwest Planning Area, operated by ConocoPhillips.

At the federal lease sale in Anchorage, Pioneer also acquired a 20% interest in 167,000 acres in the adjacent NPR-A Northeast Planning Area and in federal offshore blocks, including seismic and geologic data.

Samson Investment Co., Tulsa, plans a joint venture with Aurora Energy Ltd., Traverse City, Mich., to jointly develop Antrim Shale reserves on 38,000 gross acres in Michigan.

Samson is currently initiating drilling operations on 100 wells with plans to drill an additional 250 wells during the next three years. Interests in the project call for Samson to own 80% and Aurora to own 20% in the wells and leases contained in the joint-venture area.

Samson reports it continues to look for acquisition and joint-venture opportunities in Michigan and in the Rockies, ArkLaTex, Permian and Midcontinent regions.

Sonoran Energy Inc., Los Angeles, (OTCBB: SNRN) has teamed with a consortium of international companies to pursue development of several large oil fields in the Middle East. The consortium, which includes Sonoran Energy, COWI and France's Eurovia, plans to conduct feasibility studies of selected oil fields in the region.

COWI, a Europe-based consultant, provides multidisciplinary consulting services in oil and gas, infrastructures, engineering, environment and economics. Eurovia, a European roadworks company, specializes in road and industrial surfacings.

Toreador Resources Corp., Dallas, (Nasdaq: TRGL; Toronto: TRX) has farmed out 25% of its 49% working interest in eight contiguous permits offshore Turkey to Stratic Energy Corp., Calgary (Toronto Venture: SE).

Stratic will fund 25% of the costs of the Ayazli-1 exploratory well to earn a 12.25% working interest in the permits that comprise 962,000 acres in the western Black Sea. Toreador is responsible for 75% of the Ayazli-1 costs and will retain a 36.75% working interest in the well, which is on the South Akcakoca prospect.

TPAO, the Turkish national oil company, will be carried on the Ayazli-1 well for a 51% working interest and has an option to participate in additional wells on Toreador's Black Sea prospects on this acreage for a 51% working interest.

Vermilion Energy Trust, Calgary, (Toronto: VET.UN) has signed a letter of intent with Glacier Energy Ltd. through subsidiary Vermilion Resources Ltd., covering the development of coalbed-methane and shallow gas on lands held by the trust in central Alberta.

The joint venture entails the sale of 50% of the trust's working interest in the coalbed-methane and shallow-gas rights on more than 40,000 acres of land for which Glacier will issue approximately 5.4 million common shares, initially representing an approximate 35% fully diluted equity interest in Glacier.

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