Anglo-Dutch behemoth Royal Dutch Shell Plc (RDS.A) along with its Canada based partner Nexen Inc. (NXY) have encountered additional resources in the Appomattox deepwater structure in the Gulf of Mexico. The companies were conducting extensive exploration and appraisal activities on the concession.
Nexen confirmed that the drilling on the northeast fault block of Appomattox indicated the presence of contingent recoverable resources of about 215 million barrels of oil equivalent (boe).
The Appomattox structure in the Mississippi Canyon can be divided into three large fault blocks. The south fault block – discovered in early 2010 – is estimated to hold about 65 million boe of probable reserves. This newly discovered resource will be tagged to these probable reserves.
The companies also made a promising discovery at Vicksburg, about six miles to the east of Appomattox.
Shell acts as the operator of Appomattox with an 80% interest, while the remaining stake is controlled by Nexen. In block Vicksburg, Shell has a 75% interest and Nexen holds a 25% stake.
Both the companies – Shell and Nexen – aim to carry on further exploration and evaluation activities in the offshore field during 2012 and 2013. They also plan to drill a well in the region between Appomattox and Vicksburg to further explore and evaluate the area.
We believe that this discovery forms an important milestone in the Gulf of Mexico operations that is expected to open doors for further activities by other companies.
Headquartered in Netherlands, Shell owns one of the largest integrated oil and gas businesses in the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy-related businesses.
On the other hand, Calgary, Alberta-based Nexen is a major oil and gas company with exploration and production operations in Canada, the U.S. Gulf of Mexico (GoM), North Sea (U.K.), Yemen, Nigeria and other areas.
We are maintaining our long-term Neutral recommendation on both Shell and Nexen. Both the companies currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.
To read this article on Zacks.com click here.
Zacks Investment Research
