--Chevron seeks to enter frontier exploration off Suriname's
coast
--Drilling to begin in 2014
--Experts think the Suriname-Guyana basin contains large oil
fields similar to those in West Africa
(Adds background, analyst comment, in third through fifth, and
seventh paragraphs.)
By Angel Gonzalez
Chevron Corp. (CVX) said it would join with Kosmos Energy Ltd.
(KOS) to explore for oil off the coast of Suriname, as the oil
giant seeks an entry into what promises to be a prolific new oil
basin.
Chevron said it agreed to buy a 50% stake in two Kosmos
deepwater leases located about 155 miles from Suriname's capital,
Paramaribo. Kosmos, a private equity-backed oil company based in
Dallas, will retain the other 50% and remain the operator during
the exploration phase. But if any oil is found, Chevron will take
the lead in developing the field. Financial terms weren't
disclosed.
The move came as the coast off South America garners increasing
attention of oil prospectors seeking to tap oil riches buried deep
beneath the ocean floor. Experts believe that giant oil fields,
such as those found offshore Sierra Leone and Ghana in West Africa,
could also be present offshore Suriname and the Guyanas, which lie
right across the Atlantic ocean. Both areas interlocked when the
continents were united hundreds of millions of years ago.
Last year, Tullow Oil PLC (TUWOY, TLW.LN) and partners Royal
Dutch Shell PLC (RDSA, RDSA.LN) and Total SA (TOT, FP.FR) reported
finding a good quality reservoir offshore French Guyana. A wide
range of oil companies--from Exxon Mobil Corp. (XOM), the world's
largest publicly traded oil company, to small Canadian oil company
CGX Energy Inc. (CGXEF, OLY.V)--are also looking for oil in the
vicinity. But efforts to develop the area face challenges; last
week, the French government suspended offshore oil exploration in
its South American territory for environmental reasons.
Pioneering an emerging oil region also has its own risks, as
shown by the difficulties faced by Petroleo Brasileiro S.A. (PBR,
PETR3.BR) and other oil companies at finding oil offshore Brazil,
where the richest reservoirs lie buried beneath thick domes of salt
that make readings difficult. "Suriname is a textbook
frontier-exploration play," research firm Raymond James said in an
analyst note. "Exploration results thus far have been choppy."
Dallas-based Kosmos became known for discovering the Jubilee
field, off the coast of Ghana, one of the largest oil finds in West
Africa in recent history. It acquired the license to explore the
two deepwater blocks off Suriname in 2011.
For Chevron, the second-largest U.S. oil company after Exxon
Mobil, the move is another bet on a new frontier area in the
Atlantic basin. The company is already looking for oil off Liberia.
It also has developed massive fields in more-established production
areas off Angola, Nigeria and Brazil.
"This agreement enables us to explore for new resources in this
frontier basin," said George Kirkland, vice chairman of Chevron, in
a statement.
The blocks are located at depths between 650 and 8,500 feet.
First drilling is planned for 2014.
In recent trading, Chevron shares were down 0.01% at $104.05.
Kosmos was up 0.17% at $12.00.
--Kristin Jones and Daniel Gilbert contributed to this
article.
Write to Angel Gonzalez at angel.gonzalez@dowjones.com.
