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 News Releases - Anadarko


FORT WORTH, Texas--(BUSINESS WIRE)--March 6, 2000--Three previously announced exploration and development programs in the U.S. Onshore and Canada's British Columbia are continuing with encouraging results, Union Pacific Resources Group Inc. (NYSE:UPR) announced today, as its overall drilling program grows in size.

Twenty-five rigs are now running in the U.S., compared to 11 at this time last year and 17 at the end of 1999. Drilling in Canada has also picked up, with 11 rigs running today, compared to 13 in March of 1999 and four at year-end.

The Company has budgeted $750 million for capital spending in 2000, which includes $100 million for potential property purchases. This budget should enable UPR to stabilize production volumes by the middle of the year and increase volumes in the second half, while replacing over 100 percent of produced reserves.

The overpressured Frontier play in southeast Wyoming's Green River Basin has drawn considerable interest inside the oil and gas industry and among industry observers because of its enormous potential. The play is proving to be typical of deep horizontal exploration programs in that the four wells drilled into this Frontier formation in its brief history have delivered mixed results:

  • The Rock Island 4H well, completed in mid-1999, was the first successful horizontal well drilled into the deep, over-pressured Frontier formation. The well has already made cumulative production of 3 Bcf and is still producing 5 million cubic feet of gas per day (MMcfed).
  • The Sidewinder 1H, an offset to the Rock Island 4H, tested water in January but found excellent reservoir quality, over 1,000 fractures and a dozen faults. This well, having tested water, only condemns a very small area. The Amoco Frewen Deep No. 1 drilled in 1989 tested water free gas from the Frontier at 18,300 feet, which is 2,800 feet structurally lower than the Sidewinder 1H.
  • The Texaco-operated Table Rock 115H, located five miles to the south of the Sidewinder 1H, has tested gas with no water. Pipeline and production facilities are now being installed but the well is not expected to match the reserves of the Rock Island 4H when it goes on production in mid-March.
  • The Sidewinder 2H, recently drilled two miles to the northeast of the Sidewinder 1H and 950 feet structurally lower, has been temporarily abandoned. The well drilled 500 feet horizontally and was drillstem tested. The test recovered no gas or water and the interval has been temporarily abandoned pending further analysis of the area. Shallow potential pay in the vertical section of the well is currently being tested.
  • A fifth well, the Sage Flat Unit 7H, is now drilling to test additional play concepts 15 miles northwest of the previously drilled wells and should report results in 60 to 90 days. UPR has an approximate 50 percent working interest in all five wells.
  • A 365 square mile 3D seismic program is currently being shot south of Table Rock Field at no cost to UPR. Plans are to drill a horizontal frontier well in this area before the end of the year.

"We have learned over more than a dozen years of horizontal drilling that success requires patience," UPR's Chairman and CEO, George Lindahl III said. "We know from our experience with the horizontal programs in the Austin Chalk that there is a steep learning curve to these plays. They are complex and it takes time to understand them.

"UPR and other operators will be drilling additional Frontier wells in 2000 to learn more about the play," Lindahl added. "The Frontier is extensive -- over 160,000 acres -- and the target is enormous: several trillion net cubic feet of potential gas. We remain committed to the play. We are encouraged by what we have found and what we have learned in the short time we have been exploring the formation."

Two wells in South Louisiana's Etouffee discovery, located in Terrebone Parish and about 15 miles southeast of Morgan City, should be producing approximately 50 million cubic feet of gas per day (MMcfd), plus condensate, by April 1. The CL&F No. 1 discovery well, drilled late last year, will go on production this week. The recently drilled CL&F No. 2 well should be on production by April 1. The Company expects each well to produce approximately 25MMcfd -- the amount to which these wells are limited due to tubular design restrictions. A third well will begin drilling in mid-March.

The completed wells have confirmed minimum reserves in the field of about 100 billion cubic feet of gas equivalent (Bcfe), with additional reserve potential still to be tested in deeper sands and an adjacent fault block. The first exploratory well on the Turtle Soup prospect is drilling at a location about five miles to the east of Etouffee. It is targeting the productive interval from the Etouffee discovery. The Turtle Soup well should reach total depth of about 21,000 feet in early May.

In British Columbia, Canada, a second Klua well, the follow-up to the successful Klua D-27-J drilled in northern British Columbia is currently being completed and a third well is being drilled and approaching total depth. We expect production from the Klua No. 1 to commence in mid-summer at about 25 MMcfd. Additional gathering and processing will be needed to handle volumes above 25 MMcfd. The No. 2 and No. 3 Klua wells and future drilling will help determine deliverability requirements.

"Our exploration activity in Wyoming, south Louisiana and British Columbia shows that we are making good on our strategy, which is to find and produce natural gas opportunities onshore North America," Lindahl said. "Our rig count should continue to increase during the year. Development drilling is one of our strengths and we are hard at it onshore North America, in the Gulf of Mexico and in Latin America. Our aim in everything we do is to create value for our shareholders. We believe that we are off to a good start to delivering value in 2000."

Union Pacific Resources is one of the nation's largest independent oil and gas exploration and production companies. Based in Fort Worth, Texas, UPR has been the No. 1 domestic driller for the past seven years.

This press release, other than historical financial information, contains forward looking statements that are based on assumptions and estimates we believe reasonable but that are subject to a wide range of risks and uncertainties. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including changes in oil and gas prices, the timing and results of oil and gas drilling and acquisition programs, the success of management's cost reduction and implementation activities, expected production efforts and volumes, budgeted capital expenditures and other risks and uncertainties detailed in the Company's SEC reports, including the reports on Form 10-K for the year ended December 31, 1998 and Form 10-Q for the quarter ended December 31, 1999.

CONTACT:
Union Pacific Resources Group, Inc., Fort Worth
Media Contact:
Daniel J. Sullivan, 817/321-6527
or
Investor Contact:
Patrick Mooney, 817/321-7169
or
David Larson, 817/321-7294
Internet:www.upr.com



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