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Oil & Gas Financial Journal

El Paso Corp. has closed on the sale of certain Gulf of Mexico, onshore, and Texas Gulf coast properties. In total, El Paso contracted for the sale of an estimated 309 bcfe of proved reserves for $752 million in four transactions.

The Gulf of Mexico transaction also included the assumption by the purchaser of future plugging and abandonment liabilities associated with those properties, which were reflected on El Paso's balance sheet as asset retirement of $93 million.

Final cash proceeds are expected to be near $650 million and will be used for the reduction of debt incurred for the acquisition of Peoples Energy Production Co. in September 2007. Jefferies Randall & Dewey acted as financial advisor to El Paso.

Two Transocean rigs contracted for $928M

Transocean Inc.'s ultra-deepwater drillship Dhirubhai Deepwater KG2, which is owned by a joint venture in which the company has 50% interest, has been awarded a five-year drilling contract from Reliance Industries.

The contract is expected to commence in the first quarter 2010 following shipyard construction, sea trials, mobilization to India and customer acceptance.

Contract revenues which could be generated over the first six months and remaining 54 months of the contract period are estimated to be $90 million and $838 million, respectively.

In addition, the four-year contract for Transocean's first ultra-deepwater drillship owned by the joint venture, Dhirubhai Deepwater KG1, has been extended by Reliance to five years.

Contract revenues which could be generated over the first six months and remaining 54 months of this contract period are estimated to be $90 million and $838 million, respectively.

The drilling contract is still expected to commence in the third quarter of 2009, following shipyard construction, sea trials, mobilization to India and customer acceptance.

In October 2007, Transocean exercised its option to purchase these 50% interests in a joint venture company with Pacific Drilling Ltd.

The two drillships are currently under construction at Samsung Heavy Industries' shipyard in South Korea where the Transocean subsidiary is overseeing construction.