Business—Our drilling and development plans are scheduled out over several years, making them
susceptible to uncertainties that could materially alter their occurrence or timing.’’
New Ventures
In addition to our existing assets in the U.S. Gulf of Mexico and offshore West Africa and in
furtherance of our strategy of renewing our world-wide exploration portfolio, our New Ventures group
is actively evaluating additional exploration opportunities. Consistent with our core strengths, our New
Ventures strategy is centered on pursuing high-value, deepwater oil-focused exploration opportunities in
frontier and under-explored basins. Our New Ventures strategy continues to focus on the Atlantic
Basin, specifically opportunities in Mexico and the Canadian East Coast.
Exploration Prospect Maturation Process
The process of maturing an exploration prospect from initial identification to drill-ready status
begins with analyzing regional data, including industry well results, to understand a given trend’s
specific geology and defining those areas, or ‘‘prospects,’’ that offer the highest potential for substantial
hydrocarbon deposits while minimizing geologic risks. After these prospects are identified, we further
mature our prospects by acquiring and reprocessing high resolution seismic data available in the
potential prospect’s direct vicinity. This includes advanced imaging information, such as wide-azimuth
studies, to further our understanding of a particular prospect’s characteristics, including both trapping
mechanics and fluid migration patterns. Reprocessing is accomplished through a series of model
building steps that incorporate the geometry of the salt and below salt geology to optimize the final
image. In addition, we gather publicly available information, such as well logs, which we use to evaluate
industry results and activities in order to understand the relationships between industry-drilled
prospects and our portfolio of undrilled prospects. As part of the maturation of a prospect to drill-
ready status, we also perform substantial drilling-related engineering work, such as generating a
proposed well design, including the well evaluation and completion design, and the preparation of pore
pressure prediction analysis and reports, site survey reports, and shallow hazard reports. The purpose of
this work is to minimize the drilling and operational risk associated with drilling a well on a particular
prospect. There are also numerous regulatory filings we must prepare and submit in order to obtain the
required permits, authorizations and approvals needed to drill an exploration well on a prospect.
We may decide during any of the foregoing steps of prospect maturation that drilling an
exploration well on a particular prospect may not be warranted given the geologic, drilling and
economic risk profile that was developed during the prospect maturation process. Once the foregoing
items, as applicable, are complete and we have determined that a prospect is ready and desirable for
exploration drilling, and the geologic, economic and drilling risks associated with such prospect have
been optimally mitigated, such prospect would be considered ‘‘mature.’’
General Information—U.S. Gulf of Mexico
Our U.S. Gulf of Mexico operations target oil-focused prospects in the subsalt Miocene and
Inboard Lower Tertiary horizons in the deepwater U.S. Gulf of Mexico.
Geologic Overview
The subsalt Miocene and Inboard Lower Tertiary horizons in the deepwater U.S. Gulf of Mexico
are characterized by well-defined hydrocarbon systems, comprised primarily of high-quality source rock
and crude oil, and contain several of the most significant hydrocarbon discoveries in the deepwater
U.S. Gulf of Mexico in recent years.
Miocene.
The subsalt Miocene trend is an established play in the deepwater U.S. Gulf of Mexico.
Discoveries in this trend include Heidelberg, Thunder Horse, Atlantis, Tahiti, Mad Dog, and Stampede.
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