Chevron Corporation (NYSE:CVX) is a classic example of a supermajor that has been lately struggling with natural field declines. However, the San Ramon-based company is pinning hopes on the$7.5 billion development of the Jack and St. Malo fields, with 50% and 51% operating interest, respectively. These are expected to come online by next year, and the maximum initial daily production from these fields is expected to be around 94,000 barrels. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) holds a 25% stake in the St. Malo field.
Chevron Corporation (NYSE:CVX) is also continuing with its development of the Caesar/Tonga, Big Foot, Mad Dog, and Tahiti oil fields in the ultra-deepwater frontier of the Gulf. These fields are estimated to start producing by next year, and have production lives between 20 to 30 years. In the first quarter, the company announced another major discovery in the Coronado prospect of the Gulf.
Another Big Oil company with promising prospects in the Gulf is Royal Dutch Shell plc (ADR) (NYSE:RDS.A). When it comes to offshore production, this company has always been a game changer. The company is currently developing the Stones ultra-deepwater project, with an expected initial daily production of 50,000 barrels of oil equivalent. The Stones field potentially holds 2 billion boe. Earlier this week, Shell announced another successful appraisal well at Vicksburg in nearly 7,500 feet of water. Vicksburg potentially holds more than 100 million barrels of oil equivalent, complementing the nearby Appomattox field, which holds an estimated 500 million boe.
Investors should also keep an eye on Apache Corporation (NYSE:APA), which bought 14 blocks — nine shallow water and five deepwater blocks — in March for more than $1.2 billion. Apache Corporation (NYSE:APA) is the largest leaseholder in the Gulf of Mexico continental shelf, with working interests in more than 500 blocks.
Foolish thoughts
The ultra-deepwater prospects in the Gulf of Mexico look hugely promising. The reason is that $100-dollar-a-barrel crude oil is here to stay.The fact that the super-major E&P companies are spending billions suggests that these are long-term investments. Expect more oil-focused drilling in the Gulf, coupled with higher rig counts.
The article 2 Reasons Why Gulf of Mexico Is Back in Business originally appeared on Fool.com and is written by Isac Simon.
Fool contributor Isac Simon has no position in any stocks mentioned. The Motley Fool recommends Chevron and Petroleo Brasileiro S.A. (ADR). The Motley Fool owns shares of Apache.
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