Pogo Producing Co. reached some company milestones during 2001—its 32nd year in business. The company last year produced 31,707 b/d of oil and 238 MMcfd of natural gas, both record highs for the Houston-based independent. It also achieved the company's highest revenues and discretionary cash flow ever, Paul G. Van Wagenen, chairman, president, and CEO, told OGJ.
As of midyear 2002, production continued to grow, up 33% from the year before, he said. But unlike 2001, this growth was achieved through the drillbit, as Pogo has not made any acquisitions so far this year. The company's last large acquisition was initiated in late 2000, when Pogo merged with privately held North Central Oil Corp. of Houston in a $750 million deal. The transaction doubled Pogo's US gas holdings and added a core area of operations in the Rocky Mountains (OGJ Online, Nov. 21, 2000). That deal closed in March 2001.
In 2003, Van Wagenen expects the company to increase production another 10% vs. 2002, exclusive of any acquisitions. "That's pretty remarkable if you can do that with a drillbit, and I don't think that there are many people in our peer group that can say that," Van Wagenen stated.
Areas of operation
Van Wagenen said that Pogo's future growth would stem from exploring and developing its oil and gas reserves in its core areas of operations in the Gulf of Mexico and Thailand. The company also operates on the Gulf Coast, in the Permian basin, in the Rocky Mountains, and in Hungary.
"The way I view it, it's a little bit like real estate: it's location, location, location—these are locations that work for us," Van Wagenen said. Pogo will continue to expand in these core areas, where the company has a certain level of expertise and experience, he explained.
Van Wagenen does not see Pogo entering into any areas with high political or economic risk. Outside the US, Pogo has the kind of exposure that gives them a chance to "shoot at an elephant," he noted, but "it's basically the same kind of Miocene rocks" that the company is familiar with exploring for in the US. The company will not operate in the former Soviet Union or in parts of Africa and South America, due to these areas' high-risk profiles, Van Wagenen said. "Our view is that we need to be in places where you can explore freely, market easily, and repatriate the money immediately," he said.
Within the US, Pogo steers clear of areas outside of its core areas: "We're not in California or Florida because of the regulatory environment in those places. We leave that to others—there are certainly hydrocarbons there."
Poised for growth
Van Wagenen said that Pogo would not shy away from acquisition opportunities if they fit well with the company's current asset portfolio and expand the company accordingly.
"I would say there is not a week that goes by that we don't meet and discuss, in the top echelons of Pogo, the opportunities that are out there to make acquisitions, either corporate acquisitions or bigger property acquisitions," he said. "We don't make a million of them because we're awfully fussy," he added.
"We don't view ourselves as an acquisition target in large part because we're very efficient at what we do, and we're not sure that anybody could realize those kind of efficiencies any better than we can," he said.
Pogo Producing Co. Chairman, Pres., and CEO Paul G. Van Wagenen
"Our view is that we need to be in places where you can explore freely, market easily, and repatriate the money immediately."
