Opportunity is the name of the game for Ridgewood Energy. Instead of slowing down their deepwater Gulf of Mexico investment like their competitors they are doubling down. In fact, Ridgewood sees the exit of their competitors as a huge opportunity to capitalize on in the Gulf where they have had projects since 2008. The Houston and New Jersey-based energy company isn’t being deterred by the $50 oil price. Instead, they are confident that their $2 billion private equity fund will be profitable because Ridgewood says it can develop oil for $20 a barrel or less.
With the cost of rigs and other operational costs decreasing they are in a perfect position to take over projects that were abandoned by other energy companies who left the Gulf. Since costs are down, and Ridgewood has access to existing pipeline infrastructures, it is difficult to argue with the advantages they possess.
Since oil prices tend to fluctuate, it has been their goal to take what they can control and utilize it to their advantage. However, this energy company is very aware of the costs of expanding their operations. The projects taking place in the Gulf of Mexico require heavy investments due to startup costs. This is not a major concern because they believe in their track record in producing a return on all investments. Their track record reveals that Ridgewood has only had one dry hole out of the 13 tries that they have completed in the last five years.
Ridgewood Energy is projected to spend about $1 billion this year and is slated to launch seven projects by the end of next year. Although they have projects taking place in the Gulf, they are mostly focused on their offshore projects taking place in Louisiana. The energy company’s offshore projects are located in Mississippi Canyon, Green Canyon, and Ewing Bank.
Ridgewood’s first project led by LLOG Exploration Company is called Delta House, which started producing this spring. The next project that will be operated by Noble Energy is called the Dantzler Project and, is scheduled to start soon.
Contributors: Louis Cruz & Shon Mattox