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Oil and Gas Energy News Update

Friday, April 15, 2011

Commodity Corner: Oil Rallies on Fed Report

Commodity Corner: Oil Rallies on Fed Report

Friday, April 15, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil futures gained $1.55 Friday on news that U.S. industrial production grew last month.

May crude oil settled at $109.66 after the Federal Reserve reported that industrial production increased 0.8 percent in March, compared to just 0.1 percent in both January and February. Year-on-year, total industrial production for March reportedly increased by 5.9 percent.

The Fed also noted that manufacturing output increased by 0.7 percent last month while factory production rose to an annual rate of 9.1 percent during the first quarter. In addition, the central bank noted that total industry capacity utilization climbed by 0.5 percentage point to 77.4 percent.

Oil futures traded within a range from $107.21 to $110.10 Friday. Compared to last Friday's settlement price, oil is down 2.8 percent for the week.

Front-month natural gas lost a penny Friday to settle at $4.20 per thousand cubic feet. The dip followed predictions of above-normal temperatures throughout the eastern U.S. during the next two weeks.

May natural gas peaked at $4.24 and bottomed out at $4.17 during Friday's session. Week-on-week, natural gas is up nearly four percent.

Gasoline for May delivery gained six cents to end the day at $3.29 a gallon. It fluctuated between $3.23 and $3.30 during end-of-week trading. For the week, gasoline is up 0.9 percent.

Honda Extends North American Factory Slowdown By 2 Weeks

Honda Extends North American Factory Slowdown By 2 Weeks

Apr 15, 2011

Honda Motor Co (NYSE:HMC) said it will slow down production at its 11 North American factories into at least early May because of the ongoing parts shortage from Japanese earthquake-damaged factories.

The company said Friday it is extending the production cuts through at least May 6th, and it expects more disruptions beyond that.

The slowdowns could reduce output in the period by as much as 50%, and are likely to cause a shortage of Honda vehicles in a matter of weeks.

Honda's Japanese factories are running at half capacity, and the President of the company said it could take months to return to full production.

The company said none of its 21,000 North American factory workers would be laid off.

Shares of Honda Motor are trading up 1.73% at $35.87.

Analysis: Hercules Flexes Its Muscles

Analysis: Hercules Flexes Its Muscles

Friday, April 15, 2011
Rigzone Staff
by Jaime Kammerzell

Hercules Offshore won bankruptcy court approval on April 4th to buy Seahawk Drilling, which filed for Chapter 11 in February.

Seahawk, which owns and operates 20 mat-supported jackups in the US and Mexican Gulf of Mexico, was created as a spin-off from Pride International in August 2009. Pride divested of its shallow water fleet in an effort to concentrate its business in the deepwater markets.
Seahawk never had a profitable quarter once it split from Pride, due largely to the global financial crisis that hit the market during that time. In addition, Seahawk CEO, Randy Stilley, blames the Bureau of Ocean Energy Management (BOEM) for "arbitrarily constructing unnecessary barriers to obtaining permits they had traditionally authorized" following the Macondo blowout in April 2010.

Shallow water drilling in the GOM wasn't under the drilling moratorium that followed the Macondo blowout, but the drilling permit process slowed significantly. Commenting on its Q2 2010 earnings report, Stilley said, "new drilling permit requirements … have caused delays for permit approvals, as our customers and regulators work to understand the new regulations. We continue to work with our customers and the BOEM on improving the efficiency of the permitting process. I am optimistic that the BOEM will be able to more quickly process the backlog of drilling permit applications so that current applications will be reviewed and approved allowing us to put our idle rigs back to work, as well as enter into new contracts for our rigs that are currently working and keep our personnel employed."
However, in March 2011 Stilley said, "in the 11 months after the Deepwater Horizon accident, it became clear that Seahawk's greatest rival was no longer an industry competitor but the US government."

Seahawk is not the only shallow water driller affected by the slowed permitting process. Companies like Hercules have been hit hard, but have rigs contracted outside of the US GOM that draw in revenue to help the company stay in the game.

Hercules purchased Seahawk's fleet for about $176.8 million. The agreement was based on $25 million in cash and 22.3 million of its shares, which closed at $6.80 a share on Monday, April 4, the day a judge approved the sale.

Back in February when Hercules agreed to purchase Seahawk's rigs, John T. Rynd, president and CEO of Hercules Offshore said, "We believe that the strategic rationale and value proposition of this transaction are very compelling for our shareholders. This is a unique opportunity to acquire assets at an attractive price, and we expect significant synergies once they are added to our rig fleet. Furthermore, the structure and terms by which we are acquiring these assets will provide benefits to our shareholders, allowing us to fully dedicate our time to operate these assets to their maximum potential. We will have the ability to operate a significantly larger fleet of rigs for our customers, with a small amount of incremental cost."

While court approval to buy Seahawk was positive news for Hercules last week, the company ended the week on a sour note. On April 7, Hercules announced that the company is being investigated by the Securities and Exchange Commission and the Department of Justice. The SEC has requested documents associated with the possible violations of securities laws, including possible violations by its international operations of anti-bribery laws.

In regards to the filing, Hercules said, "At this time, it is not possible to predict the outcome of the investigations, the expenses we will incur associated with these matters, or the impact on the price of our common stock or other securities if the SEC or DOJ takes any actions regarding these investigations."

As a result, shares of Hercules fell 65 cents (10.2%) to $5.73 in aftermarket trading. Shares ended the regular session up 15 cents (2.4%) to $6.38.



Hercules has added Seahawk's 20 jackups to its original fleet of 33 jackups, two of which are under construction.

Hercules has 16 active jackups. These rigs are capable of operating in water depths from nine to 350 ft. According to Hercules, the majority of its fleet is capable of drilling as deep as 20,000 ft, and the Hercules 350 can drill up to 25,000 ft.

Comparatively, only seven of Seahawk's rigs are contracted. These jackups are capable of operating in water depths from 200 to 300 ft and drilling as deep as 25,000 ft, except for the Seahawk 2602, which can drill down to 20,000 ft.

Hercules points to its diverse geographic footprint as a key to its business strategy. According to Riglogix, the rig manager currently has 10 jackups in the GOM, two jackups in both the Middle East and South Asia and one jackup in Southeast Asia and West Africa. All of Seahawk's rigs that Hercules has acquired are in the Gulf of Mexico.

If we look at the other jackup players, Ensco has 31 active jackups in its fleet. Of Ensco's jackup fleet, 10 are in Southeast Asia, eight are in the North Sea, another eight are in the GOM, four are working off Mexico, three are in the Persian Gulf, and one is off Australia. Rowan's active fleet includes 25 jackups contracted world-wide. Ten jackups are in the GOM, seven are in the Persian Gulf, five are in the North Sea, and one each are working off Southeast Asia, South America, and Mexico.

Number of jackups around the world

Worldwide, the average fleet age is about 21 years old with an average dayrate in the low $100s. Ensco's fleet is right on target with an average age of 21 years old and an average dayrate of $95k/day. However, Hercules' fleet is 32 years old and commands a dayrate in the mid-$50k range, while Seahawk complements it with a 31 year old fleet, which commands a dayrate in the low $40k range. Rowan's fleet is the youngest by far at an average of 13 years old and has the highest earning jackup fleet with average dayrates in the $130s.

Average dayrate per jackup manager

Worldwide, 320 of 488 jackups are currently contracted, which puts worldwide utilization at about 66%. Hercules' fleet is below the utilization average at 52% and Seahawk is reporting a 35% utilization rate. Combined, the new Hercules fleet is averaging 45% utilization. However, both Ensco and Rowan's utilization rates are above the worldwide average at 76% and 71%, respectively.

Average utilization per jackup manager


Protecting the future 


Hercules Offshore along with Apache Corp., Arena Offshore, Chevron, Delta Towing, Dynamic Offshore Resources, Energy XXI, Ensco, Hall-Houston Exploration, Helis Oil and Gas, Phoenix Exploration, Rowan Companies, Seahawk, W&T Offshore, and Walter Oil & Gas formed the Shallow Water Energy Security Coalition shortly after the administration declared a moratorium on offshore drilling. According to the coalition, its goal "is to educate policymakers and the general public about our business, including the industry's impressive record of safety and environmental responsibility, as well as the importance of drilling in shallow water to the economy and the security of US energy."

Despite the coalition's efforts, Seahawk could not survive the post-Deepwater Horizon GOM regulations. Though the BOEMRE has started granting permits to drill in the deepwater GOM again, the shallow water and deepwater permitting process remains slow. Unless things change soon, Seahawk Drilling won't be alone.

Follow Hercules and its projects worldwide by visiting SubseaIQ, or follow the developments, contracts and initiatives of the rigs through RigLogix.

Shell Expects to Drill in Alaska's Arctic in 2012

Shell Expects to Drill in Alaska's Arctic in 2012

Friday, April 15, 2011
Dow Jones Newswires
by Isabel Ordonez

Shell expects to start drilling in Alaska's Arctic waters in the summer of next year and have in place an oil-containment system specifically designed for the area ready at the same time, the head of the company's U.S. operations said Friday.

"Our aspiration is to drill in the 2012 season," Marvin Odum, president of Shell Oil Co., the U.S. unit of the Anglo-Dutch giant, told Dow Jones Newswires in a interview. "We are hopeful, but also cautions."

Shell still has to obtain a number of permits from the federal government in order to go ahead with its $3.5 billion investment to drill in the state's Beaufort and Chukchi seas. Shell's plans have been delayed by environmental lawsuits and permit issues on top of calls for better spill prevention and containment capabilities following BP's oil spill disaster in the Gulf of Mexico last year.

Odum said the company will wait until about September to see the amount of progress in the permitting process before making a final decision to start deploying the system needed to drilling next summer. "It takes about six months to build up the capacity you need to start the program," Odum said. "This is a very significant resource for the country, which is worth pursuing, and we are focused on getting it done."

Shell is planning to have in place an oil-containment system specifically designed to work in the cold-climate conditions of the Arctic by the time drilling starts, Odum said.

Shell said it has a three-tier, Arctic oil-spill response system consisting of an on-site oil-spill response fleet, near-shore barges and oil-spill response vessels, and onshore oil-spill response teams staged across the North Slope of Alaska that in the event of a blowout or spill could be ready to respond within one hour.

Separately, Odum said he believes it could take a year until the level of drilling activity in the Gulf of Mexico's deep water returns to normal levels, but that it could take longer if the federal government doesn't speed up the permitting process.

The Obama administration imposed a drilling moratorium in the area after BP's oil spill. The ban was lifted in October, but permits started to be issued only in late February.

Shell last month received the first authorization since the spill to drill a new well that complied with new regulations from the government. The company started drilling last week. However, Shell's production in the area will be about 50,000 barrels of oil equivalent a day lower this year due to the impact of the moratorium, Odum said.

The executive said the company is following closely the oil-shale acquisitions some of its U.S. rivals have recently made in the U.S. and that it is working on developing its oil-shale portfolio.

Odum said the world's oil markets are well supplied and that current high oil prices reflect the risk traders are seeing in short-term supply. He added that the ongoing oil glut at the Nymex delivery point of Cushing, Okla., could be solved in 2012 or 2013.

Maverick Completes Acreage Acquisition at Boling Dome

Maverick Completes Acreage Acquisition at Boling Dome

Friday, April 15, 2011
Maverick Drilling & Exploration Ltd.

Maverick Drilling has completed closing on the acquisition of an additional 850 net acres on Blue Ridge Dome and 740 net acres on the Boling Dome. The net effect of these are an increase from the original 838 net acres held at listing to a current position of approximately 4,100 net acres held on the two domes.

On Blue Ridge Dome, this reflects more than a 100% increase in net leasehold acreage from Maverick's original holdings at listing in September 2010. The acreage is a combination of outer band acquisition adjoining the company's existing acreage and additions to inner fairway holdings.

On Boling Dome, the additions of approximately 740 net acres reflect an increase of 46% from Maverick's original acquisition of 1,625 net acres in September 2010 following listing. These new acquisitions are within the confines of the defined Boiling Dome field, and have had previous drilling success in past decades.

Chesapeake Ropes Bronco Drilling

Chesapeake Ropes Bronco Drilling

Friday, April 15, 2011
Chesapeake Energy Corp.

Chesapeake and Bronco Drilling have entered into a definitive agreement for Chesapeake to acquire Bronco for approximately $315 million, including debt, net working capital and outstanding warrants.

Under the agreement, Chesapeake will make a cash tender offer to acquire all outstanding shares of Bronco's common stock at a price of $11.00 per share. The $11.00 per share purchase price represents premiums of 6% and 24% over the closing price of Bronco's common stock on the NASDAQ on April 14, 2011 (the date of signing of the definitive agreement) and the average closing price for the 90-calendar day period ending on April 14, 2011, respectively.

The transaction has been unanimously approved by the Boards of Directors of both companies. The Board of Directors of Bronco unanimously recommends that Bronco's shareholders accept the Chesapeake offer. Third Avenue Management LLC, on behalf of its investment advisory clients, and Inmobiliaria Carso, S.A. de C.V., which are Bronco's largest shareholders and collectively own or have dispositive authority over approximately 32% of Bronco's outstanding common stock, have committed to tender all their shares into the Chesapeake offer.

The acquisition will enable Chesapeake to further its goal of owning approximately two-thirds of the rigs that it operates in its drilling program - a key aspect of its vertical integration strategy - at an attractive price per rig. Bronco currently owns 22 high-quality drilling rigs primarily operating in the Williston and Anadarko basins, including three that are under contract with Chesapeake. Chesapeake is currently Bronco's second largest customer.

Following the closing of the transaction, Chesapeake will integrate Bronco's 22 rigs into Chesapeake's wholly owned subsidiary, Nomac Drilling, L.L.C., which currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake. The company is currently operating a total of 160 drilling rigs and plans to end 2012 utilizing approximately 200 drilling rigs. Chesapeake believes that the acquisition of Bronco should satisfy the vast majority of Chesapeake's anticipated rig investment needs through 2012.

Aubrey K. McClendon, Chesapeake's CEO, stated, "We have known and admired Bronco's management team and assets for years and we are especially pleased to announce this transaction today. The acquisition of Bronco is a great additional step in our vertical integration strategy and increases confidence in our plan to ramp up drilling activities in highly lucrative, liquids-rich unconventional resource plays. We look forward to working with Bronco's management team to quickly complete this transaction and integrate operations."

D. Frank Harrison, Bronco's Chairman and CEO, stated, "We are excited about this transaction with Chesapeake, one of the premiere and most innovative energy companies in the world. Chesapeake's visionary and people-centric approach is highly admired. We view this as a great opportunity and in the best interests of Bronco, our shareholders and our employees."

The definitive agreement entered into by Chesapeake and Bronco provides for Chesapeake to acquire Bronco in a two-step transaction. The first step will consist of a cash tender offer to be made by a wholly owned subsidiary of Chesapeake for all outstanding shares of Bronco common stock at a price of $11.00 per share in cash. In the second step, the tender offer will be followed by a merger in which the holders of the outstanding shares of Bronco common stock not purchased in the tender offer will receive the same per share price paid in the tender offer, in cash, without interest. Upon completion of the transaction, Bronco will become an indirect wholly owned subsidiary of Chesapeake. The tender offer will be conditioned upon a majority of the outstanding shares of Bronco common stock being tendered into the offer and will also be subject to regulatory clearances and other customary terms and conditions.

Chesapeake is expected to launch the tender offer shortly and the transaction is expected to close in the second quarter of 2011, subject to customary closing conditions. The transaction is not subject to or conditioned upon financing arrangements.

Johnson Rice & Company L.L.C. is acting as financial adviser to Bronco and has delivered a fairness opinion to its board of directors. Thompson & Knight is acting as legal counsel to Bronco. Jefferies & Company, Inc. is acting as financial adviser to Chesapeake. Commercial Law Group, P.C. and Wachtell, Lipton, Rosen & Katz are acting as legal advisers to Chesapeake.

Trinidad Drilling to Add New Rigs to Fleet

Trinidad Drilling to Add New Rigs to Fleet

Friday, April 15, 2011
Trinidad Drilling Ltd.

Trinidad Drilling has agreed to build two new rigs for delivery into operations in 2011.

"Demand for high quality, modern equipment has continued to increase and contract terms have now moved to a point where it is attractive for us to build new equipment," said Lyle Whitmarsh, Trinidad's President and Chief Executive Officer. "The rigs we are adding to our fleet fit well with our strategy of deep, technically advanced equipment and we expect that they will remain competitive long after their initial contracts expire."

Rig No. 139 will be an 18,000 foot (5,500 meter) triple rig with 1,500 horsepower and equipped with Trinidad's industry-leading technology and automation. The rig is expected to cost approximately $18 million and be operational in the Eagle Ford Shale in Texas in the second half of the year. The rig is backed by a three-year, take-or-pay contract that guarantees 100% utilization throughout the duration of the contract.

Rig No. 57 will be an 18,000 foot (5,500 meter) triple rig with 1,500 horsepower and is being built to work in Steam Assisted Gravity Drainage (SAGD) applications in north-eastern Alberta. In addition to Trinidad's usual automation and technical advancements, this rig will include a system that provides improved fluid handling ability while drilling in a pad environment, and a new pipe handling system that removes the need for a crew member to be positioned in the derrick, increasing both the performance and the safety of the rig's operations. Trinidad expects that it will cost approximately $20 million to build the rig and that it will be operational towards the end of 2011. The rig is under a four-year, take-or-pay contract that guarantees a minimum of 1,200 days over a four year period which equates to an 82% average utilization over the term of the contract.

In addition to these two newly-announced rigs, Trinidad is currently building a natural gas powered rig for operations in the Horn River in north-eastern British Columbia. The Company expects that the construction of the three new rigs, the completion of the 2010 rig construction program and capital enhancements planned for a small number of existing rigs will total approximately $80 million of capital expenditures in 2011.

Following the completion of the rigs being constructed in 2011, Trinidad will have 122 drilling rigs with 62 rigs in the US, 57 rigs in Canada and 3 rigs in Mexico. In addition, Trinidad has 22 service rigs, 20 preset and coring rigs and five barge drilling rigs.

CNOOC Waves Goodbye to Board Chairman

CNOOC Waves Goodbye to Board Chairman

Friday, April 15, 2011

CNOOC announced that Mr. Fu Chengyu has resigned as Chairman of the Board and non-executive director of the Company. Mr. Wang Yilin has been appointed as new Chairman of the Board and non-executive director of the Company. The aforementioned changes become effective from today.

Mr. Wang Yilin, the newly appointed Chairman of the Company commented, "With joint efforts of the Board, the management team and the entire staff, CNOOC Limited has grown into an outstanding company. In this new role, I will fulfill my duty with my best endeavor, to enhance the company's capability of value creation and sustainable growth. Meanwhile, on behalf the Board, I would like to thank Mr. Fu for his exceptional contribution to the development of CNOOC Limited."

Mr. Yang Hua, the Vice Chairman and CEO of the Company said, "Mr. Wang Yilin has abundant experiences in the oil and gas industry in China. With his leadership we will work more closely together to bring more value to our shareholders."

EnCore Shuffles Management

EnCore Shuffles Management

Friday, April 15, 2011
EnCore Oil plc

EnCore announced the following changes to its Board of Directors.

Non-Executive Director, L. Keith Hughes has tendered his resignation with immediate effect. Keith has recently become a senior partner at a law firm which has a general policy prohibiting partners holding non-executive directorships with for-profit companies. Keith has been on the EnCore Board since October 2009.

A new Non-Executive Director, Vivien Gibney (formerly Gaymer) has been appointed to the Board with immediate effect. Qualified as a barrister, Vivien has over 26 years’ experience within the oil and gas industry. Vivien’s previous roles include nine years at Mobil as Legal Counsel, and prior to her retirement, more than 17 years at Enterprise Oil plc where she undertook various roles including Head of Legal, Head of Human Resources and Company Secretary for the Group.

Christine Wheeler OBE, EnCore’s Chairman, commented, "On behalf of the EnCore Board, I would like to thank Keith for his invaluable service as a Non-Executive Director of Encore over the last 18 months and as a trusted adviser in the five years before that. I wish him well in his new role and anticipate that he will advise us again in the future.

"I am delighted to welcome Vivien to the EnCore Board. A number of us on the Board have worked with her before and we are looking forward to doing so again as we continue to follow our strategy of delivering value for shareholders."

EMAS to Take Delivery of FPSO from Keppel

EMAS to Take Delivery of FPSO from Keppel

Friday, April 15, 2011
Keppel Corp. Ltd.

EMAS Production is set to take delivery of one of Vietnam's largest Floating Production Storage and Offloading (FPSO) vessels from Keppel Shipyard Limited (Keppel Shipyard), on behalf of owner PV Keez Pte. Ltd (PV Keez).

To be managed and operated by EMAS Production, FPSO Lewek EMAS has been chartered by Premier Oil Vietnam Offshore B.V. for the development of the Chim Sáo field off southern Vietnam for six years, with a further option to extend the charter by another six years. The FPSO charter contract is one of only seven signed worldwide in 2009, and is worth approximately US$1 billion.

The project to convert the 168,000 dwt Suezmax tanker into an FPSO was awarded to Keppel Shipyard in December 2009. To date, Keppel Shipyard has achieved a good safety record of over 4.1 million incident-free man-hours for its conversion.

Speaking at the vessel's naming ceremony, Mr. Lionel Lee, Group Managing Director of EMAS said, "Lewek EMAS is our second FPSO project with Keppel Shipyard with whom we have established a win-win partnership. This FPSO underscores EMAS' ability to deliver a diverse range of customized marine and offshore support solutions, from design and engineering to maintenance and offshore installation. The addition of Lewek EMAS to our fleet propels EMAS Production to be one of Asia's leading FPSO operators."

Mr. Nelson Yeo, Managing Director of Keppel Shipyard said, "Keppel Shipyard is pleased to support the conversion of Lewek EMAS. We provided a broad spectrum of FPSO conversion services on this project, including the engineering and fabrication of topsides modules.

"In spite of the tight schedule, the project teams for this conversion have worked hard to upkeep the highest standards of quality and safety of our people and workplace. The successful conversion of Lewek EMAS further enhances Keppel as the choice provider of reliable and value-added services."

Lewek EMAS is on track for delivery in the second quarter of 2011, and is expected to begin production in July this year.

A joint venture between Ezra Holdings Limited, PetroVietnam Transportation Corporation, EOC Limited and KSI Production Pte Ltd, PV Keez is the first overseas company to secure an offshore Vietnam loan in order to finance the FPSO's conversion.

Consumer Sentiment Rises To 69.6 In Preliminary April Report

Consumer Sentiment Rises To 69.6 In Preliminary April Report

Apr 15, 2011

The Thomson Reuters/University of Michigan survey of American consumer sentiment hit 69.6 in its preliminary reading for April, up from 67.5 in March.

Barclays Capital analysts said in a research note in advance of the data's release, "The equities market has recovered somewhat since its recent low in mid-March and we think that this should support consumer expectations. However, energy prices remain elevated and have continued to rise further over the recent period."

Economists had been expecting a reading of 69. The rise comes after a big drop in March from February, as consumers showed concern about Middle Eastern unrest, the rising price of oil, and the devastating Japanese natural disaster.

The current conditions index was 82.7, up from 82.5 the month prior, while the future expectations gauge came in at 61.2, up from 57.9.

Proposed EPA Regs Put Energy Reliability, Affordability at Risk, CEO Says

Proposed EPA Regs Put Energy Reliability, Affordability at Risk, CEO Says

Apr 15, 2011

The Southern Company (SO) CEO Thomas Fanning told Congress today that the U.S. Environmental Protection Agency's (EPA) proposed regulation is risking reliability, American jobs, and higher electricity prices and could impact economic development. Utility companies have 60 days to comment on the proposal. Fanning said the deadline is inadequate for companies to analyze all the data and offer its opinions. Southern Company's shares are up 0.95% in early trading at $38.20.

Petrobas Inks MOU with Chinese Oil Cos

Petrobas Inks MOU with Chinese Oil Cos

Friday, April 15, 2011

Petrobras has signed a Memorandum of Understanding (MOU) with the Chinese company Sinochem Corporation and a General Technological Cooperation Agreement (GTCA) with Sinopec.

The MOU signed with Sinochem includes a strategic cooperation between the parties in oil and gas exploration and production in Brazil and abroad; technological cooperation for the development of projects aimed at increasing oil recovery; export of oil and other products.

The objective of the GTCA signed with Sinopec is the exchange of experiences and knowledge in technological areas with a focus on Geophysics, Geology, Reservoir Engineering and Assessment aimed at increasing oil recovery of the reservoirs of both Companies.

The agreements are designed to enhance cooperation between the activities of the companies, both in Brazil and abroad, in areas of common interest and are aimed at developing a strategic cooperation in activities of the oil and gas industry.

Rocksource Scoops Up Blocks Offshore Norway

Rocksource Scoops Up Blocks Offshore Norway

Friday, April 15, 2011
Rocksource ASA

Rocksource has been awarded 4 new licenses in the 21st Licensing Round on the Norwegian Continental Shelf (NCS) announced by the Ministry of Oil and Energy on the April 15, 2011. All licenses contain high potential, low risk prospects that have been de-risked using Controlled Source Electromagnetic (CSEM) data, processed in the proprietary software system ‘Rocksource Discover’, prior to application. These awards mark another significant milestone in the Company’s development and add multiple, high value drillable prospects to the Rocksource prospect inventory.


PL 602. Blocks 6706/10 (part), 6706/11, 6706/12 (part)

This license is located on the Vema Dome in the Vøring Basin (Norwegian Sea), immediately west of the Luva, Haklang and Snefrid discoveries. Several prospects have been mapped and de-risked using 3D seismic data and CSEM. The prospects have potential targets at multiple reservoir levels.
  • The license group consists of:
    • Statoil (Op.): 40%
    • Petoro: 20%
    • Centrica: 20%
    • Rocksource: 20%
  • The work program consists of:
    • Year 1-3: Acquire new 2D seismic and reprocess 3D seismic. Decide on drill or drop.
    • Year 4-5: Drill exploration well.
    • Year 6: Decide on continuation or drop.


PL 528 B. Block 6707/10 (part)

This license is located in the Vøring Basin in the Norwegian Sea, directly northeast of the Luva, Haklang and Snefrid discoveries. The license is an extension to PL 528, and the new acreage is securing ownership of the full extent of the Ivory prospect which was awarded in the 20th Round.
  • The license group consists of:
    • Suncor Energy (Operator): 40%
    • Centrica: 30%
    • Rocksource: 30%
The work program follows PL 528, where a drill or drop decision must be taken within April 2012.


PL 601. Blocks 6609/3 and 6610/1

This license is located in the eastern part of the Træna Basin, in the Norwegian Sea. Several leads and prospects have been mapped and de-risked using 3D seismic data and CSEM.
  • The license group consists of:
    • Wintershall (Op): 40%
    • Edison International: 20%
    • North Energy: 20%
    • Rocksource: 20%
  • The work program consists of:
    • Year 1-3: G&G work, reprocessing of existing 3D seismic, acquisition of minimum 250 new 3D seismic. Carry out G&G studies where evaluation and possible CSEM acquisition is included. Decide on drill or drop.
    • Year 4-5: Drill exploration well.
    • Year 6: Decide on continuation or drop.


PL 610. Blocks 7722/2 and 7722/3

This license is located at the eastern margin of the Loppa High, in the Barents Sea, immediately north of the Obesum discovery. The prospectivity has been mapped and de-risked using 2D seismic data and CSEM.
  • The license group consists of:
    • GDF Suez E&P (Op.): 50%%
    • Spring Energy: 25%
    • Rocksource: 25%
  • The work program consists of:
    • Year 1-3: Acquisition of new 3D seismic. Decide on drill or drop.
    • Year 4-5: Drill exploration well.
    • Year 6: Decide on continuation or drop.
Rocksource's COO Gregor Maxwell commented, "These awards further add to Rocksource’s existing portfolio of prospects which have been de-risked using an integrated evaluation of EM data in combination with conventional seismic and well information. We believe each award contains low risk, high value prospectivity which we look forward to maturing with our partners."

United American Petroleum Drills Ahead in Bastrop County

United American Petroleum Drills Ahead in Bastrop County

Friday, April 15, 2011
United American Petroleum Corp.

United American Petroleum provided an update on its drilling development program for its Bastrop County, Texas operations. The Company's Gabriel Rosser Project consists of two strategic phases. Phase 1, drill new proposed locations and begin initial pressurization of existing wells and Phase 2, continue development of undeveloped acreage on the Gabriel lease, which from geophysics indicates an undeveloped serpentine mound to the east of the existing Gabriel wells.

The Gabriel Rosser Project is a serpentine development and re-pressurization operation consisting of two mounds, on adjacent acreage; the Gabriel and Rosser lease. Phase 1 consists of new development drilling in the Gabriel mound and secondary pressurization of a developed Rosser serpentine mound. The Company will continue to produce its Rosser #4 well and will equip the Gabriel #9 well for immediate production. Upon completion, the Company will drill the Gabriel #16 well, an offset and replacement well, to the Gabriel #4 oil well. The expected initial production is estimated to be approximately 100 to 200 BOPD and 50 to 100 MCFGPD. United is currently in the process of obtaining a permit to drill the Gabriel #16 well.

The Gabriel #4 well initially produced at 426 BOPD from a 102 ft. thick serpentine section. The total depth for the new well should be approximately 3,180 ft. and United expects serpentine sections of 150 to 170 ft. thick. The Gabriel #16 location had high surface geochemical hydrocarbon readings of 68 ppm (parts per million). Currently, Gabriel #4 has 400 psi on casing, and 1,400 ft. of oil in casing above perforations at 3,050 ft. However, the Gabriel #4 has water encroachment from the Austin Chalk perforations below the serpentine and the Company will need to isolate the water to optimize production from this well. Current surface casing pressure is 400 psi, which is all natural gas.

In February 2010, oil was found in the Gabriel #4 well at a depth of 1,320 ft., or 1,700 ft. above the perforations. As oil is produced from the new Gabriel #16 well, gas released from the oil will be used to begin gas pressure maintenance on a portion of the mound complex. We believe an additional (2) wells could be drilled near the Gabriel #4 and #16 locations.

United will need to hook up a compressor at the Rosser #2 well and begin pressurization of the Rosser mound. This secondary recovery gas injection produces from GAGD (gas assisted gravity drainage) and has proven to be effective. This will begin to pressurize the Rosser mound and increase production in the existing Rosser #4 well once the squeeze has been completed. Upon completion, the Gabriel #17 will be drilled near the Gabriel #4 and Gabriel #16 locations. We believe an additional 2 to 3 wells could be drilled on the Rosser mound.

Phase 2 consists of expanding the undeveloped portion of the Gabriel lease. A surface magnetometer survey was run over the Gabriel property. Serpentines traditionally have a strong magnetic signature and many mounds have been drilled solely from magnetometer surveys. The magnetometer indicated a magnetic buildup in approximately 160 acres of the Gabriel lease between the Gabriel #3 and Gabriel #4 wells.

Michael Carey, President of United American Petroleum said, "We are very enthused with the results of the project and tests to date. The completion techniques and utilization of the produced gas to re-pressurize the zone makes this project unique in the sense that we could actually reverse the traditional depletion curve and produce more hydrocarbons at an increasing rate as the zone re-pressurizes over time. With these techniques, coupled with the potential for additional drilling locations, we feel this will become a valuable asset to United as well as create a platform for utilization in other areas with similar geological parameters."

Analysis: UK North Sea Drilling Activity, Production Decline

Analysis: UK North Sea Drilling Activity, Production Decline

Friday, April 15, 2011
Rigzone Staff
by Karen Boman

While debate continues over how proposed changes to the UK's tax regime will impact North Sea oil and gas production, exploration activity declined in the first quarter of this year and weakness in oil output for the UK North Sea is expected to continue.

Nine exploratory and appraisal wells were drilled on the UK Continental Shelf (UKCS) during this year's first quarter, a 25 percent decline from the same period in 2010 and the previous quarter, according to a report by Deloitte's Petroleum Services Group. Five of those wells have been started in the Central North Sea; two in the Southern North Sea; one in the Northern North Sea, and one on the Faroe-Shetland Escarpment.

Prior to the announcement of tax increases by the UK government, Deloitte said that, despite the decrease in drilling activity, industry outlook for UK drilling had initially appeared positive this year as the average Brent Blend oil price continued to rise. Deloitte noted that there were indications that increased Brent prices and tax incentives were encouraging companies to

return to pre-recession strategies.

However, the announcement of tax increases has had a negative effect on industry optimism and a number of companies have already announced that they intend to put appraisal and development projects on hold. "At present, it is unclear how these factors will affect levels of drilling activity over the coming months," Deloitte said in the report.

Deloitte reported seeing more farm-in activity than asset acquisitions in the first quarter, noting that farm-in activity for this quarter was higher than fourth quarter 2010. The uptick in farm-in activity could be indicative of companies beginning to return to corporate strategies that were in place pre-recession. The increase in farm-ins could also be attributed to the continued rise in oil prices, which may provide incentive for companies to increase their equalities in reserves.

UK Oil Production Weakness

Last month, Barclays Capital reported that it anticipated weakness in UK total oil liquids output to continue as no major field start-ups to boost output are in sight.

UK total oil liquids output averaged 1.3 million b/d in December, a year over year decline of 128,000 b/d, with production falling by 111,000 b/d across 2010 as a whole. The decline is a step up from the declines in 2008 and 2009, when output declined by 106,000 b/d and 73,000 b/d, respectively.

Barclays expects output to fall by .15 million b/d this year, and it's fair to say that the UK Treasury's proposed tax hike on UK North Sea oil and gas production will hurt UK oil production, said Amrita Sen, oil analyst for Barclays. "Because it's a mature basin, production costs in general are already higher, so if you add additional costs, it will be difficult to incentivize research and development efforts for technology in this area."

The tax increase announcement has already prompted Norway-based Statoil to put plans on hold to develop two heavy oil fields in the UK North Sea in light of the proposed tax hike. This delay and other possible delays mean ongoing weakness in UK oil output will continue.

Sen estimates that an additional 100,000 b/d of oil is needed to maintain current UK oil production, and that an additional 200,000 b/d of oil is needed to maintain existing Norwegian oil production, which is experiencing even steeper declines than UK oil production.

New Production Coming Online

Weakness in oil output is expected to continue; however, new oil and gas production is expected to come online within the next year. Endeavour International Corporation expects oil production from its Bacchus development on UK Block 22/6a in the Central North Sea to begin during the second half of this year, and gas production from its Columbus development on UK Block 23/16f to begin in 2012.

In late February, the UK Department of Energy and Climate Change (DECC) approved Endeavour's Rochelle Field Development Plan (FDP) for Block 15/27 in the Central North Sea, now known as East Rochelle. The current FDP calls for the subsea development to be linked by a 18.6-mile pipeline to production facilities on the Scott Platform. First production is planned for the second half of 2012. West Rochelle, which was successfully appraised in October 2010, will be integrated into this development plan as the second phase.

DECC also has approved RWE Dea's field development plan for the Clipper South gas field in the UK North Sea. The field will be developed by five horizontal wells, each containing up to six hydraulic fractures, connecting to a wellhead platform and then piped to the LOGGS PR platform. First gas is expected in the first quarter of 2012, with production is anticipated to reach a maximum rate of 100 MMcf/d.

O&G Employment Outlook for UK

Salaries in the UK oil and gas industry through 2010 were some 50% lower than those in other oil and gas regions, such as the U.S. or Norway, as the UK oil and gas industry was dragged down by the recession experienced by the overall UK economy. While these are now rising, they are still lagging some way behind their counterparts. "Consequently, many international companies are targeting the UK as a location in which they can recruit highly skilled talent at relatively low costs," said Matt Underhill, managing director for oil and gas at Hays Recruiting.

"The one positive sign in the market regards salaries is that day rates for contractors have shown some excellent growth and this is usually a pre-cursor to staff salaries following suit," Underhill noted.

Faroe Snaps Up Second License in Barents Sea

Faroe Snaps Up Second License in Barents Sea

Friday, April 15, 2011
Faroe Petroleum plc
by SubseaIQ

Faroe announced the 21st Norwegian License Round award of its second license in the Norwegian Barents Sea, as announced by the Norwegian Ministry of Petroleum and Energy.

The new license covers an area of approximately 2100 square kilometers and is located within blocks 7223/3, 6 and 7224/1, 2, 3, 4 & 5. This is the largest single license awarded within the Barents Sea in this round. The main Kvalross Prospect consists of a wedge of clinoforms contained within a large structural closure. This new license area is located to the east of the recent significant Statoil discovery, Skrugard, and immediately adjacent to Faroe Petroleum's Samson Dome license, which has now completed the acquisition and processing of an extensive 3D seismic survey.

The new license partners are Faroe Petroleum (40%), together with Wintershall (40% and operator) and Petoro (20%). The license work program involves the acquisition of 3D seismic data, with a decision to drill to be taken within three years.

Graham Stewart, Chief Executive of Faroe, commented, "Faroe was awarded its first license in the Barents Sea in the 20th Norwegian Licensing Round. Since then, our team has continued its efforts to identify new high quality exploration prospects in the Barents Sea, and we are therefore delighted to have been awarded our second prestigious license in the highly competitive 21st Licensing Round. Our team has considerable experience in the Barents Sea, which is becoming an increasingly important oil province, with the Goliat oil field development now underway, and recently, a new large oil discovery by Statoil on the Skrugard prospect. The Barents Sea is an area which complements our strategic position in the Atlantic margin area of West of Shetlands and the Faroe Islands and secures further highly prospective exploration acreage for the Company. Of the 17 wells in the Company's exciting, fully funded 2011 to 2013 drilling program, 13 are planned to be drilled in Norway, clearly demonstrating Faroe's continuing commitment to create further value in Norway."

Nations Going Global on Drilling Standards

Nations Going Global on Drilling Standards

Friday, April 15, 2011
Houston Chronicle
by Jennifer A. Dlouhy

Drilling regulators from a dozen countries on Thursday agreed to form a working group that could eventually develop global offshore drilling standards.

Interior Secretary Ken Salazar suggested the idea at the end of a daylong summit on offshore drilling safety that focused on learning lessons from last year's Deepwater Horizon disaster, including a need for better ways to rein in runaway underwater wells.

"The working group can help us figure what the best organization is" and "can help us develop global protocols for oil and gas development," Salazar said.

The current set-up -- a patchwork of standards that vary from ocean to ocean and country to country -- doesn't recognize the reality that the same companies drilling in the Gulf of Mexico are also drilling off Brazil, Angola and Norway, Salazar said.

"I feel confident in what we are doing with the Gulf of Mexico, but the oil and gas industry is a global industry," Salazar said. And, he added, "it's one ocean in this Earth."

"When we get to the second anniversary of the Macondo spill, hopefully we will be able to be working on global standards that go beyond just our own backyard," Salazar said.

The representatives at Thursday's summit -- including those from the United Kingdom, the European Union, Russian Federation and Australia -- tentatively agreed to meet again in Oslo, Norway, in 2012, on the Gulf spill's second anniversary.

Salazar tasked his offshore drilling chief, Michael Brom-wich, with developing the framework for the international working group within 90 days.

One notable absence in the planned collaboration -- at least initially -- and at Thursday's international summit is Cuba, which expects five wells to be drilled off its coast in the next two years. Salazar said the U.S. was concerned about the potential drilling 60 miles off Florida, within the loop current that travels up the East Coast.

The drilling regulators at Thursday's summit stressed that the blowout at BP's failed Macondo well is shaking up government oversight of coastal oil and gas exploration far beyond the Gulf of Mexico.

Geoffrey Podger, chief of the United Kingdom's health and safety executive, called the blowout of BP's Macondo well a seminal event, like the 1988 explosion on the Piper Alpha platform in the North Sea that killed 167 people.

"The accident was a watershed for the oil industry," said Mario Gabriel Budebo, Mexico's undersecretary of hydrocarbons, who has been meeting with U.S. officials to try to harmonize standards for drilling in the Gulf.

One of the biggest post-Macondo lessons, Budebo said, was "the need for drilling and development plans to include design of emergency procedures" for countering blowouts.

Jan de Jong, the Netherlands' inspector general of mines, stressed that "it is absolutely necessary to raise standards in industry."

"This accident is not unique for deep-sea drilling in general, nor BP, nor for the Gulf of Mexico," Jong said. "It could have happened anywhere."

Norway's top petroleum and energy minister, Per Rune Henriksen, said he was dismayed by the inability to cap blowouts as evidenced by the Gulf spill that took 85 days to contain and the Montara blowout near Australia that leaked for 74 days before it was finally killed in November 2009.

Those crude-containment failures are "highly unsatisfactory," Henriksen said. "This is an area where the industry must provide solutions."

Drilling Bill Modernizes State O&G Statutes

Drilling Bill Modernizes State O&G Statutes

Friday, April 15, 2011
Knight Ridder/Tribune Business News
by Robert Barron, Enid News & Eagle, Okla.

Enid Legislation authored by state Rep. Mike Jackson and state Sen. Cliff Branan allowing expansion of horizontal drilling in Oklahoma was signed into law Wednesday by Gov. Mary Fallin.

House Bill 1909 modernizes oil and gas statutes to update them to accommodate technological advances in horizontal drilling in shale reservoirs. Jackson, R-Enid, said originally there was opposition from royalty and mineral owners, but a task force led by Corporation Commissioner Dana Murphy looked at the problem in an interim study.

The legislation allows for production to expand across drilling unit boundaries of 640 acres. To do so, producers would make application to royalty owners. Producers who do not own a royalty lease can go across the lease and make percentage payments for surface damages that have been done. Jackson said that will benefit shale production in northwest Oklahoma. It makes investment costs less, because drilling can be extended, rather than "poking another hole in the ground," he said.

"When you poke a hole in the ground, your upfront costs are more, so if you can extend it ...," Jackson said.

He said he thinks there will be an increase in horizontal drilling in northwest Oklahoma because of the shale play here and because investment costs are less. That will result in an increase in gross production tax receipts, give more people jobs and do a number of things that will benefit the state, Jackson said.

"The more production is pulled out of the ground benefits the mineral owner as well," he said.

Producers must submit a proposal for horizontal drilling to Oklahoma Corporation Commission for approval, and mineral owners will have a say in whether they want it to occur, Jackson said. There is a high threshold, but an overall benefit to everyone will make it work, he said.

Fallin said the act will help Oklahoma compete against other shale plays nationwide and ensure drilling dollars stay in Oklahoma. Murphy praised the signing of the bill Wednesday.

"I am pleased and proud to have been part of this nine-month-long collaborative effort to ensure that Oklahoma's natural resources continue to be developed while protecting all mineral owners' and other stakeholders' rights," Murphy said. "It was an honor to serve as the facilitator and coordinate this effort with industry, mineral owners and others to make this bill a reality."

A statement from Continental Resources said representatives of the company participated in the study sponsored by Murphy. Advances in horizontal drilling techniques for wells drilled and completed in shale reservoirs have advanced beyond the historical statutory spacing scheme, particularly with lateral wells exceeding 5,280 feet in length, the Continental statement said.

Oklahoma Corporation Commission is the agency charged with the protection of rights of those owning oil and gas interests in Oklahoma, prevention of waste and promotion of full development.

CPI Increases 0.5% In March

CPI Increases 0.5% In March

Apr 15, 2011

The consumer-price index increased 0.5% in March, led by increases in food and fuel costs, according to the Labor Department. The report was in-line with what economists had expected.

Core CPI, which excludes volatile food and fuel prices, rose 0.1% in the month, less than the 0.2% economists had forecast.

The index has now increased 2.7% in the past 12 months, the biggest year-over-year increase since December of 2009. Core CPI has risen 1.2% in that time frame.

As recently as October, the year-over-year gain was just 0.6%, the smallest rate of price increase since records began in 1958.

Energy costs increased 3.5% from a month earlier, the most since December, while gasoline prices jumped 5.6%.

Rising prices have caused economists to lower their forecasts for inflation adjusted consumer spending, which increased at a 2% annual rate in Q1, compared to a 4% gain in the fourth quarter of 2010.

Noreco Picks Up NCS Licenses

Noreco Picks Up NCS Licenses

Friday, April 15, 2011
Norwegian Energy Co. ASA

Norwegian Energy Company (Noreco) has been offered two licenses in the 21st licensing round on the Norwegian continental shelf.

"This license round has opened up for very interesting new opportunities in the Barents Sea and the Norwegian Sea, and has attracted a lot of interest from the industry. We are very pleased to see that Noreco was awarded two of its prioritized targets," said Einar Gjelsvik, CEO in Noreco.

Noreco has been offered a 40 percent interest in license PL606 which is located in the Barents Sea. OMV will be operator for the license.

The company has also been offered a 20 percent interest in license PL599, which is located in a part of the Norwegian Sea where Noreco already has a strong acreage position. This license will be operated by BG Norge.

Salamander Sees Gas Shows at Thai Well

Salamander Sees Gas Shows at Thai Well

Friday, April 15, 2011
Salamander Energy plc

Salamander provided the following update on its Thai drilling operations in Block L15/50, onshore Northeast Thailand, and Block B8/38, Gulf of Thailand.

Dao Ruang-2 well, Block L15/50

Dao Ruang-2 ("DR-2") drilling operations at the Dao Ruang-2 location have been completed. Following an openhole drill stem test ("DST") the well failed to flow at a sustained commercial rate and is in the process of being temporarily suspended for potential re-entry at a later date. Drilling now moves to the second location of the two well program, as originally planned, targeting an independent fault network in the structure.

The DR-2 well was drilled to a depth of 2,212 meters true vertical depth sub-sea ("m TVDSS") into the eastern flank of the Dao Ruang structure, targeting a swarm of faults and fractures identified from high resolution 3D seismic. The well intersected a number of fracture zones with associated gas shows and experienced gas influx associated with a fault system around 1,840 m TVDSS. Gas shows were seen all the way to TD, with no sign of water, demonstrating a significant gas column in the Dao Ruang structure.

An openhole DST was undertaken across an interval between 1,008 - 2,211 m TVDSS. The section was tested following an acid wash, however only sub-commercial flow rates were recorded, indicating very low permeability formation and a limited open, connected fracture network at the DR-2 location.

The MB Century 26 rig will now be mobilized to the Dao Ruang-3 ("DR-3") drilling location. The DR-3 well will target a separate fracture set on the northern flank of the Dao Ruang structure with a different orientation to those seen in DR-2, providing a greater chance of encountering an open fracture network and an opportunity to test at a commercial flow rate.

The DR-3 well will be drilled to a planned depth of 1,900 m TVDSS and is expected to spud within the next 8 days. The well is forecast to take 45 days to drill on a dry hole basis.

Salamander has a 50% interest in, and is operator of, Block L15/50.

James Menzies, Chief Executive Officer of Salamander Energy, said, "While it is disappointing that we did not encounter commercial gas at our first Dao Ruang location, it is clear from drilling that there is a significant gas column in the structure. The two well program was originally designed to target two independent fault networks in different orientations, and we expect to spud the second well in a matter of days."

Circle Oil Hits Gas Pay in Morocco

Circle Oil Hits Gas Pay in Morocco

Friday, April 15, 2011
Circle Oil plc

Circle Oil announced that the KSR-11 exploration well has been drilled, logged and successfully tested in the Sebou Permit, Rharb Basin, Morocco.

The Company confirms a gas discovery in the Main Intra Hoot target and secondary targets available for future testing in the Mid and Base Guebbas sands. The well tested gas at a sustained rate of 4.0 mmscf/d on a 16/64" choke from the Intra Hoot. The perforated Intra Hoot zone of 17.9 meters at 1,761.2-1,779.1 meters MD has a calculated net gas pay of 11.6 meters.

The Base Guebbas zone of 37.7 meters at 1,636.0-1,673.7 meters MD has a calculated net gas pay of 5.5 meters. The Mid Guebbas zone of 22.8 meters at 1,464.1-1,486.9 meters MD has a calculated net gas pay of 4.1 meters. The Guebbas Zones will be tested at a later date following production and depletion of the Intra Hoot producing zone.

The well is being completed as a potential producer.

A full technical evaluation of all the results of the well is underway. This will allow for future planning as a precursor to further assessment of the resource, including conducting an extended well test to give a more complete estimation of the reserves.

The drilling rig is now being demobilized to end the 2010-2011 drilling campaign. Work is underway for consolidation of the results of this campaign together with planning for the next drilling campaign. The preparations for Circle's third Moroccan drilling campaign include the acquisition of a new 3D seismic survey over areas of Circle's permits not previously covered by 3D seismic.

In parallel, recent engineering testing of underground crossings of public transport infrastructure have been successfully completed as part of the construction preparation for the new 8-inch pipeline. Work on the pipeline is progressing in line with management's expectations.

The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt. The concession agreement, in which Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share, includes the right of conversion to a production license of 25 years, plus extensions in the event of commercial discoveries.

Prof. Chris Green, CEO, said, "I am very pleased to be able to report that we have yet again continued our drilling success in Morocco's Rharb Basin. The KSR-11 well has been completed and, when required, will be available for future production. We tested this well at a small restricted choke size and it still achieved a good flow rate with very quick pressure build up. The second drilling campaign has been very successful and we have increased our ability to both supply gas and incrementally increase our resources in line with the business plan for the area. Everyone has worked hard to achieve this result and it is definitely appropriate to thank staff and our service companies for their efforts and also to thank ONHYM for their continuing support to our endeavors."

Lukoil Buys 25.1% Stake in Trebs, Titov Project

Lukoil Buys 25.1% Stake in Trebs, Titov Project

Friday, April 15, 2011
Dow Jones Newswires
by Jacob Gronholt-Pederson

Lukoil has agreed to buy a 25.1% stake in the Trebs and Titov exploration project in northwest Russia from mid-sized oil company Bashneft.

Lukoil paid RUB4.7 billion ($166.7 million) for the stake in the project, which needs investment of $6 billion, Lukoil's Chief Executive Vagit Alekperov said.

Lukoil expects first oil from Trebs and Titov in the fourth quarter 2013 or the first quarter 2014, he said.

Bashneft, which is majority-owned by conglomerate AFK Sistema, last year won the right to develop the Trebs and Titov oil fields ahead of bigger rivals such as Lukoil and TNK-BP Ltd.

Last year's auction for the Trebs and Titov fields, which combined hold 1.5 billion barrels of oil, was mired in controversy after bidders were told by authorities they couldn't bid because of incorrectly-filed applications.

Norway Makes Headway in Barents Sea Exploration

Norway Makes Headway in Barents Sea Exploration

Friday, April 15, 2011
Norwegian Petroleum Directorate

The Ministry of Petroleum and Energy has awarded new production licenses in the 21st licensing round on the Norwegian shelf. 29 companies were offered participation in 24 new production licenses.

Twelve of the licenses are in the Norwegian Sea and twelve in the Barents Sea. Four of these are additional acreage associated with existing production licenses.

Exploration director Sissel Eriksen of the Norwegian Petroleum Directorate (NPD) said this was the most comprehensive announcement ever in the Barents Sea, and that it also includes areas located further north than before.

"In this licensing round, we are moving further north/northwest than in existing production licenses. Therefore, this is an important step on the road towards exploring the Barents Sea," she said.

Eriksen emphasizes that the NPD is satisfied with the round, which was one of the most comprehensive ever. The interest from the companies has been significant, and it is clear that the players still believe in the Norwegian shelf.

The preparations for the round started on November 5, 2009, when the Ministry of Petroleum and Energy invited the oil companies to nominate blocks they believed should be part of the announcement. The round was announced on 23 June last year, with an application deadline of November 3.

Lundin Expands Presence in Barents Sea

Lundin Expands Presence in Barents Sea

Friday, April 15, 2011
Lundin Petroleum AB

Lundin has been awarded a new exploration license interest in the 21st Norwegian Licensing Round. The awarded license, PL609 is located in the Barents Sea.

Lundin Norway will be the operator of PL609 with 40 percent interest. The partnership comprises RWE Dea Norge AS and Idemitsu Petroleum Norge AS, each with 30 percent interest.

PL609 covers an area of 1,180 km2, and is located immediately east of license PL532 where Statoil recently made a significant oil discovery on the Skrugard prospect (7220/8-1).

Lundin Norway AS has a strong acreage position in the area with four operated licenses and one partner-operated license in addition to the new award. Lundin Norway will drill a well on the Skalle prospect, well 7120/3-2, scheduled to be spudded in the second quarter 2011.

Maersk Oil Takes Stake Offshore Norway

Maersk Oil Takes Stake Offshore Norway

Friday, April 15, 2011
Maersk Oil

Maersk Oil has been awarded a 30% non-operated share in License PL597 on the Halten Terrace offshore Norway in the 21st Licensing Round.

The operator of the license is VNG Norge A/S (40%) with Dana Petroleum Plc as partner (30%). Together with Maersk Oil, the partners are committed to carrying out seismic data reprocessing leading to a decision whether to drill an exploration well.

"This license award fits well with Maersk Oil's strategy of building up a strong exploration portfolio in our chosen focus areas in Norway. It adds to our current interests in four other licenses on the Halten Terrace," said Morten Jeppesen, Managing Director of Maersk Oil Norway.

"We are committed to growing our business in Norway through exploration and acquisitions to build a significant portfolio of exploration and producing assets in the coming years," Jeppesen said.

Statoil Gets NPD Nod for North Sea Drilling

Statoil Gets NPD Nod for North Sea Drilling

Friday, April 15, 2011
Norwegian Petroleum Directorate

The Norwegian Petroleum Directorate has granted a drilling permit for wellbore 6407/3-1 S, cf. Section 8 of the Resource Management Regulations.

Wellbore 6407/3-1 S will be drilled from the Transocean Leader drilling facility at position 64°46'32.49" N and 7°42'14.23" E after it has completed drilling of wildcat well 6407/4-2 for Statoil ASA in production license 429.

The drilling program for wellbore 6407/3-1 S relates to drilling of a wildcat well in production license 312 where Statoil ASA is the operator with an ownership interest of 59 percent. The other licensees are ExxonMobil Exploration & Production Norway AS (24 percent) and Eni Norge AS (17 percent). The area in this license consists of part of block 6407/3 and part of block 6407/6. The well will be drilled about six kilometers north of the Mikkel gas/condensate field.

Production license 312 was awarded on December 12, 2003 in APA 2003. This is the third well drilled in the license.

The permit is contingent upon the operator having secured all other permits and consents required by other authorities before the drilling starts.