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Oil and Gas Energy News Update

Monday, April 18, 2011

SmarTrend Market Close Wrap-Up: April 18, 2011

SmarTrend Market Close Wrap-Up: April 18, 2011

Apr 18, 2011

The major U.S. equity indices closed lower Monday after Standard & Poor's Ratings Services lowered its outlook on the U.S.

S&P's Ratings Services affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the U.S. It also revised its outlook on the long-term rating to negative from stable.

Crude futures for May delivery fell 2.48% lower to $106.94 a barrel on the New York Mercantile Exchange.
In corporate news, Texas Instruments (TXN) reported Q1 revenue of $3.39 billion, in line with the analyst expectations. EPS was $0.55, vs. expectations of $0.58 per share. For Q2, the company expects revenue in the range of $3.41 to $3.69 billion and EPS of $0.52 to $0.60 per share.

The Dow Jones Industrial Average (DJI) closed 1.14% lower at 12,201, the S&P500 (INX) closed 1.10% lower at 1,3.05, and the Nasdaq Composite (IXIC) closed 1.06% lower at 2,735.

Commodity Corner: Crude Tumbles on S&P Debt Outlook

Monday, April 18, 2011
Rigzone Staff
by Saaniya Bangee

Front-month crude futures plummeted Monday after Standard & Poor (S&P) changed its outlook for U.S. debt from stable to negative. The shift in outlook has increased concerns of the U.S. economy's stability and cuts in government spending.

Oil prices fell by $2.54 Monday, settling at $107.12 a barrel on the New York Mercantile Exchange (NYMEX). Prices fluctuated between $106.54 and $109.44. The S&P move came on the possibility that policymakers may not reach an agreement on how to address long-term fiscal pressures.

Over the weekend, China's central bank announced it would increase bank reserve requirements. In its fourth attempt this year, China hopes to control inflation and curb energy demand. Following the U.S., China is the world's second largest energy consumer.

Additionally, Saudi Arabia's Oil Minister Ali al-Naimi said Sunday that the kingdom has reduced oil production by 800,000 barrels due to lack of demand. Crude output was 8.3 million barrels a day last month, compared to February's 9.1 million barrels a day. Naimi anticipates an increase in April production.

On Monday, the greenback rose against the euro and other currencies further pressuring prices. The euro fell on concerns that Greece will have to restructure its debt. A stronger dollar makes oil more expensive, less attractive to foreign buyers.

May natural gas prices fell for a second day Monday, settling nearly seven cents lower at $4.14 per thousand cubic feet. Analysts do not foresee any near-term pressure increasing prices due to near-average storage and below-average prices. The intraday range for natural gas was $4.087 to $4.27 per thousand cubic feet.

Likewise, gasoline futures fell 1.1 percent, peaking at $3.29 before bottoming out at $3.23. Gasoline priced ended Monday's trading session at $3.25 a gallon.

ConocoPhillips Commits to $2B Slope Project If State Tax Change Is Made

Monday, April 18, 2011
Alaska Journal of Commerce
by Tim Bradner

ConocoPhillips CEO James Mulva said his company will increase its Alaska drilling and will work toward development of a $1.5 billion to $2 billion partial gas processing plant, and a new 50-well drill pad, in the west end of the Prudhoe field.

That's if the state of Alaska takes steps to improve the fiscal environment.

Mulva spoke to a gathering of Make Alaska Competitive, a group formed to push for modifications to the state's production tax that are proposed by Gov. Sean Parnell.

Parnell's bill, House Bill 110, passed the state House of Representatives April 1 but was bogged down in the state Senate with days left before the Legislature's scheduled April 17 adjournment.

Mulva's statements were intended to counter criticisms by state senators, including Senate President Gary Stevens, that there is no commitment by industry to invest if the state does lower the tax and forego revenues.

The west-end Prudhoe field project needs approvals of other field owners BP and ExxonMobil, but Claire Fitzpatrick, BP's Alaska chief financial officer, said in Juneau recently that the west-end project was the type of development that could occur quickly if changes in taxes were made.

The project, aimed at developing viscous oil resources in that part of the Prudhoe field, had been planned but was put on hold when the Legislature increased the state production tax in 2007.

Mulva said ConocoPhillips would also increase its work on the West Sak viscous oil development in the Kuparuk River field and pursue small satellite accumulations known to exist around the Alpine field if the tax changes are made. ConocoPhillips is the operator of those fields.

"Alaska's business environment has deteriorated over the past several years. We face restricted access, increased litigation and the highest tax rates," of any producing region outside OPEC, Mulva said. "Meaningful improvements in the business environment are needed this year to affect investment decisions next year. We need new investments. Past investments cannot sustain us."

Mulva cited continued production decline of 6 percent yearly and potential operating problems with the Trans-Alaska Pipeline System due to the low flow of crude oil moving through the system.

TAPS is operating at about one-third of its capacity, he said.

In opening remarks at the meeting Northrim Bank chairman Marc Langland warned against an us vs. them attitude that has developed between the state and the petroleum industry, it's major source of revenue."

"Our state and our economy need a new vision based on what we can accomplish together, not how we can tear each other apart," Langland said. "We need a vision based on cultivating partnerships, not building adversaries. We've done this before. The road map already exists. All we need to do is ask directions."

Make Alaska Competitive was formed earlier this year by business and labor leaders and former political leaders including former Gov. Tony Knowles, a Democrat, and former House Speaker Gail Phillips, a Republican.

EnCore Spins Off Exploration Company

Monday, April 18, 2011
EnCore Oil plc

EnCore planning for a subsidiary company, which will be assigned the Exploration Assets, to be floated on AIM. The new company will be known as XEO Exploration plc ("XEO"). Subject to regulatory approvals and a successful institutional placing, XEO is expected to be admitted to AIM around the end of May 2011.

EnCore is in the process of transferring the Exploration Assets listed below into XEO, subject to receiving the necessary partner and regulatory approvals. The exact percentage shareholding of EnCore in XEO will depend upon the final amount of funds raised by XEO.

In addition to their indirect interest in XEO through EnCore's remaining holding, the Company plans to offer qualifying EnCore shareholders the opportunity to subscribe for shares in XEO directly at the institutional placing price. The offer to EnCore shareholders will be made around the time of XEO's admission to AIM and close shortly following admission.

In addition to the licenses above, XEO has the potential option to acquire a number of UK 26th Round licenses, yet to be awarded by DECC, that are under further environmental review.

Rationale behind the flotation

The EnCore Board has considered a number of scenarios for progressing the exploration portfolio and has concluded that placing those assets into a separately quoted company is the most beneficial route forward for the following reasons:
  • EnCore's future focus is now to be directed towards its two main assets, Catcher and Cladhan, which are in the latter stages of appraisal and will soon be moving into the development stage of their lifecycles.
  • A very significant proportion of the value of the Company is in Catcher and Cladhan. Therefore, the Board did not wish to dilute shareholders' exposure to these assets by an EnCore fundraising for a high-impact exploration program covering the Exploration Assets with the attendant risks.
  • Moving forward, EnCore's existing and any future capital/debt can be targeted directly at the development assets.
  • Existing EnCore shareholders will remain exposed to any success from the Exploration Assets through EnCore's shareholding in XEO. However shareholders who wish to have increased exposure to a risked exploration program will also be offered the opportunity to participate in the offer at the institutional placing price.

Proposed XEO Board and EnCore Board of Director Changes 

On completion of the institutional placing and admission of XEO to AIM, Eugene Whyms, currently Chief Financial Officer (CFO) and Company Secretary will become a Non-Executive Director of EnCore and take up the role of Chief Executive Officer (CEO) of XEO. Alan Booth, CEO of EnCore, will assume the additional role of a Non-Executive Director of XEO. Chris Johnson, currently Group Financial Controller will become CFO of EnCore, whilst James Clark, currently Commercial Director of EnCore will assume the additional role of Company Secretary. All these appointments are scheduled to occur concurrently with the successful admission to AIM of XEO.

Additional appointments to the XEO Board will include the appointment of EnCore's Business Development Manager, Peter Schwarz as Chief Operating Officer (COO), and the appointment of experienced banking and oil industry executive, John Mapplebeck as Non Executive Chairman of XEO.

EnCore expects the XEO prospectus to be mailed to shareholders during the week commencing May 30, 2011.

Matrix Corporate Capital LLP is acting as nominated adviser and joint broker and Westhouse Securities Limited as joint broker in connection with XEO's admission to AIM.

Commenting on the formation of the new company, EnCore Chief Executive Alan Booth said, "EnCore has considered a broad range of options available to it at this important time in the Company's development. Clearly the significant discoveries at Catcher and Cladhan must take priority in terms of access to our capital. At the same time, we also firmly believe that our expanding exploration portfolio deserves appropriate funding to unearth any value that it may contain. However, we recognize that the risk profile of these assets is higher than the ongoing evaluation of the Catcher area and Cladhan. Whilst farming out the exploration portfolio was one possible route, it was recognized that the remaining equity levels would likely be in the order of one third of current levels. The farm out process would also likely place timing and control in the hands of third parties, who might perceive EnCore to have limited options with regard to exploration funding. We believe that the chosen route should allow us greater control over our own destiny, whilst enabling us to expose our current and new shareholders to higher impact and more material equity levels in those prospects in which we will seek to invest.

"Both companies will continue to benefit from the people and skills that have been so successfully deployed in building the asset base to date at EnCore, and both companies will be co-located at the current Baker Street offices. Whilst there can be no guarantee that we will be as successful again, we would like to ensure that our shareholders at least have a choice as to whether they wish to have ongoing exposure to high-impact exploration in the UK offshore in addition to their indirect interest through EnCore's shareholding in XEO."

KBR Says Hello to New Executive Appointments

Monday, April 18, 2011
KBR Inc.

KBR announced the executive appointments of Roy Oelking, Dennis Calton and John Rose within its leadership organization.

Roy Oelking has been appointed Group President, KBR Hydrocarbons responsible for the company's four hydrocarbon business units: Downstream, Gas Monetization, Oil & Gas, and Technology. Prior to being appointed as Group President, Oelking served as President, KBR Oil & Gas. He joined KBR in 2008 and previously served in various leadership capacities with Worley Parsons and J. Ray McDermott.

Dennis Calton has been appointed President, KBR Oil & Gas, responsible for the strategic growth of one of KBR's four Hydrocarbons business units. Prior to being appointed President, Oil & Gas, Calton served as Executive Vice President, KBR Operations. He joined KBR in 1975 and has served in many important capacities with wide-ranging experiences include working offshore, managing the company's Singapore office and overseeing KBR resource centers and project management oversight activities.

In anticipation of his retirement in June 2012, John Rose will assume the role of Executive Vice President, KBR Operations. In his new capacity, John will examine how KBR’s resource centers can more effectively serve KBR's business units in their pursuit and execution of work. Rose previously served as Group President, KBR Hydrocarbons. Rose, whose tenure with KBR spans more than 40 years, has served in various leadership positions within the company.

"Roy, Dennis and John have been instrumental to the success of KBR throughout their years of service," said William P. Utt, KBR Chairman, President and CEO. "I am confident that under their leadership and vision in these newly appointed roles, KBR's Hydrocarbons and Operations groups will continue expanding their global footprint and building upon KBR's current success."

Vantage Shuffles Board Directors

Vantage Shuffles Board Directors

Monday, April 18, 2011
Vantage Drilling Co.

Vantage reported a change in the composition of its Board of Directors.

On April 8, 2011, Hsin-Chi Su informed the Board of Directors (the "Board") of Vantage that effective upon the appointment of Steven Bradshaw to the Board, he would resign from the Board and from the Compensation Committee of the Board. On April 14, 2011, the Board appointed Steven Bradshaw to the Board.

Paul Bragg, Chairman and Chief Executive Officer, commented, "I would like to thank Nobu Su for his service on the Board since June 2008, when Vantage acquired its current five drilling rigs, all of which were then just under construction. With the support of Nobu, we were able to expand rapidly from start up with about $275 million in assets, to full operations with approximately $2 billion in assets today. In the past few months, F3 Capital initiated the replacement of two of its internal Board representatives with new, independent, industry-experienced Board members. Our Board has evolved from its initial sponsor-heavy composition, into an independent group with both experience and industry expertise to provide sound governance and fiduciary oversight on behalf of all of our shareholders. I am also pleased to have Steve Bradshaw join the Board. His experience in offshore drilling will be a valuable asset to us."

Gazprom Subsidiary Snaps Up Songa Semisub

Gazprom Subsidiary Snaps Up Songa Semisub

Monday, April 18, 2011
Songa Offshore

Songa announced that a firm contract for the use of Songa Mercur has been agreed and signed with Gazflot LLC, a Gazprom subsidiary. The contract covers the use of the Songa Mercur for Gazflot's upcoming drilling campaign offshore Sakhalin Island during the 2011 summer season. The rig is currently scheduled to depart from Singapore during May 2011 after completion of BOP rebuild work followed by a testing and verification period.

The firm part of the contract is set to 180 days including mobilization from and de-mobilization back to Singapore. Aggregated total revenue of approximately USD 46 million is expected to be generated from the firm part of the contract.

The Company has in parallel to the above entered into an agreement with the previous operator to get released from the contractual obligation of returning with the rig to its last well for finalization of the committed program.

Wintershall Snags Licenses in Norway's 21st Licensing Round

Wintershall Snags Licenses in Norway's 21st Licensing Round

Monday, April 18, 2011
Wintershall AG

The Norwegian Ministry of Petroleum and Energy has assigned Wintershall Norge two new licenses in the 21st Licensing Round. Wintershall is the operator of both licences. A total of 24 production licenses were awarded on the Norwegian Continental Shelf (NCS), 12 in the Barents Sea and 12 in the Norwegian Sea. "We are pleased with the results from this round. The Norwegian Continental Shelf is one of Wintershall's core regions, and we are continually building business and commitment in Norway," said Martin Bachmann, Member of the Board of Executive Directors responsible for Exploration and Production.

In June 2010 the Ministry announced 94 licenses for which 37 companies applied. Wintershall received license PL611 in the Barents Sea (in blocks 7223/3 and 6, and 7224/1, 2, 3, 4, 5). Germany's largest E&P company will be the operator with a 40% interest, Faroe Petroleum Norge holds 40% and Petoro 20%. In the Norwegian Sea, Wintershall will be the operator of PL601 in the blocks 6609/3 and
6610/1 in the Nordland III area. The company will own a share of 40%. Rocksource, North Energy and Edison International Norway Branch each hold 20%.

Endeavour Briefs Rochelle Deal

Monday, April 18, 2011
Endeavour International Corp.

Endeavour announced agreement of commercial terms for the processing and transportation of East Rochelle production on the Scott Platform, in the Central North Sea. Endeavour, operator of the East Rochelle, plans to award contracts and commence construction of the production facilities immediately.

"This represents an important milestone in the development of the East Rochelle field," said William L. Transier, chairman, chief executive officer and president. "Endeavour can now move forward expeditiously to achieve first production in 2012. This off-take solution is expected to incorporate the production at West Rochelle, the second phase of the development of the Greater Rochelle area, which will be on a simultaneous track with East Rochelle."

The Field Development Plan for East Rochelle was approved by the Department of Energy and Climate Change in February 2011. The plan calls for the subsea development to be linked by a 30- kilometer pipeline to production facilities on the Scott platform. First production from East Rochelle is planned for the second half of 2012. Endeavour holds a 55.6 percent working interest in the East Rochelle development and Nexen Petroleum UK Limited holds the remaining 44.4 percent interest.

Petrovietnam, PDVSA Sign Oil Extraction Deal

Monday, April 18, 2011
Asia Pulse Pte. Ltd.

Vietnam National Oil and Gas Group (PetroVietnam) and Venezuela National Oil Petroleum Company (PDVSA) have reached an agreement on measures to extract the first oil flow from Block Junin 2 in Venezuela in the fourth quarter of 2012.

The two sides agreed on tasks and funding for their joint venture Petromacareo in 2011-2012 to enable it conduct the assessment, development and installation of equipment, building of pipelines, and implementation of oil services for the Junin 2 project. With a very large investment capital and scale, the Junin 2 project is seen as a motive force for the development of oil projects between Vietnam and Venezuela.

The oil output pumped from Block Junin 2 is expected to reach 10 million tonnes by 2016.

Apart from Junin 2, PetroVietnam and PDVSA are cooperating in several other projects, including a master study project for Maracaibo lake and an expansion and upgrade project for Dung Quat Oil Refinery.

During his working visit to Venezuela, PetroVietnam's Chairman Dinh La Thang has gained Venezuelan Vice President cum Minister of Energy and Petroleum Rafael Ramirez Carreno's commitments to simplifying administrative procedures and required processes while giving top priority to PetroVietnam's service companies to engage in providing services related to the Junin 2 field project, said PetroVietnam.

Venezuela said it was ready to provide strategic reserves of crude oil and oil products for Vietnam in the long term.

Expro Wins Noble Contract Offshore Israel

Expro Wins Noble Contract Offshore Israel

Monday, April 18, 2011
Expro International Group

Expro has been awarded a $27million (£17million) contract offshore Israel.

Noble Energy has awarded Expro a contract for deepwater operations onboard the Transocean Sedco Express for the Tamar field development and the Pride North America for an exploration program.

The contract will see Expro provide Noble Energy Inc with specialist well testing and subsea services and equipment, including a high flow rate well testing package and large bore subsea safety systems.

Expro has a long and distinguished track record in providing tailor-made solutions to the oil and gas industry and offers the complete package of services and products to support operators throughout their exploration and appraisal well tests.

Expro's market-leading subsea safety systems provide reliable and efficient in-riser landing strings for well interventions and completions. Expro is already well established in the deepwater regions of the world, including Africa, Gulf of Mexico and Brazil, with its superior technology in greater demand as development progresses in the world's deepwater provinces.

This is the largest single project ever conducted from Expro's Continental Europe base. It is also a major expansion in Expro's geographical area.

Keith Palmer, Expro's Europe CIS regional director, said, "Expro's track record in deep water means we are well positioned to move in to new markets and bring the benefits of our leading-edge technologies to our customers. This is a significant win for Expro's Continental Europe team."

Ford Taking Test Fleet of Electric Vehicles to China Later this Year

Ford Taking Test Fleet of Electric Vehicles to China Later this Year

Apr 18, 2011

Ford Motor Co. (F) said on Monday it is taking a test fleet of electrified vehicles to China later this year, including the Fusion hybrid.

On the eve of the Shanghai auto show, the car maker unveiled three electric vehicles: the new Focus all-electric vehicle, the C-MAX Energi plug-in hybrid, and the Fusion hybrid.

Joe Hinrichs, head of Ford's Asia-Pacific and African operations, said in a statement, "With China aiming to go green on the road with new-energy vehicles, the country is the perfect platform to showcase Ford's advanced technologies in the electrification plan."

Subsea 7 Bags Shell Contract for Ormen Lange Field

Subsea 7 Bags Shell Contract for Ormen Lange Field

Monday, April 18, 2011
Subsea 7 S.A.

Subsea 7 announced the award of a contract with A/S Norske Shell for subsea pipeline installation services for the Ormen Lange Northern Field Development – Mid North Project in the Norwegian Sea.

The work is the first call-off under Subsea 7's Frame Agreement with Shell for Pipeline Installation services in the North Sea region awarded in September 2010, and the call-off is valued at approximately $70 million.

The Mid North Project will be developed with a new subsea template located approximately 6 km north of the existing subsea facilities on Ormen Lange in around 900m water depth, and will be tiedback to Ormen Lange by two 12" Production pipelines, a 6" service pipeline and a control umbilical.

Subsea 7's scope is to fabricate and install the two 6 km long 12" rigid pipelines and the 6" service pipeline, and installation of the control umbilical. Furthermore, Subsea 7 will perform all subsea connections and pre-commissioning activities on the new pipelines.

Engineering and procurement activities will commence immediately and will be performed at Subsea 7's offices in Stavanger, Norway. Fabrication of the pipeline will be carried out at Subsea 7's North Sea Spoolbase at Vigra on the north-west coast of Norway, in early 2012. Pipelay operations are due to commence in early 2012 and will utilize one of Subsea 7's specialized reeled pipelay vessels.The remainder of the offshore installation scope will be performed in summer 2012, utilizing Subsea 7's specialized offshore construction vessels suitable for deepwater subsea construction work.

The Ormen Lange field is located in the Norwegian Continental Shelf, approximately 130 km northwest of Kristiansund, in water depths between 850m and 940m.

McMoran Exploration Posts Net Loss for Q1; Shares Off 0.9%

McMoran Exploration Posts Net Loss for Q1; Shares Off 0.9%

Apr 18, 2011

McMoran Exploration (MMR) an oil and natural gas developer, reported a Q1 net loss today of $27.55 million, or $0.17 per share, compared with $66.16 million, or $0.74 per share, last year.

However, loss for the quarter, at $14.53 million, or $0.16 per share, is lower than last year's $57 million.

Shares are down 0.85% at $17.5 in trading today.

McMoRan Shines in 1Q11 Operations

McMoRan Shines in 1Q11 Operations

Monday, April 18, 2011
McMoRan Exploration Co.

McMoRan Exploration reported a net loss applicable to common stock of $27.6 million, $0.17 per share, for the first quarter of 2011 compared with a net loss applicable to common stock of $66.2 million, $0.74 per share, for the first quarter of 2010.

  • Shallow Water, Ultra-Deep Exploration & Development Activities:
    • Davy Jones
      • Offset appraisal well (Davy Jones No. 2) has been drilled to a true vertical depth (TVD) of 30,546 feet and McMoRan is preparing to evaluate the exploration objectives in the Cretaceous section below the identified Wilcox pay sands with wireline logs.In February 2011, preliminary log results from the Davy Jones No. 2 confirmed Wilcox sand continuity and the major structural features of the Davy Jones prospect.
      • Completion and flow testing of the Davy Jones discovery well (Davy Jones No. 1) expected by year-end 2011.
    • o Blackbeard East
      • Drilled to a TVD of 32,559 feet. Plan to deepen, pending resolution of mechanical issue.
      • Exploration results to date indicate updip potential in the Miocene (178 net feet of hydrocarbons) above 25,000 feet and downdip potential in the Oligocene (Frio) and Eocene (Sparta) below 30,000 feet.
    • Lafitte
      • Commenced drilling on October 3, 2010 and is drilling below 20,950 feet towards a proposed total depth of 29,950 feet.
  • Shallow Water, Deep Gas Exploration & Development Activities:
    • o Laphroaig No. 2
      • Successful production test in April 2011 – gross rate of approximately 54 million cubic feet of natural gas per day (MMcf/d), approximately 16 MMcf/d net to McMoRan.
      • Production expected to commence in the second quarter of 2011 and results from the production test will be used to determine the optimal flow rate.
    • Hurricane Deep commenced drilling on January 20, 2011 and is drilling below 17,300 feet towards a proposed total depth of 21,700 feet.
    • Boudin exploratory well commenced drilling on February 27, 2011 and is drilling below 10,800 feet towards a proposed total depth of 23,100 feet.
    • Brazos A-23 development well commenced drilling on February 13, 2011, and is currently drilling below 14,100 feet with a planned total depth of 16,120 feet.
  • First-quarter 2011 production averaged 195 MMcfe/d net to McMoRan, compared with 190 MMcfe/d in the first quarter of 2010.
  • Average daily production for 2011 is expected to approximate 175 MMcfe/d net to McMoRan, including 190 MMcfe/d in second quarter 2011.
  • Operating cash flows totaled $33.5 million for the first quarter of 2011, including working capital uses of $22.7 million and $22.2 million in abandonment expenditures.
  • Capital expenditures totaled $96.5 million in the first quarter of 2011.
  • Cash at March 31, 2011 totaled $836.7 million.

James R. Moffett and Richard Adkerson, McMoRan's Co-Chairmen, said, "The theme of McMoRan's 2010 annual report, 'Buried Treasures on the Shelf,' characterizes our deep drilling activities in the shallow waters of the Gulf of Mexico and highlights the significance of this developing trend. Results to date in our program indicate the potential for large structures, similar to large discoveries onshore South Louisiana and in the deepwater of the Gulf of Mexico. We have six wells currently drilling and an extensive prospect inventory, which provide opportunities for significant future production and reserve additions."


Big Oil Ready to Deploy New Containment Device for Deepwater Spills

Big Oil Ready to Deploy New Containment Device for Deepwater Spills

Monday, April 18, 2011
Dow Jones Newswires
by Angel Gonzalez

The high-tech marvel that's enabling oil companies to return to the deep waters of the Gulf of Mexico sits in a sun-baked industrial lot in the outskirts of Houston, not far from a gas station, a taco truck, and a highway that could quickly take it to the scene of the next Gulf oil spill.

The new spill-containment device was developed by a consortium led by ExxonMobil to control future spills similar to the largest marine oil spill that leaked more than 4 million barrels in the Gulf in April last year.

"We like it here," Marty Massey, chief executive of the Marine Well Containment Co. (MWCC), said Friday, as the company unveiled to reporters the device, called a capping stack that is the heart of the containment system. "[The device was] built here; the people who built it can maintain it" and can be deployed to its destination "in a matter of days," Massey said. "We are ready to go."

The 30-foot tall, 100-ton stack--a tree-shaped mass of blue, yellow and white steel with protruding knobs and gauges--is meant to be lowered on top of a deepwater gusher, either killing the flow or funneling the oil to ships. It draws on the lessons of the system that BP struggled to develop during the three months it fought to control the damaged Deepwater Horizon well that unleashed a major environmental disaster.

The company said the containment system that the device is part of can capture up to 60,000 barrels a day from wells up to 8,000 feet below sea level.

Massey said that the consortium, created by Exxon, Chevron, Shell and ConocoPhillips, is also developing a similar system with a higher capacity capable of capturing up to 100,000 barrels a day from gushers as deep as 10,000 feet. This improved version, Massey said, will operate from several bases along the Gulf Coast and will be ready around mid-2012.

As the government suspended deepwater drilling following the Gulf disaster, the oil industry needed to quickly take steps and prove that it was capable of controlling any future

Det norske Awarded License in Barents Sea

Det norske Awarded License in Barents Sea

Monday, April 18, 2011
Det norske oljeselskap ASA

Det norske has been awarded a new license in the Barents Sea in 21 licensing round. Production license 613 is located in blocks 7322/10 and -11 in the central part of the Barents Sea. The license was Det norske's first priority in this allocation round. In total the Government offers 12 new licenses in the Barents Sea

Dong E & P is the operator of the license with a 40 percent stake. Det norske and Edison International are partners with respectively 35 and 25 percent stake. The work program for the license acquisition of 3D seismic over the area. Within three years from granting, the license must decide to drill an exploration well or hand back the license. If drilling is decided, the well must be drilled within five year from the grant.

This year's round was announced on June 23. 94 blocks, 43 in the Norwegian Sea and 51 in the Barents Sea were offered, with a deadline in November 2010. Of these, the Government has decided to offer 24 licenses to 29 companies

Icon Begins Drilling at Lydia Well

Icon Begins Drilling at Lydia Well

Monday, April 18, 2011
Icon Energy Ltd.

Icon commenced drilling the Lydia-10 coal seam gas well at 4:30am on Sunday, April 17, 2011 in the ATP626P Lydia Block (Permit), in which Stanwell Corporation (Stanwell) has farmed into.

Lydia-10 is being drilled using the Atlas Drilling Rig #2.

The Well forms part of Stanwell's investment (through Goondi Energy Pty Ltd) in ATP626P, located in the Surat Basin, to earn a 50% interest in the four graticular blocks which make up what is known as the Lydia Block.

As at 11:00am (AEST) on Monday, April 18, 2011, the Well had set and cemented with 9⁵/₈" casing at a depth of 105.75m. It is expected that the Well will be drilling ahead by approximately 2:00pm Monday, April 18, 2011). The Well is targeting the Walloon Coal Measures with the well programmed to reach a target depth of 920m.

Icon Energy Managing Director Ray James said that, "Following the drilling of Lydia-10 the Rig will move 5.4 kilometres north north-east in the Permit to drill the Lydia-11 well and then 3.2 kilometers north north-west to drill Lydia-12."

OGX Notes 4 Bboe Increase in Potential Resources Offshore Brazil

OGX Notes 4 Bboe Increase in Potential Resources Offshore Brazil

Monday, April 18, 2011

OGX disclosed the results of the reports prepared by petroleum consultants DeGolyer & MacNaughton ("D&M"), which estimate new volume of resources held by the Company in Brazil's Campos and Parnaiba basins and three basins in Colombia. These reports indicate net potential resources for OGX of 5.7 billion barrels of oil equivalent ("boe") in the Campos Basin, 1.0 billion boe in the Parnaíba Basin and 1.1 billion boe in Colombia. When combined with the estimates from the previous report for the Santos, Espírito Santo and Pará-Maranhão Basins (Sep/09), these new results present a total volume of net potential resources of 10.8 billion boe.

These results validate the successful and accelerated evolution of the Company's asset portfolio and its ability to grow organically, through massive discoveries as well as via the acquisition of new areas, demonstrating a unique capacity of to create value and deliver results.

"These results, presented by an independent, internationally-renowned consulting group, confirm the extraordinary success of our business strategy and execution, which has been to focus on world-class assets located mostly in shallow waters. We have discovered accumulations of scale and levels of productivity comparable to those found in the pre-salt areas, and will be able to develop them at a much lower cost, utilizing fully tried-and-tested technologies," commented Eike Batista, Chairman and CEO of OGX.

"OGX has demonstrated that it has the technical and managerial expertise to discover billions of barrels in accumulations in basins which vary greatly in their geological formations, and to transform their prospective resources into contingent resources. At the same time, we have expanded our exploration portfolio with high-potential assets. We have also made huge strides in the delineation of new discoveries and production, while continuing to grow and create value for all stakeholders," emphasized Paulo Mendonça, General Executive Officer and Head of Exploration for OGX.

The five reports submitted by D&M were prepared with the information available as of December 31, 2010, for the Campos and Parnaíba Basins, and as of March 31, 2011 for Colombia. The documents cover a period of approximately 15 months of exploration and 22 wells, and do not include the wells drilled subsequently. For the Campos Basin, only the post salt sections were considered. The new reports update the figures that were previously available for these two basins and present the first estimates for the five blocks held by OGX in Colombia. D&M's potential resource report dated September 2009 continues to apply for the Santos, Espírito Santo and Pará Maranhão basins.

The results of these studies reflect the success of OGX's strategy to prioritize, in the initial phase of its campaign, the accomplishment of ANP work program and the exploratory drilling of wildcat wells to maximize the discovery of accumulations. In response to the large number of discoveries made, the Company is intensifying its appraisal campaign in preparation for Declarations of Commerciality and the start-up of production.

"The identification of our discoveries and the recent chartering of five FPSOs and two WHPs with OSX, which will be followed by new orders, represent an important step towards production. We have rapidly executed on our business plan and achieved important milestones, enabling us to the begin production and commercialization within a timeframe that is unprecedented for the oil and gas industry," stated the Production Officer, Reinaldo Belotti.

President Petroleum IDs Gas Shows at Northumberland Well

President Petroleum IDs Gas Shows at Northumberland Well

Monday, April 18, 2011
President Petroleum Co. plc

The Northumberland 2 exploration well has been drilled to a measured depth of 3,427 meters with the primary target reservoir, the Waarre sands extending even deeper beyond this point. The well was drilled to schedule and budget and extensive logging has now been completed, including a drill stem test over a 30 meter section.

Detailed results from the well

  • While wire-line logs and the results of the drill stem test did not indicate movable hydrocarbons in commercial amounts the evidence points to considerable quantities of condensate and gas having migrated through the very thick Waarre sandstones.
  • Although hydrocarbons have not been trapped at the well location because of thinner than forecast seal and a possible leak window to the next fault block, importantly the presence of a top seal to the Waarre sands being Belfast mudstone has been confirmed. No material Flaxman sands were identified in the well.
  • The results of this well show evidence of hydrocarbons from core samples and logs, and the materially deeper than expected Waarre sands are very encouraging. This points to significantly greater potential for economic gas condensate and/or oil to be preserved, and in greater volumes than previously projected in many other structures within the PEL 82 licence, where fault movement is less or the seal thicker. Indeed structures in the north of the license have yet to be covered by a higher resolution 3D seismic. Prospective resources for the PEL 82 license remain similar to the previously estimated 430mmbbls of oil or 630Bcf of gas, due to the materially thicker sands.
  • President have identified a number of potential hydrocarbon bearing structures and by way of example the first location to which President is applying the learnings so far obtained, albeit originally a relatively small structure, on current information has benefited from an over 50% increase in volumes of recoverable hydrocarbons.
  • Accordingly as there has now been a substantial de-risking by the confirmation of charging of a potentially thick reservoir, President is now addressing the other risk as to sealing and detailed work will now be carried out to identify areas for further work both seismic and drilling.

Commenting on the announcement, Peter Levine, Chairman of President Petroleum Company Holdings BV said, "Interestingly it may be said that the value proposition of the PEL 82 license is greater now than before the drilling of the well, both in terms of increased potential and reduction of risk.

While Northumberland 2 has not made a commercial discovery, the clear identification of hydrocarbons in the system with a significantly thicker than expected reservoir sand, has given encouragement and impetus to move forward with further work on this license. Now that one of the two main questions has been de-risked, our attention is focused on identifying structures with a complete and effective seal and we move forward on this task with some optimism as much of the license has not yet been covered by high resolution seismic.

Now that the two legacy prospects have been drilled, and notwithstanding the important work now continuing on PEL 82, President clearly recognizes the priority of exponentially growing the Company and is very much focused on pursuing acquisition opportunities. President remains in a strong financial position with substantial current net cash balances, and continues to be well funded with the ongoing support of its major shareholder Levine Capital Management. Patient and careful progress is being made in various directions and further announcements will be made as soon as appropriate."

Buccaneer Spuds 1st Alaskan Well

Buccaneer Spuds 1st Alaskan Well

Monday, April 18, 2011
Buccaneer Energy Ltd.

Buccaneer announced the Kenai Loop # 1 well spud on Friday, April 15, 2011. This is a milestone for the Company as it is the first well drilled by the Company in Alaska and comes just over 12 months since the initial acquisition of leases in Alaska was finalized.

At 8:00 AM Monday, April 18, drilling operations for the well had been successful in reaching 3075 feet, the designed surface casing point, preparations are being made to log this surface interval. On completion of logging surface casing will be set before commencement of drilling the next interval.

The next interval includes the Beluga Formation, one of several target objectives for the well. The Total Depth (TD) of the Kenai Loop # 1 well is 10,500 feet. The well is currently on schedule and expected to take approximately another 20 days to reach TD.

Argos Completes Seismic Acquisition in North Falkland Basin

Argos Completes Seismic Acquisition in North Falkland Basin

Monday, April 18, 2011
Argos Resources Ltd.

Argos has completed the acquisition of 3D seismic data over the entire area of its PL001 license in the North Falkland Basin.

A total of 1,415 net square kilometers of 3D seismic data has been acquired. This includes coverage over the entire license area, a halo outside the license boundaries and tie-ins to key wells. A high priority area from this total has been carved out and is being processed on a fast-track basis to be ready for interpretation and prospect mapping by July 2011. It is the Company's objective to be ready to drill exploration wells in late 2011/2012 in order to have the option to use the Ocean Guardian drilling rig currently operating in the area.

The Company is also using the opportunity of having a seismic vessel under contract in the area to acquire additional 3D seismic data in open acreage to the north of the license to identify additional prospectivity in the northerly continuation of the Basin. This acquisition in open acreage has now commenced.

Commenting on this progress, Ian Thomson, Chairman of Argos, said, "We are delivering on the 3D seismic acquisition plans announced on 30 December 2010, and are pleased with the progress being made. Processing of the new 3D data has commenced and early indications are that this is the best quality 3D data that has been acquired in the basin to date. We are therefore encouraged that we will have excellent data for prospect mapping which we expect to undertake from July".

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative

Apr 18, 2011

Standard & Poor's Ratings Services affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the U.S., according to a Bloomberg report.

It also revised its outlook on the long-term rating to negative from stable.

The revised outlook reflects the U.S.'s "very large budget deficits and rising government indebtedness" relative to its triple-A peers.

Jubilant Reaches TD at Golaghat Well

Jubilant Reaches TD at Golaghat Well

Monday, April 18, 2011
Jubilant Energy N.V.

Jubilant announced that the P-16-1 well, which was spudded on March 20, 2011 in the Golaghat Block (AA-ONN-2003/1), reached a total depth of 1625 meters. The well encountered a granitic basement from 1555 meters onwards.

The well tested a NE/SW fault prospect and was drilled through all the potential reservoirs that were previously identified at this location. Based upon drilling, electric logs and MDT data, no hydrocarbons were encountered in the well. The well is thus being prepared to be plugged and abandoned.

The drilling of the well was completed under budget and without any health, safety and environmental incidents.

The execution of the remaining work program comprising of six additional exploratory wells will be finalized on obtaining forestry land approval.

Jubilant through its subsidiary, Jubilant Oil and Gas Pvt Limited, holds a 10% participating interest in this block and is the Operator. Jubilant Securities Private Limited (JSPL), a company in the wider Jubilant Bhartia Group, also holds 35% participating interest in this block. Jubilant, through its subsidiary, Jubilant Energy (Nelp-V) Pvt Limited, has entered into a business transfer agreement dated 1 April 2007 with JSPL for acquiring its entire stake in the block. This transfer is subject to, inter alia, the parties obtaining consents from various third parties, including the management committee under the relevant Production Sharing Contract and the Government of India.

The other partners in the acreage are Gujarat State Petroleum Corporation Limited with 20% and GAIL India Limited with 35% Participating Interest.

Heritage to Commence Multi-Well Exploration Program at Miran Block

Heritage to Commence Multi-Well Exploration Program at Miran Block

Monday, April 18, 2011
Heritage Oil plc

Heritage Oil provided an update on the work program and development options for the Miran Block in the Kurdistan Region of Iraq ("Kurdistan").

  • Rig secured to commence a multi-well exploration and appraisal drilling campaign on the Miran Block
  • Miran West-3 well scheduled to spud in July and is estimated to take 160 days to drill and test
  • It is planned to undertake a comprehensive testing program
  • 3D seismic program progressing with the first batch of data being analyzed
  • 2D seismic program to commence in the summer to define other potential prospects on the Block
  • Discussions with the Kurdistan Regional Government (the "KRG") continue regarding fast-track development of the gas

Drilling Program

Heritage has signed a rig contract with DaQing International to supply the DQ037 2000HP rig to commence a multi-well exploration and appraisal drilling campaign on the Miran Block. The first well in this continuous drilling campaign will be the Miran West-3 well, which is an approximate 4 kilometer step out appraisal of the major Jurassic gas discovery made by the Miran West-2 well.

The Miran West-3 well, which is scheduled to spud in July, will take an estimated 160 days to drill and test and is targeting the flanks of the Jurassic structure, with the benefit of the current 3D seismic survey. The well will appraise the Upper and Lower Cretaceous reservoirs whilst drilling to its primary Jurassic objective, with an estimated total depth of approximately 3,800 meters. The well bore will be angled to increase the frequency of fracture penetration and orientated in the optimal direction for the interception of open fractures. It is planned to undertake a comprehensive testing program targeting numerous potential reservoir horizons.

On completion of this well the rig will move to drill the Miran West-4 appraisal well. A second rig is being sourced to drill the Miran East-1 exploration well in the fourth quarter of this year, at which point Heritage will have two rigs operating in country.

Seismic Acquisition

Heritage is currently acquiring 730 square kilometers of 3D seismic across the Miran Block to help define further appraisal drilling locations and fully exploit fracture networks. This is believed to be the largest ever 3D seismic program undertaken to date, in Kurdistan. The data will be analyzed in separate tranches to expedite understanding of the structures and the first batch of 3D seismic data, covering 180 square kilometers, is currently being processed.

In addition, 180 kilometers of new 2D seismic data will be acquired within the Block in the summer of 2011 to define other potential prospects.

Gas Monetization

Discussions with the KRG over the fast-tracked phased development of the Miran Field have continued. The KRG has outlined their favored development options for gas utilization and the initial priority will be to satisfy local gas demand by supplying produced gas on commercial terms to local power stations and other end-users in the Sulymaniyah region in 2013. Early production of the gas will also result in early associated condensate and oil production. This will then be followed by the export of gas to Turkey/Europe and full production of the oil and condensate zones enabling full development of the field.

Tony Buckingham, CEO, commented, "The signing of the multi-well rig contact and expansion of the seismic programs demonstrates our commitment to exploring and developing the Miran Field. The initial discussions with the KRG have been very constructive and could lead to the fast-tracked development of the field, which has the potential to benefit our shareholders significantly, and contribute to the further development of the region as well as generate revenue to be shared by all peoples of Iraq."

Batista: No Need for OGXto Sell 30% Stake in Campos Basin

Batista: No Need for OGXto Sell 30% Stake in Campos Basin

Monday, April 18, 2011
by Jeff Fick

OGX is continuing to explore the sale of part of its Campos Basin oil fields but has reduced the size of the stake to be sold, said OGX Chairman Eike Batista.

"We have discovered such high-quality oil and such high-productivity that we don't see it as necessary to sell a maximum of 30% of our assets," Batista said in a conference call with investors. "The farm-out is ongoing, but it will be reduced to 10%." OGX is part of the billionaire investor's ever-growing industrial conglomerate, which includes energy, mining, logistics and oilfield services companies.

OGX gave investors a clearer picture of the company's value late Friday, when it announced that oilfield consultants DeGolyer and MacNaughton had certified prospective, contingent and delineated resources of 10.8 billion barrels of oil equivalent, or BOE. That was up from an earlier estimate of 6.8 billion BOE made in September 2009. The total included OGX's first contingent resources in the offshore Campos Basin, where the company booked 3 billion barrels of oil equivalent, or BOE.

The report did not include any possible pre-salt resources from the Campos Basin, which could add more than 1 billion BOE to the 5.7 billion BOE total resources in the basin, Batista said.

"We have a huge area to be added," said OGX Chief Executive Paulo Mendonca. The company will further evaluate the pre-salt prospects with fresh three-dimensional seismic data, Mendonca added.

While OGX's pre-salt prospects will require further evaluation, the company is quickly closing in on moving from a pure exploration play to a crude oil producer.

In September, OGX plans to produce its first crude oil. The company will start an extended well test at the Waimea prospect, which is expected to produce about 20,000 barrels a day later this year. The OSX-1 floating production, storage and offloading vessel, or FPSO, will be installed at the site in August, OGX officials have said.

OGX's Batista said that the quality of the oil to be produced from the company's Campos Basin field would range between 20 and 21 degrees on the American Petroleum Institute's grading scale. In talks with refiners in Houston and London, the crude should fetch a better-than-expected price for the company, he added.

"We will fetch Brent oil prices considering today's market situation," Batista said. The company had previously expected to receive a price at a $10-a-barrel discount to U.S. WTI prices, he said.

The shallow waters of the basin will also allow the company to produce the crude at about $7 a barrel, with total operating expenses of about $16 a barrel, Batista said.

Drilling Commenced at Eni's Guendalina Gas Field

Drilling Commenced at Eni's Guendalina Gas Field

Monday, April 18, 2011
Mediterranean O&G plc

Mediterranean O&G provided the following operational update on the Guendalina Gas Field.

Italy - Concession AC 35 AG - Guendalina Gas Field (MOG interest 20%, ENI 80% and Operator)

The Operator, ENI, has informed the Company that following the installation of the platform jacket which was successfully completed in March, the Transocean jack up rig, GSF Key Manhattan, commenced drilling of the two development wells Guendalina 2D ("Gue 2D") and Guendalina 3 ("Gue 3") on 7th April 2011. The two wells are being drilled in parallel, by implementation of the skid drilling technique.

To date
  • The Gue 2D well has been drilled to a depth of 400 meters. The set up of the casing has been completed.
  • The Gue 3 well has been drilled to a depth of 350 meters. The set up of the casing is ongoing.

The planned total depth of the Gue 2D well is 3,290 meters (3,225 meters true vertical depth), while the planned total depth of the Gue 3 well is 3,190 meters. The Pliocene gas sand levels are expected to be encountered from a depth of about 3,000 meters.

ENI estimates that the drilling campaign, including completion of the two wells for production, will be completed by the end of July 2011. In parallel, the construction of the platform deck is progressing. Its installation is forecast to occur immediately after the completion of the development drilling phase.

Based on the information received from ENI, the Guendalina field development plan is progressing on schedule and first gas is forecast in September 2011.


The Guendalina gas field is located 47 km off of the northeast coast of Italy in 42 meters of water, outside the offshore restricted area for E&P activities, which was introduced in August 2010 by the Italian Government.

ENI has independently certified 2P gas reserves of 22 Bcf (4.5 Bcf net MOG). An additional 5 Bcf (1.0 Bcf net MOG) of potential gas resources will be assessed during the current development drilling campaign by the Gue 2D well. Based on studies performed by ENI, the aggregate gas production from the field is expected to be around 20 MMcf/day (100% basis); 4MMcf/day net to the Company.


As announced on March 3, 2011 it is necessary for the Company to raise further funds to develop and progress its exploration, development and producing assets, as well as to meet the Company's working capital requirements. Negotiations for funding are on-going and the Company is hopeful it can conclude an agreement to resolve the Company's financial position satisfactorily. There can be no certainty that these discussions will result in a satisfactory outcome.

Sergio Morandi, the Company's CEO, stated, "The Guendalina development is entering the most exciting phase, with the development project remaining on schedule and progressing well.

The Guendalina development represents one of the key milestones of the Company's business plan that from the point of first gas is expected to generate significantly higher net gas production and revenues than those currently realized by the Company."

Halliburton Topped Q1 Estimates, Top Line Surged 40% YoY

Halliburton Topped Q1 Estimates, Top Line Surged 40% YoY

Apr 18, 2011

Halliburton (NYSE:HAL) reported Q1 EPS of $0.61, ex-items, ahead of consensus estimates of $0.58 per share. Revenues for the quarter rose 40% year-over-year to $5.28 billion, topping consensus estimates of $4.89 billion.

Dave Lesar, chairman, president and chief executive officer said, "I am extremely pleased with our Q1 results, as overall revenue in the first quarter set a company record of $5.3 billion. North America delivered strong performance as margins progressed due to increased activity while Eastern Hemisphere operating income was significantly impacted by geopolitical events in North Africa, delays in Iraq, and typical seasonality."

Providence Secures Semisub for Drilling Program in Celtic Sea

Providence Secures Semisub for Drilling Program in Celtic Sea

Monday, April 18, 2011
Providence Resources plc

Providence has secured a semi-submersible rig for its well program in the Celtic Sea during the summer of 2011. This forms part of Providence's previously announced multi-year, multi-basin drilling program, offshore Ireland.

Under the terms of the deal agreed, Providence, as Operator, has hired the semi-submersible rig, the GSF Arctic III. The rig contract provides for a minimum 54 day period with options to extend, should the company wish to drill further wells. The primary objective of the 2011 drilling program will be to further appraise the Barryroe oil accumulation. Based on the current rig schedule, the spud date is expected to be late August 2011. Well site surveys were recently successfully completed using the R.V. Celtic Voyager.

Desire Drills Duster at Ninky Well

Desire Drills Duster at Ninky Well

Monday, April 18, 2011
Desire Petroleum plc

Desire advised that the 14/15-3 well on the Ninky prospect has reached a total depth of 2,620 meters in the Barremian source rock interval.

Ninky Well Results

Based on drilling and wireline logging, the well encountered two sand-prone sections in the Upper and Middle F2 intervals, which were the primary targets (2323 meters to 2334 meters and 2365 meters to 2389 meters). The sands have a combined gross thickness of 35 meters and oil shows were encountered throughout both intervals while drilling. The reservoir quality is generally poor having only 5.6 meters of net reservoir with an average porosity of 13%. A thin interval of around 1.2 meters at the top of the Middle F2 zone is interpreted to be oil bearing from log analysis.

Wireline formation pressure measurements were attempted, but no valid pressures were obtained, indicating that the reservoirs are low permeability at this location. As a result no wireline sampling was attempted. The depositional model suggests these sands are sourced from the east and therefore better reservoir quality may be expected downdip. In addition, there are indications from seismic of further sands along strike on the Ninky structural high, which were not penetrated in this well. These opportunities will be evaluated with the new 3D seismic as part of Desire's prospect inventory update.

Operations on the Ninky well will now be completed and the well will be plugged and abandoned. The well was drilling using the Ocean Guardian drilling rig and will now return to Rockhopper. Rockhopper will drill a minimum of 3 additional wells using the Ocean Guardian drilling unit. Rockhopper's next well is planned to be located near to the 14/10-2 discovery well. Specialist flow test equipment is due to be in the Islands in early May and Rockhopper intends to flow test the well if appropriate using this equipment to obtain a greater understanding than was possible during the test of well 14/10-2.

3D Seismic Update

The 3D seismic operations are ongoing with the Polarcus Nadia vessel, in a joint program with Rockhopper. To date, approximately 1485 km2 of data have been acquired in the Desire operated part of the program. Desire anticipates that a further 195 km2 will be acquired to complete the operated program. The joint survey is expected to be completed during May. Processing of the new seismic data is in progress and initial indications are that data quality is good. Priority areas have been identified in the East Flank play between Ninky and Sea Lion, and over the Ann/Orca South prospect. The processed data from these priority areas is expected to be available in July. The full, merged data will be available later in the year, which will provide coverage over the southern part of the East Flank play and the Helen prospect.

Desire remains optimistic that existing prospects can be significantly de-risked using the new seismic data and that new prospects will be identified, particularly within the East Flank play which is widely developed within the Desire operated licenses.

Stephen Phipps, Chairman of Desire, commented, "On completion of the Ninky well Desire will have funds of circa $37 million which, while more than adequate for our share of rig and vessel demobilization, completion of our 3D seismic acquisition, processing and interpretation plus general working capital needs, is insufficient to drill further wells. Given our continuing confidence that oil will be discovered on Desire's acreage, further wells will need to be drilled and, therefore, once the results of the Ninky well and the 3D seismic have been analyzed, we will review all financing options available with the intention of rejoining the drilling campaign later in the year if possible."

Halliburton Sets Record Revenue of $5.3B in 1Q11

Halliburton Sets Record Revenue of $5.3B in 1Q11

Monday, April 18, 2011

Halliburton announced that net income for the first quarter of 2011 was $557 million, or $0.61 per diluted share, excluding the Libya charge of $46 million, after-tax, or $0.05 per diluted share, related primarily to reserving certain assets as a result of recent political sanctions. This charge does not include the operating losses incurred in Libya during the first quarter. Reported net income for the first quarter of 2011 was $511 million, or $0.56 per diluted share. This compares to net income for the first quarter of 2010 of $206 million, or $0.23 per diluted share. The first quarter of 2010 results were negatively impacted by $41 million, or $0.05 per diluted share, associated with the devaluation of the Venezuelan Bolívar Fuerte.

Halliburton's consolidated revenue in the first quarter of 2011 was $5.3 billion, compared to $3.8 billion in the first quarter of 2010. Consolidated operating income was $814 million in the first quarter of 2011, compared to $449 million in the first quarter of 2010. These increases were attributable to increased activity in United States land, as the unabated shift to unconventional oil and liquids-rich basins more than offset geopolitical issues in North Africa and the ongoing effects of the suspension of deepwater activity in the Gulf of Mexico.

"I am extremely pleased with our Q1 results, as overall revenue in the first quarter set a company record of $5.3 billion. North America delivered strong performance as margins progressed due to increased activity while Eastern Hemisphere operating income was significantly impacted by geopolitical events in North Africa, delays in Iraq, and typical seasonality," said Dave Lesar, chairman, president and chief executive officer.

"In North America, rig activity increased 2% from the prior quarter, while revenue and operating income grew 13% and 16%, respectively. This is a result of our continued strategic investment in oil and liquids-rich growth areas where service intensity continues to grow.

"Service intensity in oil and liquids-rich basins is increasing due to the demand for tailored solutions that require more complex fluid chemistry, longer laterals, higher proppant volumes, and strategic placement of frac stages. Going forward, we believe this structural shift will continue through 2011, further increasing demand for our services.

"We have been confident about the robust outlook in North America, and the prospect of higher activity in the coming quarters has made us more bullish in the strength of our business in 2011 and beyond. We believe our unique technologies and operational footprint will allow us to enhance our leadership position and provide opportunities for margin expansion.

"International revenue decreased 9% from the prior quarter and operating income declined by $252 million. The decline was primarily driven by approximately $110 million in weather related issues and the typical seasonal slowdowns of software and direct sales, approximately $105 million from political unrest and other disruptions in North Africa, including asset reserves for Libya, and approximately $20 million for project delays due to customers' logistical challenges in Iraq.

"We expect our Eastern Hemisphere margins to improve in the second quarter but they will continue to be impacted by the situation in Libya and by competitive pricing. As activity accelerates during the second half of the year, we anticipate margins will return to the levels seen in 2010. In North Africa, we expect that Libya will continue to be challenged while Egypt appears to be returning to prior activity levels. In Iraq, our delayed integrated drilling projects are now scheduled to begin in the second or third quarter of this year. We remain very optimistic about this market and expect to be profitable in 2011.

"We continue to commercialize core technologies, win key contracts, and make the necessary investments to ensure that we gain momentum as the industry enters the projected upcycle. We remain focused on global growth markets including deepwater, unconventional resources, and mature fields. We have made progress on this strategy, as evidenced by a number of recent contract awards. We believe our superior execution in these markets will deliver unique growth opportunities and position us to continue to deliver superior shareholder returns," concluded Lesar.

2011 First Quarter Results
Completion and Production

Completion and Production (C&P) revenue in the first quarter of 2011 was $3.2 billion, an increase of $1.2 billion, or 62%, from the first quarter of 2010. The continued growth in activity in United States land accounted for the majority of this increase.

C&P operating income in the first quarter of 2011 was $660 million, an increase of $422 million, or 177%, over the first quarter of 2010. Excluding the impact of the charge for Libya, C&P operating income improved $458 million, or 192%, from the prior year quarter. North America C&P operating income increased $477 million compared to the first quarter of 2010, primarily due to increased demand and improved pricing. Latin America C&P operating income increased $7 million, as lower activity in Mexico was offset by higher activity and improved pricing for production enhancement services in Argentina and higher cementing activity in Colombia. Europe/Africa/CIS C&P operating income was negatively impacted by activity disruptions caused by geopolitical issues in North Africa and project delays in Kazakhstan. Middle East/Asia C&P operating income increased $3 million as higher demand for completion tools and production enhancement services in Malaysia and China was partially offset by startup costs in Iraq.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the first quarter of 2011 was $2.1 billion, an increase of $313 million, or 17%, from the first quarter of 2010 due to higher activity in the Western Hemisphere and the commencement of work in Iraq.

D&E operating income in the first quarter of 2011 was $230 million, a decrease of $40 million, or 15%, from the first quarter of 2010. Excluding the impact of the charge for Libya, D&E operating income decreased $17 million, or 6%, from the prior year quarter. North America D&E operating income increased $25 million compared to the first quarter of 2010, as higher drilling activity in United States land offset the decline in the Gulf of Mexico. Latin America D&E operating income increased $23 million, primarily due to Mexico and Venezuela. Europe/Africa/CIS D&E operating income was negatively impacted due to activity disruptions caused by geopolitical issues in North Africa and lower drilling activity in the North Sea. Middle East/Asia D&E operating income decreased $19 million, primarily due to higher costs in Saudi Arabia and certain locations in Asia Pacific and startup costs in Iraq.

Corporate and Other

During the first quarter of 2011, Halliburton spent approximately $11 million on strategic projects aimed at improving Halliburton's business model, which include lowering service delivery costs in North America and repositioning supply chain, manufacturing, and technology infrastructure to support projected international growth. While the level of investment was tempered in the first quarter due to activity declines in the Eastern Hemisphere, Halliburton expects to continue funding this effort throughout 2011.

Significant Recent Events and Achievements
  • Halliburton has the broadest portfolio of high-pressure and high-temperature (HP/HT) tools in the industry. Recent contract wins which expand Halliburton's market position in offshore HP/HT environments include the following:
    • Halliburton was awarded several contracts by Statoil to provide services for two HP/HT fields offshore Norway. Halliburton estimates that these significant multi-year awards have the potential to exceed more than $200 million in value. Under these contracts, Halliburton will provide directional drilling, logging-while-drilling, cementing, drilling fluids, and completion equipment and services. Drilling is scheduled to begin in the third quarter of 2011.
    • Halliburton was awarded several contracts for equipment and services on two offshore blocks in the South China Sea. This is the first ultra-HP/HT oil and gas drilling project in Asia. This project will push existing technology limits, with required equipment specifications at 250°C and 15,000 psi. Under these contracts, Halliburton will provide several ultra-HP/HT technologies for drilling, completions, cementing, and testing, including two industry-first technologies. The exploration campaign calls for two firm wells and one potential well. Drilling is scheduled to start in the third quarter of 2011.
    • Halliburton was awarded a $120 million, three-year contract extension by Chevron Thailand for directional drilling, measurement-while-drilling, and logging-while-drilling services for its ongoing offshore developments in the Gulf of Thailand. The majority of the wells that Halliburton's Sperry Drilling product service line will service are high temperature wells that exceed 150°C (302°F), with some exceeding 200°C (392°F).
  • Halliburton has been awarded a contract by Statoil to provide integrated drilling and well services in offshore Norway with options up to eight years in duration with extended scope and activity. Under the first phase of the contract, Halliburton will provide directional drilling services, logging- and measurement-while-drilling services, surface data logging, drill bits, hole enlargement and coring services, cementing and pumping services, drilling and completion fluids, completion services – including multilateral junctions, SmartWell® completion systems and VersaFlex® expandable liner hangers – and project management. This is the first time Statoil has awarded an integrated well services contract in Norway, which includes project management by Halliburton, with the intent to increase efficiency and reduce development costs.
  • Halliburton was awarded a contract by Exxon Mobil Iraq Limited to provide drilling services for 15 wells in the West Qurna (Phase I) oil field located in southern Iraq. This is in addition to work awarded in this field by the same customer in 2010. Under this contract, Halliburton will provide a complete range of well construction services, utilizing three drilling rigs to deliver the wells.
  • As reported in the Oil and Gas Journal, Halliburton received the No. 1 overall ranking and was named the most sustainable oil/gas full service engineering company by Management and Excellence, a sustainability rating firm. Halliburton earned an AAA ranking through demonstrating quantifiable performance and risk reduction in areas such as energy consumption, earnings per share, and debt. Further, Halliburton was named "Best in Class" among all oil and gas service companies in corporate governance, sustainable management, emissions reductions, and executive remuneration effectiveness. Halliburton's score registered at 90.4 out of 100 possible points, a 26% increase from the last survey performed in 2009.
  • Halliburton announced its plan to build a 200,000-square-foot manufacturing facility in Lafayette, Louisiana. The facility is expected to produce complex machined components for oilfield service operations with state-of-the-art manufacturing equipment, and will support the fast-growing needs of the Western Hemisphere oil and gas industry, including the shale markets. Construction on the new facility is scheduled to begin by July 2011 and to be completed in early 2012.
  • Landmark Software and Services, a Halliburton product service line, announced that leading Brazilian exploration and production company, OGX Oil and Gas, will migrate all users of geophysical and geological software applications to the Landmark DecisionSpace® Desktop system. OGX explored and tested the capabilities of the DecisionSpace Desktop technology as part of a Landmark pre-release program launched in early 2010. OGX determined that the software suite greatly enhanced its workflow capabilities with significant improvements in productivity.
  • Halliburton announced that it has integrated the drilling capabilities of several product service lines to deliver significant drilling performance gains and save operators millions of dollars in well costs. Halliburton's Optimized Drilling Performance™ approach includes the delivery of a proprietary engineering workflow, an integrated suite of drilling applications that sit on the DecisionSpace® InSite® global infrastructure, and localized, cross-functional teams. Optimized Drilling Performance has already improved production rates and saved thousands of days in drilling time in all of the major basins globally, both in deepwater and on land.