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Oil and Gas Energy News Update

Tuesday, May 17, 2011

Commodity Corner: Oil Drops on Weak Economic Data

- Commodity Corner: Oil Drops on Weak Economic Data

Tuesday, May 17, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices continued to fall Tuesday on disappointing economic data and concerns about the euro's stability.

Light, sweet crude futures dropped $1.34, settling at $96.03 a barrel Tuesday. According to the U.S. Commerce Department, housing starts declined by 10.6 percent in April to 523,000. Additionally, the Federal Reserve reported a 0.4 percent decrease in April's industrial production—the first drop in 10 months. A decrease in industrial production represents a weak economic situation, signifying a lower demand for goods including crude oil.

Earlier in the day, the dollar received a boost as concern escalated on the instability of the euro. The euro retreated from earlier losses but remained vulnerable on anticipation that Greece may restructure its debt.

The intraday range for June crude was $95.02 to $97.81.

Likewise, gasoline futures also fell again Tuesday. Traders continued to sell Tuesday as fears eased over the effect of the Lower Mississippi River flooding on the refinery corridor from Baton Rouge to New Orleans. Front-month gasoline traded between $2.84 and $2.95 before settling a penny lower at $2.92 a gallon.

A report that industrial production declined in April caused natural gas prices to decrease for the first time in four days. Analysts worry that the data may cause the demand for fuel to soften. Natural gas futures settled at $4.25 per thousand cubic feet, down seven cents from Monday. Prices peaked at $4.33 and bottomed out at $4.16 Tuesday.

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Anadarko Petroleum Declares Quarterly Dividend

- Anadarko Petroleum Declares Quarterly Dividend



May 17, 2011

The Board of Directors of Anadarko Petroleum Corporation (NYSE:APC) declared a quarterly cash dividend of $0.09 per share today.

The dividend is payable June 22, 2011, to stockholders of record at the close of business on June 8, 2011, and represents an annual yield of about 0.50%.

Shares of Anadarko Petroleum are trading down 1.21% at $72.51.

Anadarko Petroleum has a potential upside of 29.2% based on a current price of $72.51 and an average consensus analyst price target of $93.7.

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BP's Arctic Deal With Rosneft Collapses

- BP's Arctic Deal With Rosneft Collapses



May 17, 2011

BP Plc's (NYSE:BP) disputed share swap and Arctic oil exploration agreement with Russian state-owned company Rosneft has collapsed, opening the door for Rosneft to find another company to fill the void.

The deal came apart because BP failed to first consult with its Russian partners in a separate joint venture, TNK-BP. The joint venture was founded in 2003 as a 50/50 split with the Alpha-Access-Renova Group and is Russia's third largest producer of oil.

The deadline to resolve the dispute passed Monday night at midnight, but BP said Tuesday it would continue discussions with both Rosneft and its TNK-BP partners about collaborating in the future.

Under the proposed deal, BP would have gained access to the Kara Sea, a region of the Arctic Ocean that is considered a new frontier in oil exploration. The deal was new CEO Robert W. Dudley's first big transaction and was party of his strategy to focus on BP's exploration capabilities in quickly growing countries like India and Russia.

Shares of BP are trading up 0.35% at $42.61.

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Ford Invests $72 Million to Expand Chennai Powertrain Facility

- Ford Invests $72 Million to Expand Chennai Powertrain Facility



May 17, 2011

Ford Motor (F) announced today that it will invest $72 million to expand its powertrain facility in Chennai. The move is expected to further support the company's sales and export growth plans in India.

The company stated further that the expansion program will be completed in mid-2012. By then, it noted, the engine plant's production capacity will have increased from 250,000 to 330,000 units per year, an additional output of 80,000 diesel engines annually.

The expansion of F's diesel engine production capacity will bring its total investment in India to more than $1 billion, the company added.

Shares are down 1.55% to $14.90.

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ConocoPhillips to Drill Off Australia to Evaluate Natural Gas Discovery

- ConocoPhillips to Drill Off Australia to Evaluate Natural Gas Discovery



May 17, 2011

Shares of ConocoPhillips (COP) are down on a Bloomberg report that the oil giant plans to begin drilling in the Browse Basin off Australia's northwest coast.

The move will come in the second or third quarter in an effort to judge the potential of discovering natural gas in the area.

ConocoPhillips shares are down 0.76%, or $0.54, to $70.89.

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Denali to Close-Out Ops at Alaska North Slope Project

- Denali to Close-Out Ops at Alaska North Slope Project

Tuesday, May 17, 2011
Denali - The Alaska Gas Pipeline LLC

The Alaska Gas Pipeline announced that its open season efforts have not resulted in the customer commitments necessary to continue work on its Alaska North Slope gas pipeline project, which has an overall estimated capital cost of $35 billion (2009 dollars). Denali will withdraw its Federal Energy Regulatory Commission pre-file application and, over the next few months, close out its operations.

"Denali is ending its efforts because of a lack of customer support," said Bud Fackrell, Denali President. "Denali is a market-driven company. As such, we cannot spend the billions of dollars necessary to advance the project unless we have binding agreements with shippers. Although we have been in discussions with potential shippers for nearly a year and half, we have been unable to secure the financial commitments necessary to advance the project."

Work to date has been substantial. Denali has conducted extensive stakeholder consultations, set up multiple data rooms with detailed information, submitted comprehensive public filings, and provided access to Denali's experts to help potential customers evaluate the project. Denali has spent over $165 million and invested more than 760,000 man-hours in its work effort.

Since Denali began its efforts in 2008, the North American gas market has changed significantly, primarily as a result of the development of shale gas resources. This has created a very difficult environment in which to secure financial commitments from potential customers.

"Although we are disappointed that Denali was not able to secure customer support, we are proud of our achievements," said Fackrell. "In particular, I want to thank the hundreds of Alaskan and Canadian companies and individuals who have worked on the project as well as the regulatory agencies, government officials, and the many Native Alaskan and Canadian Aboriginal groups who have supported our work effort over the last 3 years. Denali's work has advanced the project further than at any point in the past and has provided potential shippers an opportunity to evaluate the competitiveness of North Slope natural gas in the North American marketplace."

Denali - The Alaska Gas Pipeline is owned by subsidiaries of BP and ConocoPhillips.

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BP Remains Hopeful over Russian Arctic Deal

- BP Remains Hopeful over Russian Arctic Deal

Tuesday, May 17, 2011
Deutsche Presse-Agentur (dpa)

BP's plans for a major Arctic oil exploration deal with Russian state oil group Rosneft suffered a major setback Tuesday following the failure of a massive share swap transaction agreed in January, the oil company said in London.

Talks to broker a settlement with TNK-BP, the company's existing Russian partner, which had blocked the deal, ended without agreement, meaning that BP missed a midnight deadline set by Rosneft to get the deal back on track.

BP said in a statement that discussions would continue between all parties.

The announcement is the latest twist in a protracted saga that started in January when BP and Rosneft announced a share swap of 8 billion pounds (13 billion dollars) that included exploration rights for the Kara Sea in the Arctic.

The deal was subsequently scuppered after TNK-BP successfully claimed it breached an earlier agreement that TNK-BP had to be included in deals undertaken by BP in Russia.

The latest talks reportedly involved a 18.5 billion-pound buyout of TNK-BP, which is owned by a consortium of Russian billionaires called Alfa Access Renova (AAR).

BP said Tuesday it was still hopeful a deal could be struck, adding it would intensify its efforts to ensure TNK-BP's continued success.

"In recent months, BP has conducted detailed negotiations with AAR and Rosneft to seek a reasonable and businesslike solution that would allow the agreements to proceed to the satisfaction of all parties."

"Such a solution has not been found at this time, although talks will continue," it said in a statement.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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State forms Eagle Ford task force

- State forms Eagle Ford task force

Tuesday, May 17, 2011
Houston Chronicle
by Tom Fowler

The Texas Railroad Commission is creating a task force in the Eagle Ford shale region of South Texas to ensure that regulators can keep up with the oil and gas boom there, said one of the three commissioners.

In an interview with the Houston Chronicle, Commissioner David Porter said the state's main drilling regulator wants to avoid repeating problems that arose when gas drilling took off in the Barnett Shale in North Texas in the middle of the last decade.

Breakthroughs in two technologies -- hydraulic fracturing and horizontal drilling -- have allowed drillers to tap economically into prolific shale formations in the Dallas-Fort Worth area and many other parts of the country.

The speed of development in North Texas led to backlashes against drilling in some communities, Porter said.

"There's a perception problem that no one was regulating the oil and gas industry," Porter said. "And it's still out there, that the oil companies are doing whatever they want."

Porter said he believes the Eagle Ford has the potential to be the biggest single economic driver in South Texas' history.

The task force will comprise about a dozen members, including large and small producers, oil field services companies, local elected officials, landowners and environmental groups.

"We want to make sure the lines of communication are clear," Porter said.

But the commission still may face staff shortages because of deep cuts the Legislature is making this session.

During the last session in 2009 the Commission was funded for 704 full-time equivalent positions, which was considered less than full staffing.

Now the staffing is around 625, down because of budget reductions state leaders asked all agencies to make in the past year.

The commission wants funding for 40 to 50 positions above the 704 funded in 2009, but Porter isn't optimistic.

A staffing shortage could lead to delays in issuing permits for Eagle Ford work, he said. Worker shortages already have slowed some permitting and enforcement work.

Historically, the commission has moved workers from other divisions when necessary to keep permits for new wells flowing.

"That's been the highest priority within the commission, to keep everything moving economically," Porter said -- acknowledging the potential for conflict between that function and enforcing safety rules, including ensuring that underground aquifers aren't contaminated by drilling activities.

"It's a fine line we walk at the Railroad Commission, between protecting public health and safety and promoting the industry," Porter said.

The water issues in the Eagle Ford will be even more sensitive than in the Barnett Shale, Porter said, because the area is more arid and the aquifers are deeper than in North Texas, meaning well casing has to run deeper to protect the drinking water.


Copyright (c) 2011, Houston Chronicle

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BP Sells Stakes in UK Fields to Perenco

- BP Sells Stakes in UK Fields to Perenco

Tuesday, May 17, 2011
BP plc

BP has agreed to sell its interests in the Wytch Farm, Wareham, Beacon and Kimmeridge fields to Perenco UK Ltd ('Perenco') for up to $610MM in cash. The price includes $55MM contingent on Perenco's future development of the Beacon field and on oil prices in 2011-13.

The sale of these interests is part of BP's plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before today's agreement, BP had already announced sales agreements totaling around $25 billion.

BP group chief executive Bob Dudley said, "Today's agreement brings us even closer to the target of $30 billion of divestments by year end that we set out last summer. It demonstrates that we do have assets of quality that other operators see as more strategically valuable to them than to BP, thus unlocking value for our shareholders."

An immediate payment of $500MM has been made, a further $55MM will be paid on completion which is expected at the end of 2011 with the remaining $55MM contingent on submission of the Beacon field development plan and oil prices. Completion of the sale is subject to partner preemption rights and a number of third party and regulatory approvals.

The divestment of Wytch Farm is an outcome of BP's strategic aim in the UK to invest in a more focused North Sea business portfolio in the northern North Sea, central North Sea, West of Shetland and Norway.

Trevor Garlick, regional president for BP North Sea, said, "The North Sea Region is a very important area for BP and we will sustain a significant business here for the long term. We are currently investing around $4B per annum of capital and operating expenditure, which includes four major new field development projects in the UK and two in Norway."

It is expected that impacted BP employees based at Wytch Farm will transfer with the asset to Perenco.

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BOEMRE OKs BHP Billiton's GOM Exploration Plan

- BOEMRE OKs BHP Billiton's GOM Exploration Plan

Tuesday, May 17, 2011
BOEMRE

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) announced the approval of an Initial Exploration Plan (EP), submitted by BHP Billiton, Inc., for activities in deepwater Gulf of Mexico. The EP was completed in accordance with new safety and environmental standards implemented since the Deepwater Horizon explosion and oil spill, and is the first deepwater Initial EP approved to include the completion of a thorough site-specific Environmental Assessment (SEA).

BHP Billiton's plan includes one proposed deepwater exploration well in approximately 4,468 feet 124 miles offshore Louisiana. An EP describes all exploration activities planned by the operator for a specific lease or leases, including the timing of these activities, information concerning drilling vessels, the location of each planned well, and other relevant information that needs to meet important safety standards.

BOEMRE prepared the SEA to examine BHP Billiton's proposed exploration activities in accordance with the National Environmental Policy Act (NEPA) and the implementation of departmental and bureau regulations.

The SEA included new scientific information that had not been previously available for consideration or analysis. Based on its review, BOEMRE found no evidence that the proposed action would significantly affect the quality of the environment. Therefore, BOEMRE determined that an Environmental Impact Statement (EIS) was not required and issued a Finding of No Significant Impact, which allowed the Initial EP to be approved.

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Icon Energy Begins Coring Ops at Lydia Well

- Icon Energy Begins Coring Ops at Lydia Well

Tuesday, May 17, 2011
Icon Energy Ltd.

Icon has commenced coring operations on Lydia-11 at a depth of 696 meters.

Lydia-11 is one of four wells to be drilled in this current program.

Lydia-13 has now been confirmed as part of this program and an option has been exercised on the Atlas Drilling rig to complete the additional well.

The rig will return to core Lydia-12 following operations on Lydia-11.

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Magellan Petroleum Updates Current Ops

- Magellan Petroleum Updates Current Ops

Tuesday, May 17, 2011
Magellan Petroleum Corp.

Magellan Petroleum provided updates to its current operations.

Amadeus Basin Fields

Production volumes, net of royalties, were 0.172 BCF of gas and 13,084 Bbls of oil for the quarter ended March 31, 2011 in Australia. Following the termination of the Mereenie Gas Sales Agreement last year, and in anticipation of the end of the Palm Valley Gas Sales Agreement, a large component of the Company's natural gas deliverability remains available but unsold. On its own, and in conjunction with the Mereenie Operator, the Company is in the midst of natural gas sales negotiation and project feasibility work being undertaken to sell these available volumes in the short-term.

The Mereenie Owners are in negotiations to secure new gas supply agreements with large mining companies that are actively considering expansions in the Northern Territory. This is a competitive process with other suppliers in the area.

Magellan has begun feasibility work with Mustang Engineering, subsidiary of Wood Group, to determine economic viability of their "small scale" Liquefied Natural Gas (LNG) technology at the port of Darwin, Northern Territory. If Mustang's work is successful, as early screening suggests, we will then evaluate a portfolio of assets with excess deliverability in the area as feed volumes in consultation with respective Operators, including volumes at Mereenie, Palm Valley, Dingo, new shale gas play owners, and offshore Bonaparte producers.

NT Gas, operator of the Amadeus Gas Pipeline, has proposed a new open-access arrangement to the Australian Energy Regulator for natural gas transportation including from the Amadeus Basin to all point on their system, including Darwin, for the five years commencing July 2011. The transportation tariff expected to be approved by the Regulator in July will be substantially lower that the current tariff.

United Kingdom

In the Weald Basin of Southern England, the Company (40% interest) participated in the Markwells Wood-1 exploration well in PEDL 126. The Markwells Wood-1 well targeted a prospect interpreted to be the eastward extension of the Horndean oil field which is currently producing from the Great Oolite Formation. Assessment of the logs confirmed that the entire Great Oolite reservoir sequence in Markwells Wood-1 is oil-bearing above the Horndean field oil-water contact of 1355 m (4446 ft) sub-sea level (TVD SS).

Core analysis has been integrated with the well petrophysical evaluation and image logs to enable the operator, Northern Petroleum, to finalize the design of a production test program. Testing to establish pressures and flow rates in the existing wellbore will take place once the required services and equipment have been contracted. Analysis of the test results will enable the determination of the oil reserve potential and will be the basis for production planning. Production testing is expected to occur between late June and October 2011 on Markwells Wood-1.

The Company also holds a 50% interest in PEDLs 231, 232, 234 and 243, totalling 240,000 gross acres, in the central Weald Basin area which are operated by Celtique Energie. A potential major shale gas and shale oil unconventional resource and several material-size conventional gas prospects have been identified in this acreage in the depocentre of the basin. The joint venture will acquire approximately 180 km of 2D seismic data in the central Weald Basin during the 2nd and 3rd quarters this year to better define drilling prospects

Poplar, Montana

MPC's Poplar Fields oil production was 16,879 bbls net to Magellan at an average price of $81.24/bbl for the quarter ended March 31, 2011. Winter conditions there were among the worst on record during the period. Our team was able to continue operations but was unable to complete well workovers. Weather conditions have improved.

The Company will, subject to Board review and approval, begin a springtime program to undertake seven recompletions along with the completion of the EPU119 drilled last fall into the Charles formation.

Magellan also plans to drill one shallow natural gas well to evaluate significant reservoir pressure differentials seen in the shallow gas horizon during the drilling of the EPU119 well. This gas reservoir produced during the early phases of field development in the 1950s but was later shut-in as uneconomic. Today, there is a natural gas pipeline four miles to our north and viable down and upstream markets.

A second drilling program, including up to three new infill wells in the Charles Formation, will be considered in July for late summer drilling and will be based upon the results from the recompletion program with the objective of increased production and better cash generation amid high oil price netbacks.

Given the complexity of the Poplar reservoir, the Company has completed the first steps of a reservoir engineering study for the Charles formation. Further work is being conducted to manage / monitor water influx, determine new high potential drilling sites, and to determine the merit of an infill program. We believe this work is a prudent step to manage reservoir risk and well performance downside.

Additional test on miscibility and fit for tertiary CO2 flooding is also ongoing. Work to-date has allowed modeling of possible water drive sources in relation to historical areas of high initial well production. The Company has applied for $11.5 million of CO2 sequestration funds available from the US Department of Energy. Results of that application should be received this Summer.

The EPU119 Bakken and Three Forks cores yielded encouraging results. We remain in discussions with third parties, but have not yet achieved what the Company considers acceptable value. Discussions with a number of parties continue and we are receiving new approaches from interested partners.

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Anadarko Posts Quarterly Dividend

- Anadarko Posts Quarterly Dividend

Tuesday, May 17, 2011
Anadarko Petroleum Corp.

Anadarko declared a quarterly cash dividend on the company's common shares.

A dividend of 9 cents per share was declared on the company's outstanding common stock, payable June 22, 2011, to stockholders of record at the close of business on June 8, 2011.

The amount of future dividends for Anadarko common stock will depend on earnings, financial condition, capital requirements and other factors. The Board of Directors determines dividends on a quarterly basis.

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Vast Exploration Closes Putumayo Farm-Out

- Vast Exploration Closes Putumayo Farm-Out

Tuesday, May 17, 2011
Vast Exploration Inc.

Vast Exploration has closed its previously announced farm-out of a 90% interest in the Putumayo Basin of Colombia Block (the "Block") to a wholly-owned subsidiary of Sagres Energy Inc. ("Sagres") in consideration for the Company retaining a 10% carried interest during the first exploration phase (the "Carried Interest").

The Block has an area of 148,000 acres (gross) and is located in the Putumayo Basin of Colombia. The Block offers exploration upside on a structural trend with existing discoveries, and is situated strategically between two blocks (CAG-6 and PUT-09) awarded to Pacific Rubiales and Talisman Energy, respectively. The Block carries a royalty of 7% payable to the Government of Colombia in addition to the basic royalty scheme established under Colombia Law, being 8% for up to 5,000 bopd and increasing to 25% for a 600,000 bopd field. All other terms of the contract are standard to the model Colombian E&P Contract. Sagres will have an option to acquire the Company's Carried Interest in the Block over the next twelve months at a price to be mutually agreed.

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Petrohawk Launches $600MM Offering of Senior Notes

- Petrohawk Launches $600MM Offering of Senior Notes

Tuesday, May 17, 2011
Petrohawk Energy Corp.

Petrohawk has launched a private offering of $600 million aggregate principal amount of senior notes due 2019 (the "Senior Notes"). The offering of the Senior Notes, which is subject to market availability as well as other conditions, will be made only to qualified institutional buyers in the United States and non-U.S. persons outside the United States.

Petrohawk intends to use the net proceeds from the Senior Notes offering to repay borrowings outstanding under its senior revolving credit facility and for working capital for general corporate purposes.

The Senior Notes have not been registered under the Securities Act of 1933 (the "Securities Act") or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws. The notes may be resold by the initial purchasers pursuant to Rule 144A and Regulation S under the Securities Act.

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Hercules Offshore Names New VP, Updates 2Q Activities

- Hercules Offshore Names New VP, Updates 2Q Activities

Tuesday, May 17, 2011
Hercules Offshore Inc.

Hercules Offshore announced officer appointments and provides update on second quarter 2011 activities.

Officer Appointments

Craig M. Muirhead has been appointed to the position of Vice President and Treasurer. Mr. Muirhead joined the company in January 2007 as a Corporate Finance Analyst and most recently served as Assistant Treasurer. Prior to joining Hercules Offshore, he served in various finance positions at Cameron International. He holds a Bachelors of Arts degree in Mathematical Economic Analysis from Rice University and a Masters of Business Administration from The University of Texas at Austin.

At the same time, Kimberly A. Riddle was named as Vice President Human Resources. Ms. Riddle will replace Lisa W. Rodriguez, who announced her retirement from the Company in April 2011. Ms. Riddle has been with the Company since March 2008, and served in Human Resources as the Compensation Manager. Prior to joining Hercules Offshore, Ms. Riddle served as a Human Capital Consultant at Deloitte Consulting and has over 20 years of experience in human resources, specializing in compensation management. She holds a Bachelors of Arts degree in Journalism from the University of Houston.

Second Quarter 2011 Updates

On May 13, 2011, the Company and its wholly owned subsidiary, Delta Towing LLC ("Delta Towing"), entered into an asset purchase agreement with Crosby Marine Transportation, LLC ("Crosby Marine"), by which Delta Towing sold to Crosby Marine, and Crosby Marine acquired from Delta Towing, substantially all of Delta Towing's assets and certain liabilities for aggregate consideration of $30 million in cash. In addition, the Company retained the working capital of the business, which was valued at approximately $6.3 million, as of April 30, 2011. As a result of this sale, the Company expects to record a non-cash impairment charge of approximately $13 million during the second quarter of 2011 related to the write-down of the Delta assets included in the sale to fair value less costs to sell.

On May 16, 2011, the Company, through its wholly-owned subsidiary, TODCO Mexico, Inc. initiated the permanent importation of Rig 3 and related equipment and spares into Mexico, at a net cost of approximately $8 million, which will impact second quarter 2011 financial results. Rig 3 is currently operating under a contract with PEMEX Exploracion y Produccion.

John T. Rynd, Chief Executive Officer and President, stated, "We are very fortunate that Craig and Kim have moved into their new roles at Hercules Offshore. They have been valuable assets to the Company and we look forward to the continued contributions and leadership they will bring to our organization."

"We have continued to seek opportunities to divest of non-core assets and I am pleased that we have completed the sale of the Delta Towing assets. Crosby Marine is a premium operator and we look forward to working with them in the future. Furthermore, we believe the permanent importation of Rig 3 into Mexico will allow us the opportunity to participate in multi-year contracting opportunities."

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Anadarko Hires Diamond Drillship Duo

- Anadarko Hires Diamond Drillship Duo

Tuesday, May 17, 2011
Diamond Offshore Inc.

Diamond Offshore has entered into two term drilling contracts with Anadarko. The contracts, which will utilize Diamond Offshore's two new-build drillships now on order, are expected to generate combined maximum total revenue of approximately $1.8 billion and represent 10 years of contract drilling backlog. In addition, Anadarko and Diamond have mutually agreed to dismiss all claims related to the Ocean Monarch.

The dynamically positioned, ultra-deepwater drillships, Ocean BlackHawk and Ocean BlackHornet, are each contracted for five years commencing in late 2013 and early 2014, respectively. As previously reported, Hyundai Heavy Industries Co., Ltd. is currently preparing to commence construction of the two drillships at its South Korean shipyard.

Diamond Offshore President and Chief Executive Officer Larry Dickerson said, "We are pleased to place our newest rigs under contract with Anadarko, with whom we have had a successful long-term relationship. We look forward to contributing to Anadarko's exploration and development efforts, working to bring to market energy resources for the world's increasing demand. A first class customer, two state of the art rigs and Diamond Offshore's high operational standards are all part of a formula for success."

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Parnaiba Basin Wells Deliver for OGX

- Parnaiba Basin Wells Deliver for OGX

Tuesday, May 17, 2011
OGX S.A.

OGX has presented to the National Petroleum Agency (ANP), through its subsidiary OGX Maranhão Petróleo e Gás Ltda., declarations of commerciality for the Califórnia and Fazenda São José accumulations discovered in the PN-T-68 block within the Parnaíba Basin.

"These declarations of commerciality in the Parnaíba Basin represent a milestone in the Company's development in a new exploratory frontier only 20 months after the acquisition of the concessions. With this declaration, we have taken an important step towards production," stated Paulo Mendonça, General Executive Officer and Exploration Officer for OGX.

OGX has presented to the ANP the declarations of commerciality for the California accumulation, which the new proposed designation is Gavião Azul Field and for the Fazenda São José accumulation that is expected to be designated as the Gavião Real Field, following the Agency's approval. The development plans for the fields were properly submitted to ANP's approval by OGX and are still under analysis.

Additionally, the Company has identified the presence of hydrocarbons in wells 1-OGX-34-MA and 3-OGX-38-MA, both in the PN-T-68 block within the Parnaíba Basin.

The OGX-34 well, a wildcat well in the Bom Jesus prospect, discovered a net pay of 23 meters of gas in two intervals, within the Poti and Cabeças formation, which is the third accumulation the Company has discovered in the region. The OGX-38 well, the first appraisal well in the Fazenda São José accumulation which was discovered by the OGX-22 wildcat well, encountered a net pay of 43 meters of gas in the Poti formation, surpassing initial volume expectations for this accumulation. The exploration of this well is ongoing.

The California and Fazenda São José accumulations will be OGX's first natural gas fields. The Company estimates that these fields will reach a production of 5.7 million m³ per day by 2013, which will correspond to a total production of 1.1 Tcf of gas. The natural gas to be produced in this region will be preferentially provided to the power plants to be constructed by MPX Energia S.A., an EBX group company, in association with Petra Energia S.A., both of whom are partners of OGX in the PN-T-68 block.

MPX has already acquired the site to construct a power plant in the PN-T-68 block and has also obtained an installation license for 1,863 MW, which was granted by the Secretaria Estadual do Meio Ambiente do Estado do Maranhão. In addition, MPX has initiated the environmental licensing process for the development of an additional 1,859 MW in the region.

OGX Maranhão Petróleo e Gás Ltda., an entity controlled by OGX S.A. (66.6%) and MPX Energia S.A. (33.3%), is the operator and holds a 70% stake in this block, with Petra Energia S.A. owning the remaining 30%.

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BG Group Inks PSC for Blocks Offshore Keny

- BG Group Inks PSC for Blocks Offshore Keny

Tuesday, May 17, 2011
BG Group plc

BG Group has signed Production Sharing Contracts with the Government of Kenya for two offshore exploration blocks - L10A and L10B.

BG Group will be operator on both blocks and will hold a 40% equity interest in block L10A and a 45% interest in block L10B. The initial work program consists of a commitment to acquire seismic data during an initial exploration period of two years.

Blocks L10A and L10B together cover an area of more than 10,400 square kilometers in the southern portion of the Lamu Basin, offshore Kenya, located in water depths ranging from around 200 meters to in excess of 1 900 meters.

BG Group Executive Vice President and Managing Director, Africa Middle East & Asia, Sami Iskander, said, "BG Group looks forward to working with our partners and the Kenyan Government to play an active role in the exploration for oil and gas offshore Kenya."

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PetroFrontier Updates Ops in AU

- PetroFrontier Updates Ops in AU

Tuesday, May 17, 2011
PetroFrontier Corp.

PetroFrontier reported an update on its general operations in the Georgina Basin, Northern Territory, Australia.

2011 Drilling Update

The first two wells to be drilled by PetroFrontier will be horizontal wells ("Baldwin-2" and "MacIntyre-2") on EP 103 and EP 127 respectively in the South Georgina Basin in the Northern Territory. Both wells will be twins to existing wells ("Baldwin-1" and "MacIntyre-1"). The existing wells will be used as pilot holes for the horizontal leg into the Basal Arthur Creek shale zone. Baldwin-2 and MacIntyre-2 include conventional targets above the Basal Arthur Creek shale zone.

As a result of the significant flooding in the area, the creek crossing between the two drilling locations is impassable and is currently being upgraded by constructing a new road on a different alignment that has adequate drainage to permit the rig to access the MacIntyre-2 location even in the event of further moderate rain events. The rig is also undergoing additional modification to comply with Australian regulations and is expected to be mobilizing to the Georgina Basin near the end of May. The rig will travel over 3,000 kilometers from Brisbane in Queensland to the Baldwin-2 well site. PetroFrontier will provide a further update once rig mobilization has been confirmed.

2011 Seismic Program

PetroFrontier has planned approximately 1,800 kilometers of additional 2D seismic as a further delineation to the approximately 550 kilometers of 2D seismic PetroFrontier acquired during 4Q 2010. The mandatory sacred sites cultural clearance process is underway with the local Traditional Owners and is expected to be completed by mid June. Seismic land operations are expected to commence in late June following the completion of the cultural clearance process. The initial focus of the program is to refine prospects already identified in the greater Ross area. The balance of the program is regional seismic designed to identify possible targets in the other licensed areas.

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BP Sells Stake in North Sea Fields to Perenco

- BP Sells Stake in North Sea Fields to Perenco

Tuesday, May 17, 2011
BP plc

BP has agreed to sell its interests in the Wytch Farm, Wareham, Beacon and Kimmeridge fields to Perenco UK Ltd ('Perenco') for up to $610MM in cash. The price includes $55MM contingent on Perenco's future development of the Beacon field and on oil prices in 2011-13.

The sale of these interests is part of BP's plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before today's agreement, BP had already announced sales agreements totaling around $25 billion.

BP group chief executive Bob Dudley said, "Today's agreement brings us even closer to the target of $30 billion of divestments by year end that we set out last summer. It demonstrates that we do have assets of quality that other operators see as more strategically valuable to them than to BP, thus unlocking value for our shareholders."

An immediate payment of $500MM has been made, a further $55MM will be paid on completion which is expected at the end of 2011 with the remaining $55MM contingent on submission of the Beacon field development plan and oil prices. Completion of the sale is subject to partner preemption rights and a number of third party and regulatory approvals.

The divestment of Wytch Farm is an outcome of BP's strategic aim in the UK to invest in a more focused North Sea business portfolio in the northern North Sea, central North Sea, West of Shetland and Norway.

Trevor Garlick, regional president for BP North Sea, said, "The North Sea Region is a very important area for BP and we will sustain a significant business here for the long term. We are currently investing around $4B per annum of capital and operating expenditure, which includes four major new field development projects in the UK and two in Norway."

It is expected that impacted BP employees based at Wytch Farm will transfer with the asset to Perenco.

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Eni Farms-In to Timor Sea Discoveries

- Eni Farms-In to Timor Sea Discoveries

Tuesday, May 17, 2011
Eni S.p.A.

Eni has signed an agreement with MEO Australia Limited to farm-in to the Heron and Blackwood gas discoveries in the permit NT/P68 in the Timor Sea, northern Australia.

The agreement involves Eni earning 50% in the Heron gas discovery by funding the drilling of two wells in the Heron Area. Eni may withdraw from the agreement after the first well has been drilled.

Eni has a further option to earn 50% in the Blackwood gas discovery by acquiring a minimum of 500 square km of 3D seismic and drilling one well in the Blackwood area.

Eni has a further option to acquire an additional 25% interest in the discoveries by funding the work program required to reach a Final Investment Decision (FID) in either Heron or Blackwood or both. Once completed Eni would make a one off bonus payment to MEO.

Eni Australia Limited will be the Operator of the permit NT/P68 with a 50% share with its partner MEO Australia Limited.

This agreement represents a significant opportunity in line with Eni's strategy to increase its business presence in Australia, an OECD country, and the south-east Asian region generally, through organic and acquisitive growth of quick to market hydrocarbon discoveries.

Eni entered Australia in 2000 and is the Operator of the Woollybutt oil field (65% interest), the Blacktip Project (100% interest) and the Kitan Development Project (40% interest) and is a partner in the Bayu Undan gas and condensate field and Darwin LNG (10.99% interest). Eni has interests in 13 exploration permits and production licenses in Australia, Timor-Leste and the Joint Petroleum Development Area (JPDA), 10 of which it operates and covering a total area of about 50,000 square km.

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Lundin Commences Malaysian Drilling Campaign

- Lundin Commences Malaysian Drilling Campaign

Tuesday, May 17, 201
Lundin Petroleum AB

Lundin has commenced its Malaysian drilling campaign with the spud of the Tarap-1 well in the SB 303 Block offshore Sabah, East Malaysia.

The well will target Miocene sandstones in the Kindu sub basin. The well will be drilled with the Offshore Courageous rig in a water depth of approximately 70 meters. It will be a deviated well, directionally drilled to intersect a series of stacked seismic anomalies, with a planned total depth of 2,140 meters subsea.

The well is the first of the five well program planned in 2011 by Lundin Malaysia BV in its Malaysian Blocks.

Lundin Petroleum holds 75 percent interest in SB303 through its subsidiary Lundin Malaysia BV. Lundin Malaysia BV's partner is PETRONAS Carigali Sdn Bhd with a 25 percent interest. Lundin Malaysia BV operates five blocks in Malaysia, namely PM308A, PM308B, SB303, SB307 and SB308.

Ashley Heppenstall, President and CEO of Lundin Petroleum commented, "We are very pleased to commence our five well drilling programme in Malaysia, a country where the Lundin Group achieved significant exploration success in the 1990's."

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Ecopetrol Makes Oil Discovery in Colombia

- Ecopetrol Makes Oil Discovery in Colombia

Tuesday, May 17, 2011
Ecopetrol S.A.

Ecopetrol announced the discovery of crude oil in the Mito-1 exploratory well located in the municipality of Puerto Gaitan, in the Meta province.

The exploratory well (A-3) comprises part of the exploration campaign in the Cano Sur block in the Llanos Orientales, where the presence of hydrocarbons had already been reported at stratigraphic wells in 2010 (Mago 1 and Draco-1).

Ecopetrol is the operator and owner of all the rights of the Cano Sur Contract for Exploration and Exploitation signed with the National Hydrocarbon Agency (ANH – Agencia Nacional de Hidrocarburos).

The Mito-1 exploratory well is located in the Eastern sector of the Cano Sur Contract contiguous to the Quifa field, in which Ecopetrol also has a participation.

The Mito-1 well was drilled vertically to a depth of 3,310 feet, equivalent to more than one kilometer. It was then completed with an artificial lift system using a progressive cavity pump (PCP). The accumulation of hydrocarbons has been proven in the basal sands of the Carbonera formation.

The production testing conducted to date brings up a production of crude oil of 13.5o API, with an average flow of 225 barrels per day, a water cut on the order of 10%, and a daily average production of 200 barrels of crude.

In coming weeks the evaluation of the conditions for production and the behavior of the deposit discovered with the Mito-1 well will continue. Additionally, Ecopetrol will proceed with the drilling campaign within the Cano Sur block, which will encompass more than 10 exploratory wells, and additional stratigraphic wells in coming months.

This new finding reaffirms the importance of the Llanos Orientales in Ecopetrol's growth strategy. The Meta province represents about 40% of the company's crude production, and is one of the focal points of the exploratory campaign in its strategy leading up to 2020.

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Faroe Finalizes Acquisition of Blane Field

- Faroe Finalizes Acquisition of Blane Field

Tuesday, May 17, 2011
Faroe Petroleum plc

Faroe has completed the acquisition of the 18.0% interest in the Blane oil field from ENI UK Limited and ENI ULX Limited.

Graham Stewart, Chief Executive of Faroe Petroleum plc, commented, "The acquisition of a material interest in the high quality producing Blane oil field significantly boosts Faroe's oil and gas revenue generation capacity and is very tax efficient for the Company."

"The transaction which adds approximately 1,900 barrels of oil equivalent per day (boepd) to Faroe's production, is in line with our strategy to grow and strengthen the production base towards funding the ongoing exploration program."

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Petroceltic Contracts 2nd Drilling Rig for Algerian Permit

- Petroceltic Contracts 2nd Drilling Rig for Algerian Permit

Tuesday, May 17, 2011
Petroceltic International Inc.

Petroceltic announced the signing of a fully termed contract with KCA Deutag for a second drilling rig on the enlarged appraisal campaign on the Isarene Permit, as outlined in the recent funding announcement. KCA Deutag's Nomad class drilling rig T-211 will work alongside the existing Dalma Rig LR-12 on the Ain Tsila Field appraisal program.

Petroceltic has also signed two contracts for studies in support of the Final Discovery Report. These are with G3Baxi Partnership Limited for field development conceptual studies and with Ove Arup and Partners for a geotechnical study. These studies will assist with initial concept selection and the location of the facilities, infrastructure and pipelines for the Final Discovery Report.

The T-211 rig contract period is for up to three wells and, in conjunction with the existing rig, will allow the enlarged program of a minimum of six appraisal wells to be completed before the end of 2011, allowing sufficient time for the submittal of the Final Discovery Report on the Isarene Permit to the Algerian authorities. The T-211 rig recently completed a program in Algeria for another operator in the Illizi basin and is expected to commence mobilizing to the first well location in June 2011, with drilling operations likely to commence in July 2011.

Brian O'Cathain, Chief Executive of Petroceltic commented, "The contract for the second rig will see a significant increase in the pace of appraisal activity on the Ain Tsila discovery following the recent successful fund raising and the farm out to ENEL. The award of contracts for the conceptual and geotechnical studies is of importance as they mark the start of the move from the exploration and appraisal phases of the production sharing contract into the pre-development phase."

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Voyager O&G Charges Ahead in 2011

- Voyager O&G Charges Ahead in 2011

Tuesday, May 17, 2011
Voyager O&G Inc.

Voyager O&G provided an operational update regarding acreage and drilling activity in the Williston Basin Bakken and Three Forks and the D-J Basin Niobrara plays.

Williston Basin Bakken and Three Forks

In 2011 Voyager has acquired 4,123 net mineral acres at an average price of $1,239 per acre in the Williston Basin targeting the Bakken and Three Forks formations.

Voyager controls approximately 28,000 net acres targeting the Bakken and Three Forks as of May 15, 2011. We anticipate that the industry will eventually drill as many as six wells per 1,280 acre unit which would equate up to 131 net wells on our current leasehold. Most of the newly acquired acreage is located in Richland County, Montana where Brigham Exploration announced the Johnson 30-19 #1H discovery. The Johnson well was reported to produce 2,962 barrels of oil equivalent "BOE" during its early 24-hour peak flow back period.

D-J Basin Niobrara

In 2010 Voyager acquired approximately 24,000 net mineral acres for $315 per acre with operating partner Slawson Exploration. Currently, Voyager owns 14,200 net acres targeting the Niobrara formation. In 2010 and 2011, Slawson and Voyager have drilled six wells. The Bushwacker 1-24H had geo-steering issues and has not produced. The Moonshine #1-36H had a high IP of 650 barrels per day and is currently on pump producing 25 barrels of oil per day. The Outlaw #16-11-66H was completed and is currently producing 5 barrels of oil per day. The Joker #1-36H is currently producing approximately 150 barrels of oil per day. The Smuggler #1-16H was recently completed and is still experiencing flowback. Smuggler's approximate daily production is currently 60 barrels of oil per day at an early flowback stage. The Birds of Prey #36-10-61H was completed recently. Slawson is cleaning the wellbore and testing the well. While the results of the three most recent wells are promising, further drilling in the short term is undetermined.

2011 Drilling and Production Guidance

Voyager has participated in approximately 40 gross wells in 2011, bringing the total well count to 58 wells targeting the Bakken/Three Forks formations. Voyager has also spud 3 gross Niobrara wells in 2011 targeting the Niobrara formation. Currently, Voyager has approximately 1.80 net Bakken/Three Forks wells drilling, completing or producing and 2.5 net Niobrara wells producing or completing. Voyager expects to participate in 70 gross wells and 6.0 net wells in 2011. Based on our current and forecasted drilling activity, Voyager expects to average 700 barrels of oil equivalent "BOE" per day by the end of 2011. The drilling and production guidance is in line with previous estimates.

2011 Capital Expenditures

In 2011, Voyager expects to spend $42 million in drilling capital expenditures targeting the Bakken and Three Forks in the Williston Basin. Voyager expects to devote the additional capital to strategic acreage acquisition targeting the Bakken and Three Forks using cash-on-hand of approximately $41 million and cash flow from operations.

Management Comment

J.R. Reger, Chief Executive Officer of Voyager Oil & Gas commented, "We are expanding our acreage in the Williston Basin and expect to achieve our acreage goals for 2011. The increase in drilling activity, especially in Montana, will also help us achieve our drilling goals. Voyager will continue to execute on our strategy of acquiring Williston acreage for its accretive value and convert to production while maintaining low overhead."

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Pioneer Drilling Secures Contracts for HZ Shale Drilling

- Pioneer Drilling Secures Contracts for HZ Shale Drilling

Tuesday, May 17, 2011
Pioneer Drilling Co. Inc.

Pioneer Drilling has executed three multi-year term contracts for new-build rigs, in addition to the new-build contract announced on May 5. Three of the four will be 1,500-horsepower AC drilling rigs and one will be a 1,000-horsepower AC rig, all to be delivered in the first and second quarters of 2012.

"Our latest new-build rigs are designed with features to improve horizontal drilling operations in shale plays, which are being well received by our customers," said Wm. Stacy Locke, President and CEO of Pioneer Drilling.

"The 1500-horesepower rigs will be equipped with 2,000-horsepower mud pumps and 7,500-psi fluid heads to drill long lateral well bores faster and more effectively. All of the rigs will be fully automated AC electric rigs equipped with 500-ton top drives, iron roughnecks, automatic catwalks and walking systems for pad drilling, plus they will be crane free for quicker mobilization," added Locke.

Pioneer Drilling has executed three multi-year term contracts for new-build rigs, in addition to the new-build contract announced on May 5. Three of the four will be 1,500-horsepower AC drilling rigs and one will be a 1,000-horsepower AC rig, all to be delivered in the first and second quarters of 2012.

"Our latest new-build rigs are designed with features to improve horizontal drilling operations in shale plays, which are being well received by our customers," said Wm. Stacy Locke, President and CEO of Pioneer Drilling.

"The 1500-horesepower rigs will be equipped with 2,000-horsepower mud pumps and 7,500-psi fluid heads to drill long lateral well bores faster and more effectively. All of the rigs will be fully automated AC electric rigs equipped with 500-ton top drives, iron roughnecks, automatic catwalks and walking systems for pad drilling, plus they will be crane free for quicker mobilization," added Locke.

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