Commodity Corner: Oil Falls on EU, China Fears

- Commodity Corner: Oil Falls on EU, China Fears

Monday, May 23, 2011
Rigzone Staff
by Matthew V. Veazey

The July contract price for a barrel of crude oil fell to $97.70 a barrel Monday.

Monday's selloff occurred as the dollar strengthened amid fears of a spreading debt crisis in the European Union. Stoking concerns was Standard and Poor's decision to revise Italy's credit outlook from stable to negative. The Dollar Index, which gauges the value of the U.S. Dollar against a basket of other major world currencies, rose 0.93 percent Monday. Priced in dollars, oil becomes a less attractive value for investors holding other currencies.

Also contributing to the lower oil price was a report by HSBC that manufacturing growth in China hit its lowest point in nine months in April. The bank, in releasing its latest Purchasing Managers Index (PMI) report, observed that new order growth in China is below the long-run trend.

July crude oil peaked at $100.04 and bottomed out at $96.37 during Monday's session.

Weather forecasters expect Americans in the southern and eastern regions of the U.S. to experience hotter-than-normal temperatures through next week. As a result, demand for air conditioning—and the natural gas used to generate electricity—is expected to strengthen during the period.

Front-month natural gas gained 12 cents Monday to settle at $4.35 per thousand cubic feet. June natural gas traded within a range from $4.22 to $4.38.

The June gasoline contract price remained flat at $2.94 a gallon Monday. It fluctuated from $2.87 to $2.955.

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Today's Trends: Chinese Oil Demand Reaches Third Highest Level Since 2005

- Today's Trends: Chinese Oil Demand Reaches Third Highest Level Since 2005

Monday, May 23, 2011
Rigzone Staff

China's apparent oil demand in April reached 38.36 million metric ton (mt) or an average of 9.37 million b/d, marking an 8.3% increase from April 2010 due to increased demand during the spring sowing season, according to Platts' recent analysis.

Apparent oil demand by the world's second largest oil consumer in April was the third highest monthly demand rate since Platts began tracking the data in 2005, behind 9.62 million b/d in December 2010 and 9.58 million b/d in February 2011.

"Beijing has in recent weeks directed state oil majors to ensure adequate domestic supply of products by cutting back on exports and running refineries flat out to meet increased demand from the transportation sector and agriculture sector, with the onset of the spring planting season," said Calvin Lee, Platts senior writer, China.

Earlier this month, the National Development and Reform Commission said Chinese oil majors would temporarily suspend diesel exports, except to Hong Kong and Macau, in a bid to boost domestic supplies.

Still, Platts noted that the 8.3% increase in demand in April showed that overall oil demand growth has moderated from the blistering pace set in the first quarter of well over 10% growth each month. "Some analysts are forecasting that Chinese oil demand growth will moderate for the rest of the year because of a decelerating economy and high oil prices further denting end-user demand,” Lee said.

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Kodiak to Acquire Assets in Williston Basin

- Kodiak to Acquire Assets in Williston Basin

Monday, May 23, 2011
Kodiak O&G Corp.

Kodiak O&G has entered into a definitive purchase and sale agreement with a private oil and gas company ("Seller") to acquire Bakken/Three Forks leasehold and producing properties in the Williston Basin. The purchase price for the leasehold interests and associated assets is approximately $85.5 million, which will be paid through the issuance of 2.5 million common shares of Kodiak and cash. Kodiak will also assume the Seller's contract for a new build drilling rig and will reimburse the Seller for Seller's $2.5 million cash deposit on the rig. Kodiak expects to fund the cash portion of the of the purchase price with available cash balances and borrowings under its credit facilities.

Upon completion of the transaction, Kodiak would acquire approximately 25,000 net mineral acres in McKenzie County, N.D., adjacent to and proximate to the Company's core Koala, Smokey and Grizzly Project areas. The privately negotiated transaction will expand Kodiak's acreage position in the Williston Basin to approximately 95,000 net acres.

The transaction includes operated working interest in two producing wells currently producing approximately 200 net barrels of oil equivalent per day. Also included in the acquisition are certain surface equipment and pipeline connection facilities that tie into a regional third-party natural gas gathering system.

Kodiak will have operatorship of a majority of the drilling units on the leasehold to be acquired. Including the acquisition, the Company will have over 400 net, largely de-risked, undrilled locations in the Bakken and Three Forks Formations across all of its Williston Basin leasehold.

The drilling rig contract included in the transaction is for a new-build rig that is scheduled for completion in late 2011. The rig is being built to specifications similar to the Company's existing rigs and will include a skid package to facilitate pad drilling. With the addition of this rig, the Company will be operating five drilling rigs, as well as participating as a non-operating partner under leasehold in Dunn County where one rig is presently drilling.

With the expected delivery date of the fifth rig in the fourth quarter 2011, the Company anticipates approximately $10 million of additional CAPEX related to the rig, bringing estimated 2011 capital expenditure guidance for drilling, completions and infrastructure to $230 million.

The acquisition is expected to close on or before July 1, 2011 and is subject to the completion of customary due diligence and closing conditions, including the approval of the NYSE Amex LLC. The effective date for the transaction is April 1, 2011, with any purchase price adjustments to be calculated as of June 30, 2011.

Commenting on the transaction, Kodiak's President and CEO Lynn Peterson said, "Growth through acquisition of contiguous, operated leasehold in the heart of the Bakken play is an important strategy that we have articulated to our shareholders. Today's transaction, when closed, will add significantly to our leasehold and bolster our core operating area in McKenzie County. The acquired lands, which we believe have been substantially de-risked by analog production from other operators, have the advantage of being readily accessible to existing midstream infrastructure which will help in our development plans.

"The addition of a fifth operated rig will not only provide us the opportunity to accelerate our drilling program, but also continue our efforts to gain field-level operational efficiencies. We continue to work closely with our pressure pumping services provider and are comfortable that we can achieve a timely completion schedule as we move towards a full-time dedicated frac team."

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Treaty Adds Acreage in Tx.

- Treaty Adds Acreage in Tx.

Monday, May 23, 2011
Treaty Energy Corp.

Treaty Energy has acquired eight oil & gas leases in Texas, adding another 1347 acres to Texas lease holdings.

Stephen L. York, Treaty Energy's President and Chief Operating Officer, stated, "With this new addition, Treaty now has a total of 1787 acres under lease in Texas that are spread over 13 leases. We will provide the terms of this latest acquisition via a Form 8-K filing this week."

Mr. York adds, "Treaty will assume operational control of these leases through the Company owned operating subsidiary, C & C Petroleum Management, LLC, in early June after all appropriate documents are filed with the RRC of the State of Texas."

This new acquisition generally consists of the following:

• Eight separate leases totaling 1347 acres.
• Thirteen fully equipped and producing wells.
• Eighteen shut-in wells to be put back on line.
• Twelve injection wells.
• Four water supply wells.
• Eight individual tank batteries consisting of seventeen storage tanks, eight oil/water separators (two less than six months old) six water pumping stations, miscellaneous tubing, pipe, and casings.
• Current production of oil about 20 BOPD.

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First Meadows Signs LOI in Belize

- First Meadows Signs LOI in Belize

Monday, May 23, 2011
New World O&G plc

New World O&G announced that its intermediary First Meadows has signed a non-binding letter of intent granting First Meadows (on behalf of the Company) a 45 day exclusivity period in which to undertake due diligence on two oil concessions totaling 560 sq km, located in the productive Petén Basin in Northwest Belize ('the LOI'). The LOI is non-binding save for granting First Meadows a 45 day exclusivity period in which to undertake due diligence on behalf of the Company, following which First Meadows has the right to transfer its rights under the LOI to the Company. Any potential investment by the Company would be in accordance with the Company's investing policy as set out in its Admission Document.

Overview:

• The LOI provides a 45 day exclusivity period to conduct due diligence on two concessions - Blue Creek and Gallon Jug, both named under one 560 sq km Production Sharing Agreement ('PSA'), located onshore Belize in the Petén Basin.
• The Company has engaged RPS Energy to undertake a competent person's report in the form of a letter of opinion ('CPR') to assist New World in determining the prospectivity of the PSA.
• Upon completion of the CPR and subject to the satisfactory completion of due diligence, it is intended that definitive transaction documents will be agreed in the form of a Farm-out and Operating Agreement with the Company being named as Operator, followed by the Company being named on the PSA for both concessions.
• The LOI contemplates (subject to due diligence including the CPR being satisfactory) a staged investment in 2D seismic, initially of US $500,000 but up to a total of US $2 million at the Company's discretion, followed by the right to acquire further interests on the basis of an agreed drilling program if the Company then decides to take the opportunity further.

New World CEO William Kelleher said, "We are delighted that this opportunity has materialized for us so quickly. As per the Company's stated investment policy, we are initially focused on opportunities in Central America, with particular emphasis on the highly prospective Petén Basin, Belize, where the Board believes that significant opportunities exist. This Project falls within our investment criteria and is particularly exciting as it is located in very close proximity to recent commercial discoveries."

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CGGVeritas Granted Seismic Permit in GOM

- CGGVeritas Granted Seismic Permit in GOM

Monday, May 23, 2011
CGGVeritas

CGGVeritas has been granted a seismic permit in the Gulf of Mexico.

Based on the award of this permit, CGGVeritas is currently in discussions with various E&P companies operating in the Gulf of Mexico to finalize the design of a new multi-client program. The program will utilize BroadSeis, our breakthrough broadband marine solution, in a wide-azimuth configuration.

Subject to our standard prefunding considerations, the Gulf of Mexico program is targeted to commence in the fourth quarter of 2011.

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TAG Sees 221% Increase in Taranaki Reserves

- TAG Sees 221% Increase in Taranaki Reserves

Monday, May 23, 2011
TAG Oil Ltd.

TAG Oil reported that an independent assessment of reserves has been completed as of March 31, 2011 on TAG Oil's 100%-owned Cheal Mining Permit (PMP 38156) and Sidewinder Exploration Permit (PEP 38748), located in the Taranaki Basin, New Zealand. Sproule International Limited, one of Canada's largest petroleum engineering consulting companies prepared the report in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities.

The reserves reported for the 2011 fiscal year relate primarily to the Cheal oil and gas field due to fiscal year-end 2011 cut-offs required under NI-51-101. Due to the timing of operations occurring after March 31, 2011, the Sidewinder reserve assessment was completed with information related only to the Sidewinder-1 well and does not include the now-completed Sidewinder-2, Sidewinder-3 and Sidewinder-4 wells.

The assessment of reserves has assigned net proved and probable reserves ("2P") remaining of 1,360,000 barrels of oil (2010 = 651,000 bbls) and 1,864 million cubic feet ("mmcf") of associated gas (2010 = 258 mmcf). This reserves report, on a 2P basis, amounts to 1,677,000 barrels of oil equivalent ("BOE") assessed within a reserves area covering just 475 acres of the 7,487-acre Cheal permit and just 107 acres of the 7,910-acre Sidewinder permit.

After considering production during the 2011 fiscal year, the 1,677,000 BOE in proved and probable reserves represents a 221% increase over the March 31, 2010 year-end independent reserve assessment. The key factors for the increase in reserves for fiscal 2011 are as follows:

• One new well drilled and completed
• Establishment of commercial production from a bypassed discovery
• Increased recovery factors
• Upward revision to projected future well performance

During the 2011 fiscal year, TAG focused primarily on optimizing the production from the producing Cheal wells. This resulted in an increase in the recovery factors being assigned to the Mt. Messenger Formation. In addition, TAG was successful in establishing the first-ever commercial production from the bypassed Urenui Formation oil discovery, using two historical wells drilled at Cheal by the previous operator. Having successfully completed these operations, Cheal now produces from both the Urenui and Mt. Messenger Formations at approximate depths of 1400m (~4600 feet) and 1800m (~5900 feet), respectively.

TAG Oil's Chief Executive Officer, Garth Johnson, commented, "We are very pleased to follow fiscal 2010's reserve increase with another large increase in fiscal 2011, even after having produced ~160,000 barrels of oil during the year. This report has established initial reserves within the Sidewinder discovery area, where the majority of our operations occurred after year-end and could not be considered for fiscal 2011 reserves. The commercialization of the Urenui oil discovery has also allowed us to book initial reserves and is another low-risk opportunity to build reserves in Taranaki from this widespread formation identified at Cheal."

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Cove Reports Final Results for 2010

- Cove Reports Final Results for 2010

Monday, May 23, 2011
Cove Energy plc

Cove announced its final results for the 12 month period ended December 31, 2010.

2010 Highlights

• Mozambique Rovuma Offshore Area 1
  • Drilling success - Three major gas discoveries, oil encountered:
    • Windjammer (555 ft net gas pay)
    • Barquentine (416 ft of net gas pay)
    • Lagosta (550 ft of net gas pay).
    • Ironclad well encounters oil
    • Validation of seismic model
• Commercialization/Contingent Gas Resources
  • Combined gas resources sufficient to support monetization through Liquefied Natural Gas ("LNG") development.
  • Contingent Gas Resources for combined Windjammer/Barquentine/Lagosta ("Palma Gas Area") discoveries estimated to be 12 TCF (Pmean).
• New Ventures
  • Acquired 15% interest in 5 contiguous deepwater blocks offshore Kenya
• Corporate
  • Successful equity funding combined with significant capital appreciation
  • £136 million ($210 million) raised in new equity
• 2011 - Year to Date - Highlights
  • Tubarao Gas Discovery (110 feet net gas pay) - Contingent Gas Resources in excess of 1 TCF (Pmean).
  • Cove recognize the potential for substantial additional upside resource potential to the Palma Gas Area and Tubarao discoveries based on new interpretation of existing seismic and well data
  • Circa 4,000 sq km new 3 D seismic program underway in Rovuma Offshore
  • Commitment to 2 deepwater rigs for Q4 2011 for exploration, appraisal and testing in Rovuma Offshore
  • Appraisal program of Palma Gas Area of Rovuma Offshore commenced. Extensive coring program at Windjammer discovery completed, rig now at Lagosta wellsite.
  • LNG Development planning underway
  • Interest acquired in 2 further blocks offshore Kenya

Outlook

Cove has established a unique, highly valued and coherent asset portfolio offshore East Africa that offers shareholders numerous material and exciting drilling opportunities in years to come.

Mozambique Rovuma Offshore Area 1

• Pursue Mozambique LNG project whilst exploring appropriate monetization opportunities to capture the underlying value of the LNG project and exploration potential.
• Aggressive oil and gas exploration and appraisal program planned to continue to 2014 with the availability of the new 3 D seismic data coinciding with the introduction of a second deep water rig in Q4 2011.
• In recent months there has been a marked increase from potential gas buyers (including some of the offshore partners) to commence dialogue to acquire future LNG.

Mnazi Bay - Tanzania

• The partnership is continuing negotiations to secure gas sales agreements with potential customers including cement manufacturing and power plant operators. Pending successful outcome of these negotiations the partnership will develop an appropriate exploration and appraisal program in the license area.

Kenya

• More than 3,500 sq kms of new 3 D seismic will be acquired during 2011 in the 5 contiguous deep water blocks operated by Anadarko.
• Exploration operations to commence on the recently obtained L10A and L10B offshore blocks.

New Ventures

• Management focused on securing new ventures opportunities with dynamic work programs to continue to drive the Company's strategy

Working Capital

• Current portfolio expenditure commitments funded into 2012

Michael Blaha, Chairman of Cove commented, "2010 was a remarkable second year for Cove in which the company transformed the assets that we acquired in 2009 from Artumas with world class exploration successes that added significant contingent gas resources that is to form the basis for a significant LNG project. In addition Cove has expanded its portfolio with some strategic exploration positions in 7 deep and shallow water blocks in Kenya. In our strategy we remain focused on geology in emerging basins with intensive exploration and appraisal programs executed by competent operators. We have established ourselves as a reliable company that is focused on creating shareholder value on the basis of a very clear strategy.

Cove's participation in the Rovuma Offshore Area 1 gas discoveries has positioned the Company in a leading LNG project. The Rovuma Offshore Area 1 partnership has commenced an aggressive appraisal, development and commercialization program; which aims for investment sanction of the LNG project in Q3 - 2013. We continue the exploration program on the numerous high priority oil and gas targets which will be supported by the additional 4,000 sq km 3D seismic that will be integrated with the existing 3,000 sq km 3D seismic. We aim to search for additional gas resources to support an ever expanding LNG project and we are hopeful of discovering an oil resources in the south following the oil encountered in Ironclad well during 2010.

I and the Cove Board are confident that the combined exploration and appraisal programs, currently underway on our East Africa portfolio, will achieve continuing significant growth for shareholders in what promises to be an exciting future.

"Finally I am grateful for all the support that was given to us by our consultants, advisors and my colleague directors. This group of people has formed a nimble "fit-for-purpose" and professional team. Without this team we could not have achieved today's tremendous position in a period of under two years since the company was initiated.

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Trans Energy Posts Production Results for Groves Well

- Trans Energy Posts Production Results for Groves Well

Monday, May 23, 2011
Trans Energy Inc.

Trans Energy announced that the first 30 days of production from its Groves #1H horizontal Marcellus well in Marshall County, West Virginia averaged 5,344 Mcfe per day and the rate of production on the 30th day was 4,660 Mcfe on a 30/64 choke.

John G. Corp, President of Trans Energy, said, "We continue to develop our acreage position in the Marcellus shale. We have been pleased with our initial success and our thirty day initial production results speak for themselves. We continue to learn more about the Marcellus as we drill and complete more wells and hopefully that translates into better wells in the future."

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Techlam Bags Work on Petrobras' Roncador Field

- Techlam Bags Work on Petrobras' Roncador Field

Monday, May 23, 2011
Techlam S.A.

Petrobras has awarded an important contact for manufacture of flexible joints on their P-55 Roncador field development program. These mission critical components of the P-55 riser system are designed for the life of the field. Techlam flexible joints enjoy a 100% reliability record having experienced zero failures. Maximum operating conditions for these flexible joints are as follows:

• Maximum pressure = 209 bar.
• Maximum rotation angle = +/- 16 deg.
• Maximum operating temperature = 70 deg. C.

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LGI, Geopark Close Stake Sale in Chile

- LGI, Geopark Close Stake Sale in Chile

Monday, May 23, 2011
Geopark Holdings Ltd.

LGI and GeoPark Holdings announced the closing of the previously reported sale to LGI of a 10% interest in GeoPark's oil and gas exploration and production blocks in Chile for US $70 million.

LGI is the energy, natural resource and trading affiliate of LG Corporation, the large international Korean company with 147 subsidiaries operating in over 50 countries and with annual sales exceeding US $100 billion. LGI has successfully invested and operated in the oil and gas exploration and production business for over twenty years including current upstream oil and gas projects in Oman, Vietnam and Kazakhstan. LGI has adopted a long term strategy of investing in oil and gas upstream investments in emerging resource-rich countries and has targeted Latin America as a new growth region in accordance with its strategic partnership with GeoPark.

Commenting on the announcement, Dr. E. K. Lee, Vice President and Head of the Oil and Gas Business Division of LGI, said, "We are very pleased to acquire an interest in GeoPark's upstream platform which represents an attractive foundation for our future growth in Latin America and the first oil and gas investment by a Korean company in Chile. We believe this region represents an area of untapped opportunities and high potential that fits our long term strategic objective of growing a global energy business. Our partnership with GeoPark is a relationship of complementary strengths and we see the GeoPark team and its properties as a key first step in building our business in Latin America. We look forward to growing together with GeoPark."

Commenting on today's announcement, James F. Park, Chief Executive Officer of GeoPark, said, "GeoPark is pleased to close this transaction and views its strategic partnership with LGI as a key element of our future growth and expansion in Latin America. The opportunity to cement this relationship by an initial sharing of projects builds a solid base for a promising long term and committed acquisition partnership. It also clearly demonstrates the value of the business that GeoPark has developed since 2006."

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Statoil Secures AGR's RMR for GOM Rigs

- Statoil Secures AGR's RMR for GOM Rigs

Monday, May 23, 2011
AGR Group ASA

AGR and Statoil have joined forces to push the limits of Riserless Mud Recovery technology even further.

The international energy company has signed an agreement for AGR's RMR for two deep-water rigs it has under contract in the Gulf of Mexico. AGR Drilling Services' Houston team will handle RMR operations.

Statoil has already successfully used the RMR in the GoM. That particular operation, conducted from the Discoverer Americas drillship, was on the Krakatoa well in the Mississippi Canyon block at a depth of more than 620m (2,000ft).

This latest deal with Statoil will see AGR's existing technology further enhanced to cope with the ever increasing water depths faced by Statoil in the GoM.

RMR® has made an indelible impact on the offshore industry since it was introduced. More than 140 wells have been drilled with the system. It allows the top-hole section of a well to be drilled more safely and more quickly yet with less impact on the environment.

Terry Scanlon, Senior Vice President AGR Drilling Services Americas, said, "We are continuing to further develop our RMR® technology and systems capability to be able to support Statoil in deeper water depths in the Gulf of Mexico.

"Signing this agreement with Statoil in Houston, coupled with our new strategic agreement with Statoil in Norway, gives us even stronger confidence that we are investing in our technology with a partner for the future, as we prepare to further support Statoil's deep-water GoM programmes."

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Dynamic Offshore Seals Deal for 1st KFELS Jackup

- Dynamic Offshore Seals Deal for 1st KFELS Jackup

Monday, May 23, 2011
Keppel Corp. Ltd.

Keppel FELS has secured a contract with Vision Drilling Pte Ltd (Vision Drilling), a wholly-owned subsidiary of Dynamic Offshore Drilling Limited (Dynamic Offshore Drilling), to build its first KFELS B Class jackup drilling rig for US $180 million.

Slated for delivery in 1Q 2013, the rig will be able to operate in water depths of 350 feet with a drilling depth of 30,000 feet and accommodate 120 men.

Dynamic Offshore Drilling has the option to build an additional rig to be exercised before 3Q 2011.

Mr. Naresh Kumar, Chairman of Dynamic Offshore Drilling, said, "While this is Dynamic Offshore's first collaboration with Keppel FELS, we are no strangers to its excellent project execution and dedication to safe, on-time and within-budget deliveries. My team and I have previously worked very closely with the Keppel FELS team on two KFELS B Class jackup rigs which have been deployed under long term contracts with strong day rates with a Fortune 500 National Oil Company.

"After the Gulf of Mexico oil spill, oil companies around the world prefer newbuild premium rigs with enhanced safety features and equipment reliability. With over 60% of the current Jack up fleet over 25 years old, it is an impetus for us as experienced drilling contractors to invest in premium high quality jackups with the world's leading shipyard. We are looking forward to build a number of rigs with the strong partnership of Keppel FELS in the years to come".

Mr. Wong Kok Seng, Managing Director of Keppel FELS, added, "We are glad to be working with familiar partners. Mr. Kumar is highly respected in the industry and Dynamic Offshore Drilling is backed by a recognised team of professionals.

Customers come to us because of our award winning products, excellent execution of projects and our commitment and ability to deliver rigs of the highest standards. In building their first rig to our KFELS B Class design, we are pleased to be able to support them in meeting the market requirements of newer rigs with superior technical and safety capabilities."

With 33 such units delivered worldwide, the KFELS B Class design continues to be the preferred jackup choice for drilling operators.

John Gellert, President of Seacor Marine LLC ("Seacor") and Board Member of Dynamic Offshore Drilling said, "Seacor is pleased to be a part of the project as an investor and joint venture partner in Dynamic Offshore Drilling. With the long term rising demand for premium jackups, we are looking forward to the development of the company (Dynamic Offshore Drilling)."

Dynamic Offshore Drilling's rig is equipped with enhanced features to expand the operational coverage of the rig. Provisions have been made for the rig to work in high pressure high temperature (HPHT) environments and have Offline Stand Building capabilities.

Developed by Keppel's technology arm, Offshore Technology Development, the KFELS B Class jackup design provides maximum uptime with reduced emissions and discharges. Its environmental-friendly features won the KFELS B Class design the prestigious Engineering Achievement Award from Institution of Engineers Singapore in 2009.

The above contract is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

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Spatial Energy Spins Off European Subsidiary

- Spatial Energy Spins Off European Subsidiary

Monday, May 23, 2011
Spatial Energy

Spatial Energy announced the opening of a European subsidiary. Spatial Energy made the announcement at the 2011 EAGE (European Association of Geoscientists and Engineers) Conference & Exhibition in Vienna, Austria.

Chris Carlston, co-founder and Vice President of Sales for Spatial Energy in Boulder, Colorado, USA, has accepted the new position of Managing Director, Spatial Energy GmbH, which will be based in Vienna. Spatial Energy GmbH is the fourth global office opened since the parent company's founding in 2005.

With increased interest in oil and gas exploration and production, including activity in Africa, as well as in shale gas plays in Eastern and Western Europe, Spatial Energy made the strategic decision to focus on building and strengthening relationships with key EAME energy companies. By establishing an office in Vienna with one of its key principal executives, the company is able to provide dedicated sales and support for customers and partners in key markets throughout the Western and Eastern Europe, Africa and the Middle East (EAME).

"Long term customer relations and service are a critical part of our success. As our customers expand their operations globally, a subsidiary in Europe is our logical next step," said Bud Pope, President, Spatial Energy. "We see Europe and Africa as strong growth markets where the concept of enterprise imagery hosting and management is catching on fast. We're dedicated to ensuring that our current and future clients can rely on our remote sensing expertise no matter where their business takes them."

Carlston stated, "More and more, oil and gas companies are beginning to understand the value of integrating disparate spatial data sets and making them more accessible throughout their organizations. They also place a high value on service and support, which is the hallmark of our company. I look forward to serving the EAME market with the leading enterprise imagery and data management services to the Energy sector. With our global remote sensing applications and analytical offerings, and now with the opening of the Vienna office, I'll be able to provide our global customers with the consistent, personal attention they deserve."

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Mainland Resources Names New Director, Extension to Merger Agreement

- Mainland Resources Names New Director, Extension to Merger Agreement

Monday, May 23, 2011
Mainland Resources Inc.

Mainland Resources has accepted the appointment of Gerry Jardine as a director of the Company effective May 18, 2011.

Mr. Jardine has worked in corporate finance and administration for public companies for the past 30 years and has considerable experience in fund raising for public companies. Since 1989, he has been President and principal shareholder of Amcan Fiscal Consultants, a private management consulting company based in Vancouver, British Columbia. Mr. Jardine founded and has served as Director and Officer of TSX Venture Exchange, NASDAQ and OTC Bulletin Board companies primarily within the research and development, mineral resource and oil and gas sectors. His responsibilities have included acquisitions, funding, and corporate governance and investor relations functions. Mr. Jardine has also served as a director of Mercer Gold Corporation since May 2011.

The Board has also accepted the resignation of Rahim Jivraj as a director of the Company effective May 18, 2011.

The Company also announced that it and American Exploration Corporation ("American Exploration") have entered into an amending agreement to extend the termination date of the Merger Agreement between the companies to August 31, 2011.

The previously announced Merger Agreement between Mainland and American Exploration contemplates a stock-for-stock merger between the companies, subject to approval of the shareholders of both companies. The companies have entered into the amending agreement to extend the termination date of the Merger Agreement from May 31, 2011 to August 31, 2011, in order to allow for additional time to complete required administrative and regulatory matters related to the merger process.

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CIS Awarded Major Contract by Weatherford Nigeria

- CIS Awarded Major Contract by Weatherford Nigeria

Monday, May 23, 2011
Conductor Installation Services Ltd.

Conductor Installation Services (CIS) has been awarded the largest contract in its history by Weatherford Nigeria. The USD multi-million dollar contract requires CIS to provide a range of conductor installation services in Nigeria on behalf of two major operators in the region.

Services will be carried out in conjunction with construction of a jetty, onshore and offshore platforms, and offshore stand-alone conductors. In addition to installing conductors, CIS will provide conductor make-up and cold-cutting services, and a variety of installation tooling equipment, including connection drive chasers and a range of directional drive shoes.

To carry out the conductor-driving operations, CIS will use two 150 kJ and two 90 kJ hydraulic hammers that are based permanently in Nigeria to support operations in the region. While the powerful 150 kJ hammer is designed to drive the larger conductors that measure up to 42 inches, the 90 kJ hammer is typically used to install smaller 20-inch to 36-inch conductors. CIS anticipates that it will be drive approximately 48 slots throughout the program, which is scheduled for completion in 2013.

Driving slots for construction of offshore barge

Already, CIS has commenced work on the first phase of the conductor installation program, which involves driving slots for construction of an offshore barge. This project requires CIS to install 36-inch conductors utilizing its 90 kJ hydraulic hammer spread. The contract is being supported by CIS from Port Harcourt, Nigeria and from its global headquarters in Great Yarmouth, England.

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BP, Rosneft Deal Unlikely to Be Revived, Russian Official Says - ADRs Down 2% in Afternoon Trading

- BP, Rosneft Deal Unlikely to Be Revived, Russian Official Says - ADRs Down 2% in Afternoon Trading



May 23, 2011

BP plc (BP) ADRs are down after Russian Energy Minister Sergei Shmatko said he doesn't see the arrangement between the british oil major and Russia's OAO Rosneft to come back, MarketWatch reported.

Some close to the deal had reportedly held out hope that the two parties would revive the deal for a $16 billion share swap and joint exploration and development of plots in the Arctic Sea.

BP ADRs are down 2%, or $0.91, to $44.09.

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Apache Northwest Drills Ahead at La Rocca Well

- Apache Northwest Drills Ahead at La Rocca Well

Monday, May 23, 2011
Oilex Ltd.

Oilex has been advised by the Operator that as at 0600 hours on May 22, 2011, the La Rocca-1 well has drilled to a depth of
3,579 meters and is drilling ahead. It is anticipated that the objectives could be intersected within the next few days.

• tatus: Drilling ahead below 3.579
• Past Week's Operations:
  • Drilled 311 mm (12 ¼") hole to 3,478 meters and ran 244 mm (9 ?") casing
  • Cemented and tested casing
  • Drilled 216 mm (8 ½") hole from 3,478 meters to 3,579.0 meters
• Water depth: 401 meters
• Objectives: Intra Mungaroo channel zone
• Planned total depth (TD): Approximately 5,100 meters
• Days to TD: 41 days on a trouble free basis

he La Rocca-1 well, the first exploration well in the permit, is drilling the La Rocca prospect in the Intra Mungaroo channel zone. The well, in the south-western part of the permit, was spudded on 30 April 2011 and is being drilled with the Ocean Patriot drilling rig. The well is operated by Apache Northwest Pty Ltd ("Apache").

Oilex secured funding for the cost of drilling and testing the well under the terms of a previously announced farm-out and subsequently modified agreement with Apache.

The participating interests in the WA-388-P permit after satisfaction of the requirements of the farm- in agreement and amendment, are set out below:

• Oilex Ltd 8.4%
• Apache Northwest Pty Ltd (Operator) 40%
• Sasol Petroleum Australia Ltd 18%
• Videocon Industries Ltd 8.4%
• Gujarat State Petroleum Corporation Ltd 8.4%
• Bharat PetroResources Limited 8.4%
• Hindustan Petroleum Corp. Ltd 8.4%

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Leed Hands GOM Reins to Marlin

- Leed Hands GOM Reins to Marlin

Monday, May 23, 2011
Leni Gas & Oil plc

Leni Gas & Oil announced resumption of operations in the Gulf of Mexico following the recent announcements by Leed Petroleum plc ("Leed").

Leed has announced that it has sold all its Gulf of Mexico properties and LGO has been advised that the new operator will be Marlin Energy LLC ("Marlin"), a private oil and gas operations company, based in Lafayette, Louisiana.

LGO met with Marlin last week and expect that production operations at Eugene Island 184 will be restored by early June and understand that Marlin are planning new sidetrack developments on EI 184 in the coming months to lift production.

Neil Ritson, LGO's Chief Executive, stated, "We are pleased that the operations will shortly be restored and that the hiatus has been kept as brief as possible, and we look forward to working with the new operator in order to accelerate the pace of development on these properties."

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PUC Gives Nod to Eminent Domain Power for Pipeline Company

- PUC Gives Nod to Eminent Domain Power for Pipeline Company

Monday, May 23, 2011
Knight Ridder/Tribune Business News
by David Falchek, The Times-Tribune, Scranton, Pa.

The state Public Utility Commission intends to declare natural gas pipeline company Laser Northeast Gathering a public utility, giving it the power to condemn private property by eminent domain.

By a 3-2 vote, the commission tossed back to Administrative Law Judge Susan D. Colwell her recommendation to deny Laser's application for a "certificate of public convenience," which would grant it utility status and the right to wield eminent domain.

The narrow majority of the commission disagreed with Judge Colwell's arguments that the commission lacked the authority to regulate the activity and that Laser didn't meet the definition of a public utility.

Rejecting Judge Colwell's legal reasoning, the commission majority sent the recommendation back with a narrow charge: Determine if granting a certificate of public convenience is in the public interest.

In a fiery dissent, Commissioner James Cawley warned of "grave implications for individual Pennsylvanians and their communities." He said his colleagues' decision would upset the balance in easement negotiations, giving more power to pipeline companies.

"The upset of this balance is not in the public interest and is sufficient reason to deny Laser's application," Mr. Cawley wrote, joined in his opposition by Tyrone Christie.

Joining Mr. Gardner in remanding the Laser requests were Robert Powelson and John Coleman Jr.

Collection and gathering pipelines will directly impact more property owners than the gas wells expected to multiply over the next several decades tapping Marcellus Shale gas. Every well has an estimated lifespan of 30 to 40 years and has to be connected to an interstate pipeline.

Judge Colwell argued a pipeline collection and gathering system did not serve the "public," but rather natural gas well owners. But the commission said the legal definition of public "is not confined to the entire public," but rather the individuals or companies requiring the service.

Also at the meeting, Mr. Gardner said in his motion the PUC has the authority to enforce voluntary environmental safeguards to which Laser consented. Environmental group Earthjustice, which intervened in the case, said it is pleased the PUC recognized its ability to enforce those environmental protections reached in a side agreement with Laser.

"Gas development has proceeded at a frenzied pace in Pennsylvania and along with it has come countless spills, accidents, explosions," said Earthjustice attorney Megan Klein. "Finally, state officials have a chance to do something right from the outset, rather than rushing to clean up the aftermath."

But those protections in the Laser agreement may not be enforced across the board.

State Consumer Advocate Irwin "Sonny" Popowsky is concerned pipeline companies in Pennsylvania will continue to be free to opt in or opt out of regulation.

"At some point, the commission has to decide generically whether this activity of natural gas collection and gathering is going to be regulated as a utility activity or not," he said. "You can't just have companies deciding whether or not they get to be public utilities."

Based in South Abington Twp., Laser Northeast Gathering is run by former Southern Union executive Tom Karam. The company began building its 31-mile pipeline in February and plans complete it by the fall.

Copyright (c) 2011, The Times-Tribune, Scranton, Pa.

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Ryanair Announces Capacity Cuts, Forecasts Flat Net Income For 2012

- Ryanair Announces Capacity Cuts, Forecasts Flat Net Income For 2012



May 23, 2011

Low cost Irish airliner Ryanair (NASDAQ:RYAAY) will cut capacity for the first time in its over 25-year history as rising fuel costs could potentially make dozens of routes unprofitable for the company.

"It's the first time ever that we'll go negative on traffic," CEO Michael O'Leary said in an interview. "We take delivery of 50 aircraft this winter so instead of running around trying to open up new bases and routes in November and December we'll sit them on the ground. With higher oil prices it makes no sense."

Even with a planned 12% fare increase, O'Leary expects net income for the year to be no higher than last year's $563 million. He also said he'd ground about 80 of 300 jets and make layoffs for the company's slow season beginning in October.

Ryanair has transformed the landscape of the European airline sector since O'Leary took over in 1990 after studying the growth of Southwest Airlines (NYSE:LUV) in the U.S., offering flights between cities not previously served by air and enticing customers from established carriers with bargain-basement fares and a no-frills service.

The airliner became the largest in Europe last year as measured by total scheduled passengers carried, with 72.7 million, after 2 decades of high growth.

Ryanair Holdings has a potential upside of 59.6% based on a current price of $28.51 and an average consensus analyst price target of $45.5.

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Toyota and Salesforce.com Announce Alliance To Build Private Social Network

- Toyota and Salesforce.com Announce Alliance To Build Private Social Network



May 23, 2011

Salesforce.com (NYSE:CRM) and Toyota Motor Corp (NYSE:TM) announced today the formation of a strategic alliance to build Toyota Friend, a private social network for Toyota customers and their cars.

Toyota friend is to be powered by Salesforce Chatter; a private social network used by businesses, and will be offered initially in Japan for Toyota's electric vehicles and plug-in hybrid vehicles due out in 2012.

Toyota Friend will connect Toyota customers with their cars, their Toyota dealership, and with Toyota. The private social network will provide a variety of product and service information as well as maintenance tips, creating a rich car ownership experience. For example, if an electric vehicle is running low on battery power, Toyota Friend would notify the driver to re-charge in the form of a "tweet"-like alert.

Regarding the alliance, salesforce.com CEO Marc Benioff said: "Toyota and salesforce.com share a vision to take the auto industry into the future. Social and mobile technologies will transform the car ownership experience, and we are excited to be Toyota's partner in this transformation."

Toyota Motor President Akio Toyoda said: "Social networking services are transforming human interaction and modes of communication. The automobile needs to evolve in step with that transformation. I am always calling for Toyota to make ever-better cars. The alliance that we announce today is an important step forward in achieving that goal."

Salesforce.com has a potential upside of 13.5% based on a current price of $146.61 and an average consensus analyst price target of $166.45.

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EnCore to Cancel Flotation of XEO Exploration

- EnCore to Cancel Flotation of XEO Exploration

Monday, May 23, 2011
EnCore Oil plc

EnCore announced that, in light of current market conditions, exacerbated by the uncertain investment climate created following the recent tax changes, the Board has decided to cancel the flotation of XEO Exploration and the related offer to EnCore shareholders.

Commenting on the decision, EnCore Chief Executive Alan Booth said, "In the few weeks since the Treasury announced substantive taxation changes, the market appetite for UK North Sea exploration has diminished markedly. Against that background, we were encouraged by the indicated institutional support we received for XEO, but given that the whole strategy behind XEO was to pre-fund a ten to twelve well three year exploration program without the continual need for fundraising, we felt that it was prudent to withdraw the flotation."

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Stenhouse-1 Well Plugged, Abandoned

- Stenhouse-1 Well Plugged, Abandoned

Monday, May 23, 2011
Cooper Energy Ltd.

The Stenhouse-1 exploration well has been drilled to a total depth of 1835 meters. Despite encouraging hydrocarbon shows observed in the primary objective Namur Sandstone, wireline logs indicate the formation is water saturated. No shows were observed in the secondary objective Birkhead, Poolowanna and Kalladeina Formations and wireline logs confirmed the absence of hydrocarbons in these horizons.

While the absence of a commercial accumulation at Stenhouse is disappointing, the presence of hydrocarbon shows in the Namur Sandstone demonstrates that hydrocarbons have migrated into this part of the permit and provide encouragement for other prospects along this structural trend, including the Turton prospect.

The Stenhouse-1 well has been plugged and abandoned as dry hole, and preparations are in place to move the rig to the Turton-1 drill site.

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Silver Oak Joins Partnership to Develop Petroleum Properties

- Silver Oak Joins Partnership to Develop Petroleum Properties

Monday, May 23, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

Silver Oak Energy Llc., a Fort Worth-based oil and gas exploration and production firm composed of former executives of Encore Acquisition Co., is partnering with EnCap Energy Capital Fund VIII and Chase Oil Corp. to acquire and develop petroleum properties with long producing lives.

EnCap committed $200 million to Silver Oak, and Chase agreed to assume substantial working interests in oil and gas prospects, according to Oil and Gas Investor.

Silver Oak's founders are former managers of two affiliated oil companies, Encore Acquisition Co. and Encore Energy Partners, that were acquired for $4.5 billion by Plano-based Denbury Resources in 2010.

Silver Oak has 65,000 acres of leases in oil fields in the Williston Basin of North Dakota, Madison County in East Texas and in Michigan, Steve Asbill, vice president of operations, told the Star-Telegram on Friday. The Williston Basin is a hotbed of drilling activity and an area where Encore Acquisition had substantial lease holdings.

Besides Asbill, former Encore personnel founding Silver Oak and their current positions are Wayne Bailey, vice president of land; Greg Barnes, vice president of engineering; Bill Francis, vice president of geology; and Curtis Priddy, vice president of drilling.

The company, with no CEO, is "kind of run as a partnership now," Asbill said. EnCap and Chase Oil have ownership stakes in Silver Oak, he said.

Silver Oak's website says its "primary focus will be on horizontal drilling opportunities." It says the five founding partners collectively "have been involved in the drilling of over 800 horizontal wells in Montana, North Dakota, West Texas, Louisiana and Mississippi."

Copyright (c) 2011, Fort Worth Star-Telegram, Texas

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Circle Oil Prepares for Production at Geyad-3 Well

- Circle Oil Prepares for Production at Geyad-3 Well

Monday, May 23, 2011
Circle Oil plc

Circle Oil announced an update regarding the Geyad-3 appraisal/development well together with details on the future development of the NW Gemsa Concession.

Geyad-3C Update

Geyad-3, located to the south-east of the Geyad-1X ST well in the Geyad Development Lease, was drilled to 5,635 ft MD in the Upper Rudeis. The main objective for this well was to appraise and bring into production the oil bearing Shagar and Rahmi sandstones of the Kareem Formation. The Shagar sands were encountered from 5,333 to 5,347 ft MD with 14 ft of net oil pay.

Circle announced that the Shagar interval was tested at a sustained rate of 1,316 bopd and 1.26 MMscf/d of gas on a 24/64" choke and the well will be completed for production. The underlying Rahmi sands were encountered but found to be of poor reservoir quality and were not tested. A secondary objective of the Belayim sands in Geyad-3 well was also encountered with 5 ft of calculated net pay, but it was decided not to test this interval at the present time.

The Geyad-3 well has proved up the South East extension of the field and added further confirmation of the field geometry. The next well proposed for the Geyad field is a westerly peripheral injector to be drilled later in 2011.

The well is currently rigging down and the rig is preparing to mobilize to drill the injector well Al Amir SE-8X, located on the South West flank of the Al Amir SE field.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometres, lies about 300 kilometres southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof Chris Green, CEO, said, "I am pleased to report another successful result as the partnership's plans in NW Gemsa remain on schedule. The rig now moves to start drilling the second injector well on Al Amir SE as part of the development plan to increase production rates for the medium and long term."

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Sony Revises Full Year Forecast Ahead of Annual Report

- Sony Revises Full Year Forecast Ahead of Annual Report



May 23, 2011

Sony Corp (NYSE:SNE) revised its forecast for the full fiscal year ended March 31, 2011 today, now expecting to a report a loss of $260 billion yen, compared to its earlier forecast released in February 2011 for net profit of $70 billion yen.

The company decided to set aside reserves of $360 billion yen in the quarter to cover certain deferred tax assets in Japan. The company said that three straight years of net losses, combined with the uncertain business outlook in Japan following the March 11 disaster, prompted the decision to cover the deferred tax assets, which are credits that can be used to offset taxes in future periods.

The company said the natural disaster would subtract $22 billion yen from its sales and $17 billion yen from its operating profit for the year.

Sony's revision comes after most Japanese companies have already reported their earnings. Sony will report its earnings for the full fiscal year this Thursday, as the company set the date later than its usual mid-May timing to spend more time determining the extent of the damage caused by the natural disaster on the company's operations.

Sony has a potential upside of 34.9% based on a current price of $27.05 and an average consensus analyst price target of $36.48.

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The Shale Gas Boom: Energy Exploration in Carolina

- The Shale Gas Boom: Energy Exploration in Carolina

Monday, May 23, 2011
The Fayetteville Observer, Fayetteville, North Car
by Michael Futch, The Fayetteville Observer, N.C.

For now, state geologists are finished with their research in central North Carolina.

After studying 59,000 acres in the Deep River basin for 15 years, they have concluded that Lee, Chatham and Moore counties could produce enough natural gas from shale to make North Carolina self-sufficient for 40 years at current levels of consumption.

"That's what we think," said Kenneth Taylor, chief of the N.C. Geological Survey. "We could become a net exporter."

The geologists recently sent their findings to the U.S. Geological Survey in Denver, which is being asked to assess the full potential of the Sanford sub-basin, a shale formation near the center of the Deep River basin. The sub-basin has the potential to hold the state's richest natural gas deposits, though exploration will continue elsewhere in the state.

Taylor said an assessment and fact sheet is expected from the U.S. Geological Survey by July.

The assessment would then be made available to energy companies eager to explore and begin commercial gas production in the sub-basin.

The findings could one day lead to riches for landowners -- many of whom already have signed land-lease deals with the energy companies -- and huge revenues for the state.

"The benefits from revenues that the state of North Carolina would gain from a productive natural gas industry would be immeasurable,...

Ahmadinejad to Run Oil Ministry Despite Legal Ban

- Ahmadinejad to Run Oil Ministry Despite Legal Ban

Monday, May 23, 2011
Knight Ridder/Tribune Business News
by Farshid Motahari, dpa, Berlin

Iranian President Mahmoud Ahmadinejad will run the Oil Ministry despite a legal ban, his legal deputy said Sunday.

Ahmadinejad last week dismissed oil minister Massoud Mirkazemi and took over the ministry himself, which would have also made him rotating chairman at June's OPEC meeting in Vienna.

But Iran's constitutional watchdog, the Guardian Council, rejected the plan as illegal and said that Ahmadinejad could not run the Oil Ministry as caretaker.

The president's legal deputy, Fatemeh Bodaghi, told ISNA news agency that the decision has already been made, as the Guardian Council could only decide on decisions to be made but not on those already been made. Therefore, Ahmadinejad would remain caretaker of the ministry, she said.

Ahmadinejad had argued that he planned to trim the cabinet, and one of his decisions was to abolish the Oil Ministry and merge it with the Energy Ministry. The plan led to wide-spread criticism in Parliament.

Ahmadinejad is involved in a row with Iran's clergy and conservative factions over his reform plans, which include reducing the cabinet from 21 to 17 ministries.

As caretaker of the Oil Ministry, Ahmadinejad would also chair the OPEC meeting next month in Vienna, where protests against the Iranian president are reportedly being planned.

Copyright (c) 2011, dpa, Berlin

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SSGC: Pakistan's Estimated Gas Reserves Higher Than Expected

- SSGC: Pakistan's Estimated Gas Reserves Higher Than Expected

Monday, May 23, 2011
Asia Pulse Pte Ltd.

Pakistan holds an estimated 33 trillion cubic feet (tcf) of tight-gas reserves, higher than the existing estimated 27 tcf in the country, said the deputy managing director of operations of Sui Southern Gas Company (SSGC) Syed Hassan Nawab.

Nawab made the comment addressing the 7th International POGEE Conference 2011 for Oil and Gas and Energy Industry at the Karachi Expo Center on Wednesday. Joint Secretary Ministry of Petroleum and Natural Resources Raashid Bashir Maser was the chairman of the session.

Referring to a report of Pakistan Petroleum Exploration and Production Companies Association (PPEPCA), Nawab said the country will have sufficient natural gas if tight gas is explored with the help of advanced technology. He pointed out that the government has prepared the draft policy for tight gas and it is currently with the Council of Common Interest (CCI) and this will be approved soon.

Quoting some of the incentives in the draft tight gas policy, he said that investors will be offered 40 percent premium on the current gas price for exploring tight gas. Similarly, 50 percent premium will be offered on current gas price to investors if they commission their project by December 2011.

Hassan Nawab said that Pakistan can also produce gas from Thar coal with the help of underground coal gasification (UCG) technology. There is a potential to produce 35 tcf of coalbed methane from Thar coal, he noted.

He said that the availability of natural gas can be enhanced through import of liquefied natural gas (LNG) from neighboring countries like Qatar and Iran-through 3rd party arrangements. He said the country has a very large network of pipelines and the importer of LNG can pump this gas to their buyers in upcountry destinations.

(C) 2011 Asia Pulse Pte Ltd.

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Eni Extends Footprint in Indonesia

- Eni Extends Footprint in Indonesia

Monday, May 23, 2011
Eni S.p.A.

In the 2nd Indonesian International Bid Round 2010, Eni has been awarded the 100% participation interest and operatorship of Block Arguni I located on and offshore in the West Papua Province, Eastern Indonesia.

The Block Arguni I covers an area of 5,386 square km in the Bintuni Basin, a mainly gas prone, prolific hydrocarbon province, with several giant gas discoveries already in production. The deal involves the drilling of 2 wells and the carrying out of 500 km of 2D and 200 square km of 3D seismic surveys during the first 3 years of exploration. The Tangguh LNG processing facility is located about 10 km west of the Arguni I acreage.

This award confirms Eni as one of the major oil companies committed to invest in E&P activities in Indonesia. Eni has recently made an important discovery at Jangkrik in the offshore Kutei (Muara Bakau PSC), which has been successfully appraised and whose POD is currently being submitted.

Eni has been operating in Indonesia since 2001. The company holds working interests in twelve permits and operates six of them. The offshore activities are located in the Tarakan and Kutei Basins, offshore Kalimantan, north of Sumatra and West Timor. In the Kutei Basin, Eni is also participating in the development of the significant gas reserves located in the Ganal and Rapak blocks.

Other activities are located in the Mahakam River Delta, East Kalimantan. Eni has an equity production of approximately 20,000 boed in this area and has been awarded an interest in Sanga Sanga CBM, a new coal-bed methane production sharing contract (PSC), through its operated joint venture affiliate VICO CBM Limited (Eni 50%, BP 50%). The coal-bed methane coming from Sanga Sanga would be liquefied at the Bontang plant, representing the first LNG facility to be supplied with CBM.

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Woodside Makes Gas Discovery at Xeres Well

- Woodside Makes Gas Discovery at Xeres Well

Monday, May 23, 2011
Woodside Petroleum Ltd.

Woodside advised that the Xeres-1 well has intersected approximately 51 meters of gross gas within the Triassic target. The well is located about 12 kilometres ESE of the Pluto-1 discovery in license WA-34-L, Carnarvon Basin, Western Australia.

The well reached a total depth of 3285 meters. The discovery has been confirmed by wireline logging, including the establishment of a gas pressure gradient and the recovery of gas samples to surface.

Woodside is the operator and 90% equity owner of WA-34-L. Woodside has a 100% equity interest in the Xeres-1 well and Woodside's joint venture participants in WA-34-L, Tokyo Gas and Kansai Electric, each have the right to acquire a 5% equity interest in the well.

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Gulf Keystone Charges Ahead in Kurdistan Exploration

- Gulf Keystone Charges Ahead in Kurdistan Exploration

Monday, May 23, 2011
Gulf Keystone Petroleum Ltd.

Gulf Keystone provided an update on its activities in the Kurdistan Region of Iraq.

Shaikan-2

Further to the Company's announcement on March 22, 2011, the Shaikan-2 deep appraisal well has now drilled to a depth of 2,655 meters. The well is now in the top most section of the Triassic age formations and the Company is running casing.

Further to the announced testing of the Sargelu/Alan section, which achieved the stabilized flow rate of 8,064 bopd, logs and cores have now been obtained in the Mus and Butmah Jurassic sections.

Four cores totaling almost 30 meters have been recovered from the Mus formation, 23 meters of which had excellent oil shows. An open hole test resulted in a significant flow, although a reliable oil measurement could not be obtained due to technical limitations of the down hole tools. A similar zone on Shaikan-1 achieved 2,250 bopd.

Five cores totaling almost 47 meters have also been recovered from the Butmah formation, 26 meters of which had excellent oil shows. A similar zone on Shaikan-1 achieved 4,650 bopd on test.

This combination of core, log and flow test data indicates extensive oil columns and an impressive similarity between the Jurassic section in Shaikan-2 and the same formations in Shaikan-1 (which achieved a cumulative test rate of over 20,000 bopd from various geological horizons).

The forward plan is to drill through the Triassic section and possibly into the Permian.

After drilling of the well is complete cased hole flow tests in the Jurassic may be undertaken, a practice which worked well on Shaikan-1 during the summer of 2010. This would allow an optimized testing program to be designed which will benefit from all of the information gathered during drilling of the well and equipment to be sourced which will overcome the current technical limitations of the open hole test tools. A similar approach may also be undertaken in the deeper zones but does not preclude earlier open hole testing.

Sheikh Adi-1

The Sheikh Adi-1 exploration well has reached the Triassic and has cut a core in the Kurre Chine A at a depth of 3,293 meters. The core of the Kurre Chine A contains good oil shows and a flow test is to be undertaken shortly.

Prior to reaching the Triassic, logs and cores were obtained in the Jurassic sections, which show hydrocarbon saturations and where 45 meters of net pay have been calculated. Gulf Keystone obtained the following from the Jurassic net pay zones of interest:

• A core totaling almost 13 meters was recovered from the Barsarin/ Sargelu Jurassic section which had moderate oil shows. A test of this zone of interest recovered oil but no reliable flow rate measurement could be obtained due to limited permeability.
• A core of just over 12 meters was also obtained in the Butmah containing good oil shows.

In addition, log data indicates movable oil in the Sargelu/ Alan (obtained in sections deeper than the test zone), Mus and Butmah, all of which would be the target of a future potential test program.

This recent Sheikh Adi-1 well data, along with early results of the 3D seismic interpretation, indicates that the natural fracture system that makes the wells in the Jurassic intervals at Shaikan such prolific oil producers, is significantly less extensive on the footwall of the Sheikh Adi structure. The main significance of this is that the wells in this part of the structure, which are likely to flow oil at low rates, may benefit from acid treatment and artificial fracturing in order to improve well productivity. The Company has already demonstrated with Shaikan-1 and Shaikan-3 that small scale acid treatments can lead to significantly improved production rates.

Similar to Shaikan-2 an extensive cased hole testing program is currently being considered for the Jurassic section of Sheikh Adi-1 after drilling of the well is complete, which may include limited artificial fracturing, depending on equipment availability. This would allow an optimized testing program to be designed which will benefit from all of the information gathered during drilling of the well and equipment to be sourced which will overcome the current technical limitations of the open hole test tools. A similar approach may also be undertaken in the deeper zones but does not preclude earlier open hole testing (as currently being progressed in the Kurre Chine A).

Gulf Keystone analysis indicates that due to the intense flexure of the Sheikh Adi structure a more extensive natural fracture system is likely to be found on the other side of a major reverse fault, to the north of the current well location. A well into this area is being considered.

Shaikan-4

Shaikan-4, second deep appraisal well, 6 kilometers to the north-west of the Shaikan-1 discovery well, is targeted to drill to the top of the Permian. The drilling rig is currently 98% rigged up at the well site, and is expected to spud before the end of May.

Bekhme-1

Bekhme-1, second exploration well on the Akri-Bijeel block operated by Kalegran Ltd. (a 100% subsidiary of MOL), is drilling ahead with 12.25 inch hole at a depth of 1,776 meters, in the upper sections of the Jurassic.

Oil Export

Following a request from the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG"), the Company is preparing to export up to 5,000 barrels of oil per day (bopd) from its Extended Well Test ("EWT") facility at Shaikan. A number of operational, commercial and legal preparations are required in order to be able to implement this request which the Company is currently undertaking. Commencement of the export of oil is still subject to final approval of the KRG.

John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented, "We will soon have four exploration/appraisal wells underway in Kurdistan with further wells expected to spud before the end of the summer. The Company's steady progress in the Shaikan-2 and Sheikh Adi-1 drilling is highly encouraging and we look forward to obtaining more results from these two wells soon. The Company views the recent announcement by the Kurdistan Regional Government confirming release of the first oil export payment to the KRG as an extremely positive development for all the oil producers in the Kurdistan Region of Iraq. This is especially good news for Gulf Keystone since we are preparing to meet the KRG's request to begin oil export at an initial volume of up to 5,000 bopd of crude."

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