Commodity Corner: Oil Gains; NG Surges

- Commodity Corner: Oil Gains; NG Surges

Friday, May 27, 2011
Rigzone Staff
By Matthew V. Veazey

Crude oil for July delivery entered the holiday weekend in the black, gaining 36 cents to settle at $100.59 a barrel.

Oil received a boost from a weaker dollar, which made the commodity a more attractive buy for investors holding currencies other than the greenback. The ICE Dollar Index, which tracks the dollar's value against foreign currencies, fell more than 0.8 percent Friday.

Crude oil traded within a range from $100.04 to $101.24 Friday. For the week, oil is up 1.1 percent.

Memorial Day marks the traditional start of summer in the U.S., and summerlike temperatures should prevail throughout the Midwest, South, and East during the next two weeks. As a result, investors expect stronger demand for air conditioning—and gas-fired power. Natural gas consequently ended the day 18 cents higher at $4.52 per thousand cubic feet.

The July contract price peaked at $4.56 and bottomed out at $4.365. Since last Friday, natural gas has gained 6.9 percent.

June gasoline settled four cents higher at $3.09 a gallon. The futures price fluctuated from $3.04 to $3.08, and gasoline is up 5.1 percent for the week.

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BP Firms 0.7% Despite Maintenance Work on L.A.-Based Refinery

BP Firms 0.7% Despite Maintenance Work on L.A.-Based Refinery



May 27, 2011

BP (BP) shares are up 0.73% today, despite news that its L.A.-based refinery, which produces 265,000 barrels per day, was undergoing maintenance, according to a source quoted by Reuters.

Work began early this week and is expected to go on for at least three more weeks. A spokesman for the company decline to discuss details of the operation.

BP shares are up 0.73% at $45.71.

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PayPal Sues Google

PayPal Sues Google



May 27, 2011

PayPal has sued Google and two of its top executives - this according to a PCMag.com article. The two executives, Google's VP of Commerce Stephanie Tilenius and VP of Payments Osama Bedier are said to be both former PayPal employees. PayPal is suing for stealing trade secrets that helped the search company break into the multi-billion dollar mobile payments industry, according to the article. Hours after their announcement of "Google Wallet" - an initiative to make mobile payments commercial - PayPal filed a 28-page lawsuit in California accusing Google and the two employees for misappropriating information and actively poaching other PayPal employees. All of this according to PCMag.com.

The free "Google Wallet" Android app is designed to securely store multiple credit cards, or a Google prepaid card linked to your credit card. When opened on the smartphone, you can tap your phone against a supported payment reader and the item will instantly charged to your credit card.

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G8 Supports Pro-democracy movements in North Africa with $40 billion

G8 Supports Pro-democracy movements in North Africa with $40 billion



May 27, 2011

Bloomberg is reporting that the G8 summit leaders have pledged $40 billion in loans from international development banks ad direct aid in support of pro-democracy movements in North Africa. Hosted by French President Nicolas Sarkozy, the G8 nations include the U.S., the U.K., Russa, Italy, Germany, Canada and Japan. According to the report, institutions such as the World Bank and the African Development Bank could provide more than $20 billion for Egypt and Tunisia through 2013, including $5 billion from the European Investment Bank. Bloomberg cites Sarkozy, saying in a press conference, that G8 countries will provide another $10 billion in direct aid to Tunisia and Egypt, and that oil exporting countries in the Gulf such as Kuwait, Qatar and Saudi Arabia will contribute an additional $10 billion. The International Monetary Fund says the region will need more than $160 billion over the next two years.

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Africa Oil Reports Operational, Financial Ops for 1Q11

- Africa Oil Reports Operational, Financial Ops for 1Q11

Friday, May 27, 2011
Africa Oil Corp.

Africa Oil announced its financial and operating results for the three months ended March 31, 2011.

Highlights and accomplishments during the first quarter of 2011 included:

• The Company completed the acquisition of Centric Energy Corp. ("Centric"), a publicly traded oil and gas company listed on the TSX Venture Exchange. Total consideration paid was valued at $60.2 million and included the issuance of 30,155,524 AOC common shares. Centric's primary asset is Block 10BA in Kenya which is strategically located within the highly prospective East African Tertiary Rift System between AOC's Block 10BB and its South Omo Block. Centric and Tullow Oil plc ("Tullow") are joint venture partners on the Block 10BA. In addition, Centric also has a carried 25% interest in Block 7 and Block 11, both located in the Republic of Mali and operated by Heritage Oil Corporation.
• Africa Oil entered into amending agreements with the Government of Puntland in the quarter, represented by the Puntland Petroleum and Mineral Agency, in respect of the production sharing agreements ("PSAs") for the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area. Under the PSAs, as amended, the First Exploration Agreement has been extended for a further 12 months, from January 17, 2011 to January 17, 2012. Under the amended PSAs, AOC is obligated to spud a minimum of one exploratory well in the Dharoor Valley Exploration Area by July 27, 2011. A second exploratory well is required to be spudded in the Nugaal Valley Exploration Area or, at the option of AOC, in the Dharoor Valley Exploration Area, by September 27, 2011. In conjunction with this amendment, the Company completed its farmout agreement with Red Emperor Resources NL ("Red Emperor"). Under the terms of the farmout agreement and an election made by Red Emperor to increase their interests, Red Emperor will earn a 20% interest in both the Dharoor and Nugaal Valley Blocks and is committed to paying a disproportionate share of costs related to the one well drilling commitment included in the first exploration period of both the Dharoor and Nugaal Valley Production Sharing Agreements.
• The Company signed a definitive agreement with Lion Energy Corp. ("Lion"), a publicly traded oil and gas company listed on the TSX Venture Exchange, to acquire all of the issued and outstanding common shares of Lion. Pursuant to the agreement with Lion, AOC will acquire, by way of a plan of arrangement, all of the issued and outstanding shares of Lion in consideration for 0.20 common shares of AOC for each common share of Lion. It is anticipated that 17,233,636 AOC shares will be issued as consideration to acquire Lion. Lion is a joint venture partner of AOC in Kenya and Puntland (Somalia), and currently holds the following working interests; 33.3% in Block 9 (Kenya), 10% in Block 10BB (Kenya), and 15% in each of Dharoor Valley and Nugaal Valley (Puntland). In addition to the above properties, Lion estimated that it had cash, accounts receivable and investments in marketable securities with an approximate aggregate value of CAD$30 million at the date of signing the definitive agreement. A meeting of Lion shareholders, to approve the transaction, is scheduled to be held on June 8, 2011 and, assuming shareholder approval, the transaction is expected to close shortly thereafter.
• Subsequent to the end of the first quarter, Africa Oil entered into a letter of intent for the creation of a new Puntland focused oil exploration company. The new company will be created as a result of the transfer of AOC's interest in its oil and gas properties in Puntland (Somalia) to Denovo Capital Corp. ("Denovo") (the "Transaction"). Denovo is a capital pool company and intends for the Transaction to constitute the "Qualifying Transaction" of Denovo, as that term is defined in the policies of the TSX Venture Exchange. Under the terms of the letter of intent:
  • Africa Oil and Denovo will negotiate and enter into a definitive agreement pursuant to which Africa Oil will transfer to Denovo all of the issued and outstanding shares of its subsidiary holding companies (the "Puntland Subsidiaries") which hold participating interests in the Dharoor Valley and Nugaal Valley Production Sharing Agreements in Puntland (Somalia) (the "Puntland PSAs"). Africa Oil will receive, in consideration of the transfer, 27,777,778 common shares of Denovo. As a result of the Transaction, the Puntland Subsidiaries will become wholly owned subsidiaries of Denovo.
  • Africa Oil currently holds a 45% participating interest in the Puntland PSAs. Upon completion of the transaction for the acquisition of Lion Energy Corp, AOC's participating interest in the Puntland PSAs will be increased, directly or indirectly, to 60%. It is anticipated that the entire 60% participating interest will be transferred to Denovo.
  • The definitive agreement will provide for conditions precedent that are standard for a transaction of this nature, including receipt, by both AOC and Denovo, as required, of all regulatory, partner and third party approvals including TSX Venture Exchange approval. Denovo will also seek Denovo shareholder approval for a proposed 0.65 (new) for 1.00 (old) consolidation of its common shares and a change of name of the company, both of which are conditions precedent to completion of the transaction. It will be a condition precedent of the transaction that Africa Oil will have completed its proposed acquisition of Lion Energy Corp. and that Denovo will have completed a private placement of CAD$35 million comprised of 38,888,889 subscription receipts of Denovo sold at a post-consolidation price of CAD$0.90 per subscription receipt. Each subscription receipt will be exercised, upon completion of the transaction, into a unit of Denovo, comprised of one common share and one share purchase warrant (a "Denovo Warrant"). Each Denovo Warrant will entitle the holder to acquire an additional Denovo share for $1.50 for two years, subject to accelerated exercise provisions if the Denovo shares trade at greater than $2.00 for 10 consecutive trading days. It is anticipated that the definitive agreement will be entered into during the second quarter of 2011.
  • Africa Oil will acquire 11,111,111 subscription receipts in the private placement financing, for proceeds of CAD$10 million. At the conclusion of the Transaction and the private placement financing described above, AOC is anticipated hold approximately 55% (non-diluted) of the issued and outstanding common shares of Denovo. Upon completion of the Transaction it is expected that Denovo will meet the listing requirements of the Exchange for a Tier II Oil and Gas Issuer.
• Africa Oil ended the quarter in a strong financial position with cash of $77.8 million and working capital of $57.2 million as compared to cash of $76.1 million and working capital of $70.6 million at December 31, 2010. The Company's liquidity and capital resource position improved since year end primarily as the result of payments received upon the completion of farmout transactions. Working capital improved $24.4 million subsequent to the end of the quarter as the current portion of the warrant and convertible debenture obligations were settled in shares.
• Africa Oil currently has more than sufficient funds to meet its portion of the $163 million expenditure obligations ($43 million net) as per the active work programs approved by the Company's Board of Directors for 2011. During the first quarter, the Company spent $5.0 million of the 2011 Board of Directors approved $43 million in capital expenditures.
• As of the end of the first quarter, the Company has completed all previously announced farmout transactions with Tullow. Tullow has acquired a 50% interest in, and operatorship of, five of AOC's east African exploration blocks, comprised of four exploration blocks in Kenya and one exploration block in Ethiopia.
• The Company completed the amendment to their farmout agreement with Lion. The amendment reduced Lion's interest in Block 10BB to 10% (originally 20%) and eliminated its interest in Block 10A (originally 25%).
• The Company, together with its joint venture partner Lion, entered into the First Additional Exploration Phase under the Block 9 PSC in Kenya. As a result of the withdrawal of its two other joint venture partners, AOC will now hold a 66.7% working interest in the PSC and has been approved by the government as Operator of Block 9. Lion will hold the remaining 33.3%. The First Additional Exploration Phase commenced on December 31, 2010 and will expire on December 31, 2013 with a one well work commitment (minimum depth 1,500 meters).
• The Company continued to actively explore in East Africa:
  • In Block 10BB, the Company, together with its partners, is currently in the process of undertaking Full Tensor Gravity ("FTG") surveys and finalizing the prospect and lead inventory on Block 10BB. Drilling is scheduled to commence in the third quarter of 2011.
  • In Block 10A, the Company, together with its partners, has completed recording approximately 800km (gross) of 2D seismic. Seismic data acquired is currently being processed. The Company expects to drill a well on this block in the fourth quarter of 2011.
  • In Puntland, the Company has recently signed a letter of intent with a drilling contractor and plans to spud the first well in the Dharoor Block during the third quarter of 2011. A second well in the Dharoor Block is planned to commence following completion of the first exploration well.
  • In Block 9, the Company, together with its partners, has recently commenced 750km (gross) 2D seismic survey focused on the oil prone Kaisut sub-basin. The seismic crew has recently commenced recording and is anticipated to be completed during the third quarter of 2011.
  • The Company completed its seismic acquisition program in the Company's Ogaden area of Ethiopia, acquiring 500 km 2D seismic. The new data has been integrated with existing seismic to generate a series of new prospect maps. The Company continues to focus efforts on the large El Kuran prospect.

Keith Hill, President and CEO, commented, "Africa Oil continued to add highly prospective exploration acreage to its portfolio during the first quarter of 2011. Exploration activities continued throughout the quarter with FTG, 2D seismic and drilling preparations continuing on multiple blocks. The Company is very well financed, has a well diversified exploration portfolio and reputable joint venture partners. We are looking forward to the commencement of continuous drilling in 2011."

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EMS Inks Crane Contract with Hoang Long

- EMS Inks Crane Contract with Hoang Long

Friday, May 27, 2011
EMS Energy Ltd.

EMS announced that its subsidiary, Engineering & Marine Services (Pte) Ltd, has signed an agreement with Hoang Long Joint Operating
Company for a repeat order to manufacture and supply one additional unit of offshore pedestal crane valued at approximately US $2MM.

The second crane is expected to be delivered by March 2012 for use at the Block 16-1, Te Giac Trang Field Development Project in Vietnam. The first crane was delivered on November 10, 2010.

Mr. Ting Teck Jin, Executive Chairman and CEO of EMS Energy Limited commenting on the second order, said, "This repeat order is both a testimony of our strong capabilities in design and fabrication, as well as the customer’s acceptance of the high quality standards of our products. This crane is designed and built in strict accordance to API 2C certification standards for offshore pedestal cranes."

"In addition to manufacturing and supplying offshore cranes, we also provide a whole range of engineered solutions, products, and services that we market to our customers. Leveraging on our ability to design, manufacture and install such engineering solutions and products, as well as provide aftermarket services, EMS Energy is well positioned to serve customers globally," added Mr. Ting.

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Beach Welcomes New Non-Executive Director

- Beach Welcomes New Non-Executive Director

Friday, May 27, 2011
Beach Energy Ltd.

Beach has appointed an additional Independent Non-Executive Director, Ms. Belinda Robinson, to its Board.

Ms. Robinson is the outgoing Chief Executive of the Australian Petroleum Production & Exploration Association (APPEA), a role she has held since July 2005. In her time at APPEA, Ms. Robinson has worked tirelessly to deliver the policy, regulatory and fiscal framework necessary to underpin the full growth potential of Australia's oil and gas industry. She is a regular public speaker on energy policy and the promotion of Australia's oil and gas industry. During her tenure, membership has more than doubled and the profile and influence of APPEA has led to it becoming one of Australia's preeminent national industry bodies. Testament to this achievement has been the success of the most recent APPEA conference, held in Perth, which recorded the largest delegate attendance in its history.

Having held a number of senior and senior executive positions within the federal Government, including almost a decade with the Department of the Prime Minister and Cabinet, and as a former chief executive of the Australian Plantation Products & Paper Industry, Ms. Robinson brings to the Beach Board extensive knowledge and experience in public policy, government processes, change management and corporate governance. She is a member of the Australian Institute of Company Directors, has completed the Company Director Diploma and is currently participating in the AICD's ASX 200 Chairman's Mentoring Program.

Ms. Robinson will join the existing Board of Mr. Robert Kennedy (Independent Non-Executive Chairman), Mr. Glenn Davis (Independent Non-Executive Deputy Chairman), Mr. Reg Nelson (Managing Director), Mr. Neville Alley (Independent Non-Executive Director), Mr. Franco Moretti (Independent Non-Executive Director) and Mr. John Butler (Independent Non-Executive Director).

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SapuraCrest, GE Open O&G Services Facility in Malaysia

- SapuraCrest, GE Open O&G Services Facility in Malaysia

Friday, May 27, 2011
GE O&G

Strengthening its long-term partnership with GE, SapuraCrest Petroleum Berhad, Malaysia's largest integrated oil and gas service provider and a subsidiary of Sapura Group, has opened an expanded, state of the art Regional Services Center (RSC) in Kuala Lumpur, Malaysia.

Covering approximately 24,000 sq. meters, the new $3.5M investment facility enables Sapura and GE to enhance support to key oil and gas operators in Malaysia and the region, including PETRONAS, Malaysia's national oil and gas company which has both a global frame agreement in place with GE Oil & Gas for the supply of a range of gas turbines and compressors and, secondly, a long-term service agreement in place with Sapura to provide services to GE's fleet of installed equipment in the country.

Dato' Sri Mustapa Mohamed, Malaysia's Minister of International Trade & Industry performed the ribbon-cutting at a ceremony attended by over 120 customers and VIPs, including Datuk Abdullah Karim, CEO of PETRONAS Carigali.

Datuk Shahril Shamsuddin, President and CEO of Sapura Group said, "This is a key milestone in our commitment to further push our capabilities into areas strategic to our growth. The partnership with GE will enable Sapura Service Centre to offer an enhanced value proposition to our Malaysian and regional customers to maintain their oil and gas producing equipment at peak performance levels. We have invested RM12million over the last ten years in this facility, to develop our capabilities, processes and facilities to comply with global standards. This certification by GE positions us even stronger and would also result in faster turnaround and cost savings for our customers."

Stuart Dean, CEO of GE ASEAN added, "The Sapura facility expansion highlights the strength of our partnership with Sapura and GE's overall commitment to a strong, localized presence in Malaysia and the region. Malaysia's dynamic oil and gas industry is an important contributor to world energy markets. GE is now even better positioned to deliver enhanced services capabilities to meet the needs of PETRONAS and other customers operating in the region."

The Sapura RSC provides an enhanced range of GE Oil & Gas turbomachinery related services, including maintenance and repairs, designed to enhance the efficiency and performance of GE's fleet of high-tech heavy duty and aeroderivative gas turbines and compressors installed in Malaysia and the region. The facility will also support GE's continued expansion in the drilling and production industry.

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ICON to Offer New Services

- ICON to Offer New Services

Friday, May 27, 2011
Icon Energy Ltd.

A new provider of thru-tubing milling and fishing services – ICON Oilfield Services – has been established in response to the oil and gas industry's need for oilfield service companies that adhere to a high standard of quality, professionalism and reliability. The Company is headquartered in Dallas and is currently establishing an office in San Antonio, Texas in order to service the Eagle Ford Shale play. Other district offices will open throughout the year to support domestic drilling locations across the United States.

"We are excited to launch ICON Oilfield Services and introduce a higher standard of product and service to domestic oil and gas companies – The ICON Standard," said Jim Kerr, President of ICON. "We're committed to providing the client with highly-trained employees, advanced design equipment, and local state-of-the-art repair facilities."

ICON specializes in removing composite and cast-iron frac plugs after isolated zones have been fracture stimulated. The Company's industry-leading downhole motors and mills will then remove each zone's frac plug to bring a well online and maximize its production rate. ICON also provides other thru-tubing and fishing services.

"Advances in horizontal drilling and hydraulic fracturing have led to a dramatic growth in unconventional resource plays. E&P companies are drilling longer laterals and increasing the number of frac stages to enhance their well's production," said Kerr. "This evolution has led to a burgeoning demand for thru-tubing, milling, and fishing services. ICON will fulfill this demand by providing reliable, high-quality equipment and exceptional service by experienced field supervisors."

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House Passes Bill to Drill in Parks

- House Passes Bill to Drill in Parks

Friday, May 27, 2011
The Columbus Dispatch, Ohio
by Jim Siegel

With Ohio facing $500 million in backlogged capital projects at its state parks and gas prices still flirting with $4 a gallon, House Republicans say now is the time to allow oil and gas drilling in parks and other state-owned land.

After a three-hour debate, the House voted 54-41 yesterday for a bill that would create an Oil and Gas Leasing Commission to oversee the leasing of state-owned land for oil and gas drilling.

"It will not solve Ohio's problems or energy-price problems, but it is a component we cannot ignore," said Rep. John Adams, R-Sidney, the bill sponsor.

Republicans said House Bill 133 would create jobs and help lower energy prices. Oil and gas drillers are particularly interested in southeastern Ohio and Salt Fork State Park.

"If this gas boom takes off like we understand it is, there aren't going to be enough hotels. There aren't going to be enough houses. There aren't going to be enough restaurants to handle all of the people who are coming into this state," said Rep. Matt Huffman, R-Lima.

Two Republicans joined all Democrats in voting against the bill. Franklin County lawmakers broke along party lines.

Democrats argued that with 99.5 percent of Ohio already available for drilling, the bill is unnecessary. They also questioned the economic benefits, and argued it would cause significant damage to state parks, hurt tourism and harm the economy.

"We're not against drilling. We're against drilling in parks," said Rep. Robert F. Hagan, D-Youngstown, who went on to question whether Republicans were on drugs.

Democrats also suggested Republicans would face voter backlash over the bill in next year's elections. In response, Speaker William G. Batchelder, R-Medina, pointed to gas prices.

"I would say that causes people to have a different view than they might have at $2.50," he said.

Batchelder said the ongoing revenue stream for capital projects at Ohio parks is vital. "When you look at them, you can see it," he said of the lack of upkeep. "I think six members used the phrase 'pristine parks.' I don't know where they're going. I have not seen those."

State revenue estimates from oil and gas royalties range from a few hundred thousand dollars to about $9million, depending on factors such as the level of oil and gas production and market prices, according to the nonpartisan Legislative Service Commission.

The bill divides state land into four classes, which, Adams said, will deal with issues related to federal encumbrances or deed restrictions. Energy companies would have the greatest access to land in which the state clearly owns all the development rights.

Ohio owns the mineral rights to 34,590 acres in state parks, less than one-third of the land.

Republicans added an amendment yesterday that would ban drilling on state nature preserves, which Jack Shaner of the Ohio Environmental Council called a positive step. But he strongly opposes the bill.

"Ohio has always promised that its parks would remain a natural park, not an industrial park," he said, adding that the new leasing commission would be "too industry-cozy." He said the director of the Ohio Department of Natural Resources should have the final say on whether drilling is allowed in state parks.

Tracy Sabetta of the National Wildlife Federation of Ohio said she is concerned that the bill does not explicitly exempt Lake Erie from drilling. While a federal ban remains in place, there are efforts to repeal it, she said.

Rep. Dave Hall, R-Killbuck, said the bill essentially bans Lake Erie from drilling because of the way it is classified.

Gov. John Kasich's proposed state budget also would open state parks to drilling, but it left the Ohio Department of Natural Resources in control of the leasing process.

Both Hall and Batchelder said they prefer the House drilling language to what is in the budget. Laura Jones, spokeswoman for the Ohio Department of Natural Resources, said the office is "pleased with how our concerns (with the bill) have been addressed."

"It's very positive that the landholding agency is the entity entering into the lease as opposed to the commission," she said.

Copyright (c) 2011, The Columbus Dispatch, Ohio

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Seward Shows Support for Home-Rule Bill

- Seward Shows Support for Home-Rule Bill

Friday, May 27, 2011
Knight Ridder/Tribune Business News
by Tom Grace, The Daily Star, Oneonta, N.Y.

State Sen. James Seward supports a bill that would make it easier for towns to say no to gas drilling and hydrofracking.

Seward, R-Milford, said that he is cosponsoring Senate bill 3472 "to give local governments veto power over natural gas drilling."

The measure would strengthen the home-rule authority of municipalities to use their land-use laws and zoning to restrict activities like drilling and hydrofracking -- the injection of gas wells with millions of gallons of water, sand and chemicals to shatter rock deep underground and increase production.

In northern Otsego County, several towns have been working to strengthen their land-use laws and prevent gas drilling, he noted.

"When it comes to horizontal drilling and hydrofracking, these are very technical and emotional issues," Seward said. "The DEC is going through its review, and we could see another version of their regulations in mid-to-late summer.

"In the meantime, I have been meeting with advocates on all sides of the issue, but I think it's significant when a local government, a town board for example, takes action with their zoning and land-use authority. I think the state should respect these actions and the ethic of home rule.

"Here, we have Otsego, Middlefield, Cherry Valley, Springfield all taking steps to respond to their residents and I think the state should respect that."

If the state strengthens home-rule authority, municipalities will have less risk of being sued and seeing their local laws overturned in court, he said.

"I'm taking a two-pronged approach: co-sponsoring the bill and I have written to the commissioner of the DEC, and met with the governor's office, urging them to respect home rule."

In his letter to DEC Commissioner Joe Martens, Seward wrote, "I take this opportunity ... to recognize the prerogatives of local governments, the varied opinions on the merits and drawbacks of natural gas exploration and provide for local 'opt-out' provisions in the new regulations.

"This could be as simple as the department not considering applications where local law prohibits drilling."

Reaction to Seward's stance on home rule was divided Wednesday.

"I haven't read the bill, so I can't comment on that, but I support the concept," Middlefield Town Supervisor David Bliss said.

With enhanced home-rule authority, municipalities will be freer to respond to their residents' concerns, he said.

On the other hand, Worcester town board member and drilling proponent David Parker asked: "Is he up for re-election this year? (He isn't.) Because he's going to make a lot of people upset."

Parker said the industry likes to have an organized approach to drilling, connecting wells with pipelines that cross municipal boundaries, "not dealing with every individual town government."

Jim Smith, a spokesman for the Independent Oil & Gas Association of New York State, said state regulation has "worked well for 30 years, and I don't see any reason to change that."

If some towns opt out of drilling and hydrofracking, they may compromise other towns' ability to extract the resource, he said.

Rob Robinson, president and chief executive officer of the Otsego Chamber, said: "I think gas drilling should be regulated by the state, not towns."

Erik Miller, executive director of the Otsego County Conservation Association, hailed Seward's leadership on the issue.

"Home rule is exactly what more progressive communities have asked for, a chance to make their own determinations," Miller said. "I think it's a great middle ground."

Copyright (c) 2011, The Daily Star, Oneonta, N.Y.

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Floodwaters Shut Down 30 Oil Wells in Williston Area

- Floodwaters Shut Down 30 Oil Wells in Williston Area

Friday, May 27, 2011
The Bismarck Tribune, Bismarck, North Dakota
by Lauren Donovan, The Bismarck Tribune, N.D.

About 30 oil wells were shut off ahead of the rising water on the Missouri River west of Williston and a few of those wells are now under water.

John Axtman, who heads the Oil and Gas Division's Williston office, said he started alerting well operators Monday morning to prepare for high water and found that several of them were on top of the situation.

The Missouri River was expected to crest somewhere around 27.5 feet late Wednesday, slightly lower than anticipated.

However, the high water put some wells under water, some partially under water and some are now surrounded by water, Axtman said.

He said well operators shut down the wells, removed any chemicals and motors from the site and drained oil from tank batteries, refilling them with fluid so they'd be too heavy to become buoyant.

Axtman said the wells were primarily older wells, but even at a 50-barrel per day, would cost the well owner a fair amount of money in lost production.

Randy Samuelson, a production manager for Brigham Oil and Gas, said his company shut down one well that's now under water and a couple more are a concern.

"I hope the well restarts easily and that we don't have to rebuild the whole location," Samuelson said.

Samuelson said rebuilding a pad and well site will cost upward of $200,000.

Axtman said damage to the electrical systems will be one of the major repair issues at the flooded wells

While some wells aren't flooded, owners shut them down anyway because roads leading to them are under water and they can't get in to haul out produced oil and waste water, Axtman said.

Water has backflowed across a vast low-lying area south and west of Williston, which is near the confluence of the Missouri and Yellowstone rivers.

Williams County Emergency Manager Mike Hallesy said the revised lowered crest was good news.

"When you're pushing the upper limits, inches seem like miles," he said. "High water pushed all the systems early this week."

He said much of the flooded land behind Williston is either owned by the U.S Army Corps of Engineers, as part of the Garrison Dam project, or managed as a wildlife refuge.

Further back in Trenton, farmers were having a difficult time getting any crops planted with rain and now flooding in the lowlands.

"I'm going to say that river is a couple of miles across," Hallesy said.

Copyright (c) 2011, The Bismarck Tribune, N.D.

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Indonesia Official: BP to Invest $10B More over 10 Years

- Indonesia Official: BP to Invest $10B More over 10 Years

Friday, May 27, 2011
Dow Jones Newswires
by Joko Hariyanto

BP is committed to investing $10 billion more in Indonesia over the next 10 years, Gita Wirjawan, Indonesia's investment agency chief, said Friday.

"They will soon start exploration in Kalimantan and further develop the Tangguh project in Papua," Wirjawan told reporters.

BP Chief Executive Robert Dudley confirmed the commitment after a meeting with Indonesian President Susilo Bambang Yudhoyono.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Exxon Mobil CEO Defends Hydraulic Fracturing

- Exxon Mobil CEO Defends Hydraulic Fracturing

Friday, May 27, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

An obviously frustrated Exxon Mobil CEO Rex Tillerson jumped to the defense of hydraulic fracturing Wednesday while taking verbal pokes at the news media's reporting on the controversial process used to extract more oil and natural gas from rock formations.

Hydraulic fracturing, dubbed "fracking," has not been confirmed as the cause of contamination of water wells or aquifers in a single instance, Tillerson said during the company's annual shareholders meeting at the Morton H. Meyerson Symphony Center in Dallas.

A resolution calling for the company's board of directors to prepare a report on "known and potential impacts of Exxon Mobil's fracturing operations" was defeated after receiving support from 28.2 percent of shares voted.

The company opposed the measure, saying it operates "in an environmentally responsible manner," issued public statements about fracking and believes a report is unnecessary.

The Rev. Michael Crosby, a Franciscan friar from Milwaukee who deals with corporate responsibility issues, said at the meeting that Exxon "has not provided sufficient information" about its fracturing operations. "Shareholders have no way of assessing the risks and rewards," he said.

In a news conference after the meeting, Tillerson said that, in cases where groundwater supplies have been polluted, a likely cause is underground migration of methane gas or other contaminants as a result of old wells not having been "drilled as they should" in the 1920s, '30s or '40s.

In earlier decades, drilling regulations were not as exacting and industry technology was much less advanced.

"More often than not," cases of groundwater pollution are "not associated with any current-day activities," Tillerson said.

He also said that, in areas such as North Texas, extensive use of water wells has resulted in large withdrawals from aquifers, which could contribute to movement of potential contaminants such as methane gas into the aquifers.

Tillerson said fracking, which has drawn heavy media attention in recent years, has been portrayed as "something new and futuristic" while "in fact, this technology has been around 50 to 60 years."

Irving-based Exxon Mobil has been drawn into the debate on hydraulic fracturing after its acquisition last year of Fort Worth-based XTO Energy, a major shale-gas producer.

That acquisition made Exxon Mobil the largest natural gas producer in the U.S.

By adding XTO, "we have created the premier unconventional gas company," Tillerson told shareholders.

The company is now considering budding shale plays worldwide and is partnering with the French oil firm Total to explore for shale gas in Poland.

With a surge in U.S. shale-gas drilling, pioneered in North Texas' Barnett Shale, advanced horizontal drilling and fracturing techniques have led to much bigger "frack jobs" in completion of wells. But the fractures occur thousands of feet below freshwater aquifers and extend no more than about 400 feet upward, industry experts say.

The Environmental Protection Agency has launched a detailed study of fracking, and University of Texas researchers are taking an in-depth look as well.

Various other scientific and environmental groups have also examined the process.

Tillerson told reporters that fracking has a bad rap partly because of "you guys" in the media.

Exxon Mobil plans an advertising campaign "to reach out to the public with fact-based information" about fracking and other drilling issues, Tillerson said.

"We have some problems in getting out the message with some of you folks," he told reporters. "So we have to go out and buy some of the space" in which to present the industry's viewpoint, he said.

Tillerson said some fracking critics have made "pretty casual statements ... that have not been backed up with any kind of facts."

But the As You Sow Foundation -- a nonprofit organization that backed resolutions at the Exxon Mobil and Chevron shareholders meetings calling for more information about fracking -- said the 28.2 percent favorable vote at the Exxon meeting and 41 percent by Chevron shareholders show that "mainstream investors are concerned about fracking and want more disclosure."

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

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Northern Revises 2011 Production Forecasts

- Northern Revises 2011 Production Forecasts

Friday, May 27, 2011
Northern Petroleum plc

Northern announced that it will be revising its 2011 production forecasts and is making changes to reserve estimates in the Netherlands. The adjustments concern three of the five gas fields operated by Northern.

The revisions to reserves follow an ongoing economic and technical evaluation. Reprocessing of the 3D seismic data over Geesbrug and Wijk en Aalburg fields, plus much of the rest of the Netherlands acreage has been underway for some time. When it has been received and interpreted, the static and dynamic field models will be updated with the production data later this year, it will then be possible to make a further assessment of the reserves. Northern has not as yet had the opportunity to review these reserve adjustments with joint venture partners but believes it to be prudent to make a reserves revision now.

The revisions are as follows:

Fields	Previous 1P Gas (Bscf)	Revised 1P Gas (Bscf)	Previous 2P Gas (Bscf)	Revised 2P Gas (Bscf)
Geesbrug	73.63	60.22	137.85	72.79
Grolloo	6.44	2.29	10.52	3.00
Wijk en Aalburg	3.82	0.36	5.49	2.83

The above revisions reduce the Group's 2P reserves by 75.24 Bscf, which is the equivalent of 12.97 million barrels of oil equivalence. When the Company issued its results for the six months ended 30th June 2010, it reported Group 2P reserves of 102.67 million barrels of oil equivalence.

Following these changes to reserve estimates for Geesbrug, Grolloo and Wijk en Aalburg, the Company now expects to report a loss after tax for the year ended December 31, 2010 as a consequence of the resulting additional non cash depletion and impairment charges to the income statement. Average production for 2010 was approximately 1,200 barrels oil equivalence per day. The Company expects to report 2010 revenue of approximately €15 million, broadly in line with market expectations.

Average production for the first four months of 2011 has been just over 1,900 barrels oil equivalence per day.

On average Dutch gas prices have increased by approximately 13% over the first four months of 2011.

At Grolloo, which started commercial production in late 2009, the initial plan had been to install compression and or other surface equipment to aid and increase production once the pressure had stabilized and there was an observable influx of supplementary gas flow from the lower permeability reservoir matrix, allowing for the basis of design for the equipment. Until now no such stabilization has been observed.

Northern considers that it is not feasible to add compression in time to make a material impact to 2011 gas production. In conjunction with preparation of the Annual Report and Accounts for 2010 and for the purposes of production projection and reserve assessment for the Grolloo gas field, Northern has taken the decision to adopt what is considered to be the more conservative view that pressure support from lower permeability reservoir matrix will not occur.

At Wijk en Aalburg, which came into commercial production in December 2010, Northern has experienced the production of increasing quantities of oil, followed by increasing quantities of water, which has now affected production levels.

There are several possible explanations for such behavior. A possibility could be a near borehole build up of asphaltenes inhibiting flow. The well also has a geological fault intersecting the base of the reservoir sequence which may be acting as a conduit for the influx of liquids. It could also be a delay to influx of lower permeability reservoir matrix gas, as at Grolloo. The issues are being addressed and instruments were placed in the well on 25th May as a first step in the determination of possible interventions. The carrying value
of the Wijk en Aalburg field as at December 31, 2010 is approximately €8 million. If the well interventions are ultimately unsuccessful, then Northern would expect to see significant non cash depletion and impairment charges to the income statement within the results for the year ending 31st December 2011, the exact quantum of which would depend on, inter alia, future field performance and gas prices.

At Geesbrug, a far larger gas field which was placed on-stream in December 2009, the production performance has been analyzed in conjunction with the disappointing results of the Tiendeveen-1 well five kilometers away. An updated static reservoir model has been constructed that forms the current basis of the revised reserves assessment prior to updating the dynamic model.

There has been a change to production decline interpreted as lower permeability reservoir matrix feed, but there will be a delay before an appropriate compressor can be procured given that further production data are required to design the appropriate compressor. The Tiendeveen-1 well results also lead Northern towards a new interpretation of reservoir distribution for the Geesbrug field. Reprocessing of all applicable 3D seismic coverage was deemed essential for placing future development wells and was initiated last year as part of the development plan for the field. The planned 2011 Geesburg-2 new production well will now most likely be delayed into early 2012 to utilize the reprocessed 3D seismic data to determine the most appropriate location of the well. This is designed to be a 3000-4000 foot lateral reservoir intersection with multi-stage fracturing operations which are designed to result in a greater ability for higher production rates than near vertical wells.

Equipment and services for the Ottoland long term oil test have been selected and when all the permits are in place operations can commence. The test is currently expected to be in the third quarter of this year.

The first Papekop oil development well is planned for later this year. Reprocessed 3D seismic data will be available for planning the final well trajectory which will include a horizontal hydraulically fractured intersection of the reservoir.

At Markwells Wood in the UK, plans are well advanced for the production test to commence this summer of the oil discovery made in December 2010. The test design has been completed and the required equipment and services have been selected. The test is planned to commence in late July/early August.

Progress continues to be made in Italy to move towards the drilling of some of the high impact exploration prospects. In the Southern Adriatic plans are advanced to acquire a 2D seismic survey over permits F.R39.NP and F.R40.NP that contain the Giove and Rovesti discoveries and it is intended that in addition two 3D seismic surveys will be acquired over these two oil fields and a number of exploration prospects later this year. Blackwatch Petroleum Services in 2007 reported 2P Reserves of 53.16 million barrels for the two fields and assigned a Post-Tax Net Present Value (NPV@10%) of £610 million at a $70 oil price based on developing the fields independently, each with a new build FPSO. Northern and our new partner Azimuth Limited (15% interest) will be seeking additional
partners to assist with the development of the fields and the drilling of exploration wells. Northern has mapped prospects in the two permits with over one billion barrels of oil equivalence prospective resource, split approximately equally between oil and gas.

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Samson O&G: Everett Well Drills Ahead

- Samson O&G: Everett Well Drills Ahead

Friday, May 27, 2011
Samson O&G Ltd.

Samson O&G advised that the Everett #1-15H well is drilling ahead in the lateral at a measured depth of 13,107 feet. Previous operations saw the 7 inch casing cemented at a measured depth of 11,231 feet. This depth was 112 feet shorter than planned but should not compromise the well because this section will be cased when the 4 inch liner is installed.

The lateral is being drilled whilst observing characteristic oil and gas shows. The Everett #1-15H well is located in Township 154N, Range 99W, Section 15 in Williams County, North Dakota. The Everett #1-15H well is Samson’s sixth Bakken well in the North Stockyard Field.

Earl #1-13H (32% working interest)

Significant progress has been made in recovering the parted tubing string which was being used to drill the isolation plugs in the Earl #1-13H well. The remaining tubing and drilling assembly consists of a 1,200 feet section and the top of this fish has been conditioned such that it should be able to be extracted in the next 24 hours.

The Earl #1-13H well is located in Township 154N, Range 99W, Section 13 in Williams County, North Dakota.

HAWKSPRINGS PROJECT

Defender US 33 #2-29H (37.5% working interest post farmout)

The location of the Defender well, which will be the first of the Niobrara horizontals, has been agreed and is expected to spud in mid-July. This well is planned as a 4,000 foot lateral in the Niobrara ‘B’ zone and will be fully funded by our farminee. The direction of the lateral will be determined only after an orientated core is recovered from the vertical pilot hole. Examination of the core and its fracture orientation will be used to finalize the preferred direction of the lateral.

The Defender US 33 #2-29H well is located in Township 25N, Range 63W, Section 29 in Goshen County, WY.

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OGX Briefs on Issuance of $2.563B Senior Unsecured Notes

- OGX Briefs on Issuance of $2.563B Senior Unsecured Notes

Friday, May 27, 2011
OGX S.A.

OGX in compliance with the Instruction of Comissão de Valores Mobiliários (CVM) announced the issuance of Senior Unsecured Notes totaling US $2.563 billion. The Notes issued on May 26, 2011 are due and payable by the Company on June 1, 2018 and will accrue interest at rate of 8.5% per annum, payable semi-annually, in June and December.

The Notes will be offered to qualified institutional buyers (QIBs), resident and domiciled in the United States, in accordance with the provisions of "Rule 144A" of the Securities Act of 1933, as amended, and in other countries except the United States and Brazil, based on "Regulation S".

When added to OGX’s current cash position of approximately US $2.5 billion (as of March 31, 2011), the net proceeds from the issuance Notes provide a liquidity of approximately US $5.063 billion, at a level which is sufficient for OGX to support the exploratory campaign and the production development of the discoveries made until the Company becomes self-funded by its own cash flow generation.

"This funding provides the necessary capital for the development of OGX's sizable discoveries that were made in an unprecedented time frame for the oil and gas sector. OGX now has the natural, financial, human and physical resources to implement its business plan," declared Paulo Mendonça, General Executive Officer and Exploration Officer for OGX.

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Tethys Makes Oil Find at Tajik Well

- Tethys Makes Oil Find at Tajik Well

Friday, May 27, 2011
Tethys Petroleum Ltd.

Tethys issued a holding statement with regard to oil being encountered in its Tajik exploration well East Olimtoi EOL09 in order to ensure all pertinent information is available to the market and the Company's stakeholders.

While drilling at a depth of 3,342 meters in sandstones of the Alai formation (a secondary target) there was a strong flow of live oil to the surface accompanied by 33% gas in the drilling mud. After closing of the blowout preventer the well was successfully stabilized and drilling operations have now recommenced.

The oil, which appears to be of medium density, flowed despite drilling with heavy mud (1.57 SG) reflecting a pressure of some 512 atmospheres (7,524 psia) in the reservoir.

The primary target for the well is the Paleogene Bukhara limestone formation and it is planned to set casing prior to entering this zone. The well is exploring an attractive salt induced structure and is planned to reach a total depth of some 3,800 meters.

The well is located in the south-east of Tethys' Contract area, south of the town of Kulob and only some 10 kilometers north-west of the Afghan border. The nearest oilfield in that region is the Beshtentak field some 75 km to the north-west which produces oil from the Bukhara limestone.

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Solimar to Open 1st Zone in Guijarral Hills Flow Test Prog.

- Solimar to Open 1st Zone in Guijarral Hills Flow Test Prog.

Friday, May 27, 2011
Solimar Energy Ltd.

Solimar announced that flow testing operations using the Orchard Petroleum Rig #2 will commence in the next 24 hours when the deepest zone selected for testing will be perforated and opened for flow into the well bore.

Perforations will be made between 10,370 feet and 10,380 feet within the Lower Gatchell Sandstone and then flow tested to determine whether commercial production is feasible.

The perforations are being restricted to a preferred 10 foot interval although additional potential hydrocarbon pay may be present in the Lower Gatchell Sandstone based on the wireline log data. Initial results from the Gatchell test may be reportable by late next week.
Background to Testing Program

The program will test selected intervals within the following 3 formations:

Formation	Perforation Interval (feet)
Leda Sandstone	8,533-8,540
Lower Avenal Sandstone	9,962-9,982
Lower Gatchell Sandstone	10,370-10,380

The three intervals to be tested have all been productive in the adjacent Guijarral Hills oil and gas field. Each of the zones were characterized by increased shows of hydrocarbons recorded while drilling and anomalies on wireline logs. Petrophysical analysis indicates hydrocarbon pay is present however the flow testing program is necessary to determine whether the hydrocarbon saturations and reservoir quality will support commercial rates of flow.

A total potential net pay estimate of over 135 feet in six separate zones was previously announced for the well. The zones that have been selected for testing are those deemed most likely to provide a definitive series of tests. If successful then the likelihood will be increased that other zones identified with potential pay can also be successfully tested.

Testing of each reservoir will involve perforation of the designated intervals followed by periods of flow and shut in to measure flow rates, pressure response and evaluate fluid properties. The sequence will involve testing of the deepest interval (Lower Gatchell) first and then working up the well as necessary to the shallower intervals.

The testing program cost for the three intervals has been budgeted at approximately US $530,000 although final costs will depend on results and whether these necessitate further procedures such as fracc stimulation.

ASX listed partners in the Guijarral Hills project, at post drill equities will be:

• Solimar Energy LLC (Operator) 35%
• Neon Energy Limited (ASX: NEN) 15%

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Gulf Keystone Spuds Shaikan Appraisal Well

- Gulf Keystone Spuds Shaikan Appraisal Well

Friday, May 27, 2011
Gulf Keystone Petroleum Ltd.

Gulf Keystone announced that the Shaikan-4 Deep Appraisal Well has spudded on the Shaikan block in the Kurdistan Region of Iraq on Friday May 27, 2011.

Shaikan-4 is the second deep appraisal well to be drilled on the Company's significant oil discovery with gross oil-in-place volumes of between 4.9 billion barrels to 10.8 billion barrels calculated on the P90 to P10 basis with a mean value of 7.5 billion barrels.

Shaikan-4 is being drilled 6 kilometers to the north-west of the Shaikan-1 discovery well and is targeted to drill to the top of the Permian to reach the planned total depth (TD) of approximately 3,760 meters.

Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 percent and is partnered with Kalegran Ltd. (a 100 percent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc, which have working interests of 20 percent and 5 percent respectively.

John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented, "The spudding of our second deep appraisal well on the Shaikan structure is yet another important achievement in the Company's ambitious 2011-2012 exploration and appraisal programme in the Kurdistan Region of Iraq. With the Shaikan-2 & 4 appraisal wells currently underway and the Shaikan-5 appraisal well planned to spud later in 2011, the Company is firmly focused on further proving the world class quality of the Shaikan discovery."

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CNOOC: Confident Will Achieve Full Year Output Target this Year

- CNOOC: Confident Will Achieve Full Year Output Target this Year

Friday, May 27, 2011
Dow Jones Newswires
by Yvonne Lee

CNOOC expects to meet its full-year output target despite the shutdown of four oil fields in the Bohai Bay last month due to a malfunction, Chief Executive Yang Hua said Friday.

Cnooc said in March it planned to raise crude-oil and natural gas output in 2011, targeting production of 355 million-365 million barrels of oil equivalent, up 8%-11% from 328.8 million barrels in 2010.

The company is also targeting oil and gas output growth at a compound annual rate of 6%-10% between 2011 and 2015.

In April, four of Cnooc's oil fields with a total production capacity of about 39,000 barrels a day were shut down following a malfunction at a vessel in the Bohai Bay caused by rough sea conditions.

Yang also said he expects the company to drill four to six deep-water wells in the South China Sea this year, and added that the company plans to accelerate oil exploration in deep-water wells over the next four years.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Statoil Charges Ahead at Fast-Track Proj. Visund South

- Statoil Charges Ahead at Fast-Track Proj. Visund South

Friday, May 27, 2011
Statoil

Statoil's first fast-track –project – Visund South – is moving ahead as planned. The seabed template has commenced its journey out to the field located south of Gullfaks in the North Sea.

"We submitted the plan for development and operation of Visund South in January. Now, four months later, we've built the first seabed template for the first fast-track project. We've come a long way towards cutting the time from discovery to production in half," said Kjetel Digre, who is responsible for project implementation in Technology, Projects & Drilling.

The Visund South seabed template was placed on a barge at Grenland Group's yard in Tønsberg last week. It will be installed on the field between the Gullfaks C and Visund platforms in June.

Visund South is expected to come on stream in 2012.

The template is the first to have been built from a standard catalog for subsea equipment.

This will form the basis for the continuing development and use of the standard catalog in the fast-track portfolio.

"We've been working closely with the supplier industry to develop standard equipment for this part of our field development portfolio. This means that we can start to build equipment more quickly and develop smaller finds more efficiently," said Halfdan Knudsen, who heads up the fast-track portfolio on the NCS.

It has taken less than a year to build the Visund South structure from the signing of the contract for subsea equipment with FMC.

Subsea 7 will carry out the actual installation on the seabed.

Visund South field installation will take place at the same time as that on the Marulk development, which Statoil is carrying out on behalf of operator Eni. This will mean increased efficiency and cost savings for both projects.

Statoil's high health, safety and environment (HSE) standards are fully integrated at all fast-track project development stages.

"HSE integration at all fast-track development stages is crucial to our success. I believe that all of our efforts to standardize and industrialize field developments through the fast-track process will bring us a predictability that will impact safety in a positive way," said Digre.

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Egdon Posts Initial Production Rates at Keddington

- Egdon Posts Initial Production Rates at Keddington

Friday, May 27, 2011
Egdon Resources plc

Egdon provided an update on production testing of the Keddington-4 well in Egdon's operated license PEDL005 (Remainder) located in Lincolnshire.

The Keddington-4 well was drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well, during April 2011 and encountered a total of 120 meters of the primary reservoir Unit 1 sandstone and 65 meters of Unit 2.

Site reinstatement works have been completed and the Keddington-4 well commenced pumping operations on Monday, May 23, 2011 at 08.30 hours. After initial recovery of kill-brine and oil-based drilling mud, the well began free-flowing oil and gas through an adjustable choke and the pump was shut-off. The well has been shut-in periodically to observe pressure behavior. Free-flowing production over a flowing period of 68 hours to 07.30 on May 27, 2011 has yielded 647 barrels of oil along with 1,106,300 cubic feet of gas on a minimum choke setting. The production rate for the 24 hours to 07.30 hours on May 27, 2011 was measured at 234 barrels of oil per day ("bopd") and 518,000 cubic feet of gas per day ("cfg/d"). No formation water has been observed to date.

It is intended to continue to produce the Keddington-4 well over the coming few weeks to determine the optimum rate and methods of producing the well. Production from the adjacent Keddington-3z well, which was producing at constrained rates of 100 bopd and 650,000 cfg/d prior to being shut-in during the drilling operations, will resume in the coming weeks once stable production has been established from Keddington-4.

We will provide further updates once stable oil and gas rates for the field are established.

Egdon holds a 75% operated interest in PEDL005(Remainder). The joint venture partners are Terrain Energy Limited (15%) and Alba Resources Limited (10%), a wholly owned subsidiary of Nautical Petroleum.

Commenting on the production testing operations, Egdon's Managing Director Mark Abbott said, "We are pleased by these initial production results from the Keddington-4 well. The good oil rates, lack of any observed formation water and current gas production from the well are all encouraging. We will continue to flow and monitor the well over the next few weeks as we look to define the optimum production strategy for the well and the field as a whole."

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Seadrill 1Q Earnings Soar to $816MM

- Seadrill 1Q Earnings Soar to $816MM

Friday, May 27, 2011
Seadrill Ltd.

Seadrill reports first quarter 2011 results:

• Highlights
  • Seadrill generates first quarter 2011 EBITDA of US $573 million
  • Seadrill reports first quarter 2011 net income of US $823 million and earnings per share of US $1.84
  • Seadrill distributes cash dividend of US $0.75 per share
  • Seadrill establishes a harsh environment focused drilling company, North Atlantic Drilling Ltd, subscribe for 75% of the shares in a US $1.7 billion private placement, lists the company on the Norwegian OTC and transfers five existing drilling units with contracts and staff, and one unit under construction to the new company
  • Seadrill orders a new harsh environment jack-up rig to be named West Linus and signs a five-year contract with ConocoPhillips
  • Seadrill orders two new tender rigs and signs five-year contracts for both units with Chevron
  • Seadrill takes delivery of one ultra-deepwater semi-submersible rig and one semi-tender rig
  • Seadrill subsidiary Seawell completes the merger with Allis-Chalmers Energy Inc in late February, leading to a reduction in Seadrill's shareholding to 36.5% and a deconsolidation in Seadrill accounts
• Subsequent events
  • Seadrill exercises its right to call the remaining US $750 million of the 2012 convertible bond
  • Seadrill repurchases 2.5 million of its own common shares
  • Seadrill orders a new ultra-deepwater drillship at Samsung for an all-in cost of US $600 million
  • Seadrill secures new contracts with an estimated value of US $1.2 billion
  • Seadrill orders a new tender rig for a total consideration of US $115 million
  • Seadrill agrees to sell the jack-up rig West Juno for a total consideration of US $248.5 million
  • Seadrill transfers the construction contract and drilling contract for jack-up rig West Linus to North Atlantic Drilling Ltd

First quarter results

Seadrill today reports consolidated revenues for the first quarter 2011 of US $1,110 million compared to US $1,169 million for the fourth quarter 2010.

Operating profit for the first quarter was US $430 million, down from US $479 million in the fourth quarter 2010, which included US $26 million in gain on sale of the jack-up rig West Larissa. The results for the first quarter were also impacted by lower contribution from Floaters, Tender Rigs and Well Services, following the deconsolidation of Archer/Seawell.

Operating profit from the Floaters was US $312 million as compared to an operating profit of US $322 million in the fourth quarter 2010.

Operating profit from the Jack-up Rigs amounted to US $64 million as compared to an operating profit of US $40 million in the fourth quarter, adjusted for the US $26 million gain on sale of West Larissa in the same quarter 2010.

Operating profit from the Tender Rigs was US $49 million, down from US $75 million in the fourth quarter 2010. The decrease was due to certain non-recurring revenues being recorded in the fourth quarter and the West Menang being idle in the first quarter.

Operating profit from Well Services was US $5 million, down from US $18 million in the preceding quarter, as Well Services was deconsolidated from the Seadrill accounts in February.

Net financial items for the first quarter amounted to a gain of US $441 million as compared to a loss of US $176 million in the previous quarter. The improvement is mainly related to a gain of US $477 million recognized in connection with the deconsolidation of Well Services that triggered an adjustment of the book value of our holding to reflect the market value of the underlying shares.

Income before income taxes amounted to US $871 million, while income taxes were US $48 million.

Net income for the quarter amounted to US $823 million and earnings per share were US $1.84 for the first quarter.

Chief Executive Officer in Seadrill Management AS Alf C Thorkildsen commented, "We are pleased to report another solid quarter for Seadrill reflecting a strong underlying operational performance. Furthermore, over the last three months Seadrill has secured new contracts for approximately US $1.2 billion. These contracts demonstrate the continued strength of the market for quality drilling units. In response to our solid operations, strong contract backlog and favorable market outlook, we are pleased to announce a quarterly cash dividend of US $0.75."

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