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Oil and Gas Energy News Update

Wednesday, June 1, 2011

Oil & Gas Post - All News Report for Wednesday, June 01, 2011

Wednesday, June 01, 2011

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Commodity Corner: Oil Sinks on Econ Slowdown Signs

- Commodity Corner: Oil Sinks on Econ Slowdown Signs

Wednesday, June 01, 2011
Rigzone Staff
by Matthew V. Veazey

Lackluster economic data contributed to a drop in crude oil futures Wednesday, reflecting fears that demand for the commodity will decrease.

Crude oil for July delivery fell $2.41 to settle at $100.29 a barrel after two closely followed indicators suggested that U.S. economic growth is becoming more sluggish. The Institute for Supply Management (ISM) announced that its Purchasing Managers' Index (PMI) for May fell 6.9 percentage points lower than April's figure of 60.4 percent.

Last month's 53.5 percent statistic marks the 22nd consecutive month of growth in the manufacturing sector, but it represents the lowest PMI reading in 12 months and the first one to fall below 60 percent this year. ISM cautioned that supplier deliveries are slower and inventories are contracting. New orders, production, and employment continue to grow but at slower rates.

On the employment front, payroll processing firm ADP reported Wednesday that total U.S. private-sector employment grew by 38,000 jobs in May—well below what analysts were expecting. According to ADP, small and medium businesses added 27,000 and 30,000 jobs, respectively, during the period. Meanwhile, large businesses shed 19,000 jobs and the manufacturing industry cut 9,000 jobs.

"Although we continue to see jobs being added to the economy, this month's job figures show that employers believe we are not out of the woods yet when it comes to decisions on hiring," ADP President and Chief Executive Officer Gary C. Butler said in a company statement.

July crude oil traded within a range from $99.96 to $103.31 Wednesday.

The gasoline futures price, which often parallels the movement of the oil price, lost 17 cents to end the day at $2.98 a gallon. July gasoline peaked at $3.06 and bottomed out at $2.97.

July natural gas lost four cents to settle at $4.63 per thousand cubic feet. The July contract price fluctuated from $4.59 to $4.68.

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Iran's Parliament Accuses Ahmadinejad of Violating Law

- Iran's Parliament Accuses Ahmadinejad of Violating Law

Wednesday, June 01, 2011
Deutsche Presse-Agentur (dpa)

Iran's internal row escalated Wednesday as the parliament filed a brief in court accusing the president of violating the law by making himself caretaker of the oil ministry.

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

The constitutional watchdog Guardian Council rejected the move as illegal and said he could not run the oil ministry as caretaker.

Although Ahmadinejad reportedly gave in and dropped the trip to Vienna, the parliament said he had violated the law and sent it to the judiciary for further investigation.

The president's plan to trim the cabinet, especially merge the oil ministry with the energy ministry, led to widespread criticism in parliament.

Ahmadinejad has also been involved in a row with the clergy and conservative faction over his close aides.

The aides were branded as a "deviant current" and accused of undermining the Islamic ruling system in Iran and the authority of Supreme Leader Ayatollah Ali Khamenei.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Thailand's Natural Gas Reserves to Run Out in 18 Years

- Thailand's Natural Gas Reserves to Run Out in 18 Years

Wednesday, June 01, 2011
Knight Ridder/Tribune Business News
by Watcharapong Thongrung, The Nation, Bangkok, Thailand

Thailand's natural-gas reserves are estimated to be enough for only 18 more years if no new reserves are found, said Kurujit Nakornthap, deputy permanent secretary of the Energy Ministry.

He made the remark yesterday (May 31) at a seminar on Thailand's energy outlook. He said the current natural-gas reserves, both proven and probable, stand at 23 trillion cubic feet. If production is maintained at the rate of 3,747 million cubic feet per day (MMcfd) and no new reserves are found, the current reserves will run out in 18 years.

He added that the ministry had given priority to seeking new resources to ensure national energy stability.

He added that of the country's proven petroleum reserves as of 2009, natural gas stood at 11.026 trillion cubic feet, condensate at 255 million barrels, and crude oil at 180 million barrels. Of total probable reserves, the natural-gas amount stood at 6.170 trillion cubic feet, condensate at 86 million barrels, and crude oil at 170 million barrels.

This year natural-gas production in Thailand in many fields is expected to reach a combined 3,717MMcfd, up from 3,511MMcfd, while the demand from many industrial sectors is estimated at a combined 4,006MMcfd, down from 4,039MMcfd last year.

The high demand for natural gas means Thailand is expected to import 702MMcfd from Burma this year.

Kurujit said one threat to the country's energy security was its over-dependence on natural gas for generating electricity. It is estimated that natural gas this year will account for 71 percent of all energy sources used for electricity generation. Coal-fired power plants and proposed nuclear plants face opposition from communities.

Department of mineral fuels director-general Songpop Polachan said it would rapidly seek additional domestic petroleum sources through the planned granting of new concessions, the promotion of production in small petroleum fields, and a feasibility study on the production of natural gas from high-carbon-dioxide fields.

Copyright (c) 2011, The Nation, Bangkok, Thailand / Asia News Network

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New Fracturing Disclosure Rules May Take Awhile

- New Fracturing Disclosure Rules May Take Awhile

Wednesday, June 01, 2011
Houston Chronicle
by Tom Fowler

Texas lawmakers have passed a bill requiring disclosure of most of the chemicals used in hydraulic fracturing, a natural gas and oil production technique that has been a source of contention in some communities over the past year.

A final version of the bill sent to Gov. Rick Perry on Tuesday requires oil and gas well owners to file online forms detailing the chemicals that are mixed with sand and water and then pumped into wells at high pressure to break apart dense shale formations.

Opponents say the materials, often called frac fluids, can contaminate ground water supplies -- a worry the industry says is unfounded.

It may be up to two years before the law takes full effect, as the Texas Railroad Commission has to write the rules and submit them to public comment.

Commission Chairman Elizabeth Ames Jones said Tuesday the agency will begin crafting the rules soon, but the law gives it until July 1, 2013, to approve them. The Railroad Commission is the state's chief oil and natural gas regulator.

"A commonsense frac fluid disclosure policy will balance the Railroad Commission's dual mission to prevent the waste of Texas' energy resources, and to protect the environment and the public's health and safety," Jones said.

Under existing rules, companies must list just some of the chemicals used in fracturing on Material Safety Data Sheets, documents kept on worksites to help officials respond to emergencies such as spills or accidental exposures to hazardous chemicals. Some chemicals are exempt if the companies claim they are trade secrets, while others simply aren't covered by the requirements.

The industry voluntarily has begun sharing fracturing fluid information from the data sheets for specific wells through a website,, in response to public concerns about hazardous chemicals.

The new Texas law makes that reporting mandatory for all wells drilled in Texas, and will require listing of chemicals not currently required on the data sheets.

The new law still exempts chemicals deemed trade secrets, but the landowner where the well is drilled, an adjacent landowner or a state agency can appeal the exemption.

The bill, introduced by Rep. Jim Keffer, R-Granbury, is the result of negotiations among industry, environmental groups and lawmakers.

A version of the bill discussed last week would have made it more difficult for the public to access some of the information by requiring reports be filed just with the Railroad Commission. But an amendment introduced by Rep. Lon Burnam, D-Fort Worth, required disclosure on public websites.

The Texas Oil and Gas Association praised the bills.

"As a result of the state's leadership, Texas will become a game changer when it comes to debunking myths or misconceptions about hydraulic fracturing," said Debbie Hastings, vice president of environmental affairs for the group. "The transparency and accessibility achieved by this legislation will reinforce how and why hydraulic fracturing has been safely used for more than 60 years."

The Environmental Defense Fund gave the bill mixed reviews, saying it's a milestone in some ways but has shortcomings that should discourage other states or the federal government from adopting it without revision.

"It represents a major shift in the debate because for the first time industry and Republican lawmakers acknowledge that disclosure should be mandatory and that it should address all fracturing chemicals that may be harmful to public health and the environment," said Matt Watson, senior energy policy manager for EDF. "Texas and the nation will be better off for it."

But it leaves the decision on disclosure exemptions with the Texas Railroad Commission, which Watson said tends to favor business interests.

The long timetable for new rules is also a concern, Watson said.

Ramona Nye, a spokeswoman for the Railroad Commission, said the commission "has discretion regarding this process for any particular rule-making and may hold workshops, stakeholders meetings or other opportunities to gather information before drafting a rule proposal."

Chairman Jones' chief of staff, Andrew Keefer, said discussions of the new rules may begin in late June.

"The intent is to get it done as quickly as possible," Keefer said, but public comments can drag the process out.

Copyright (c) 2011, Houston Chronicle

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Former Libyan Oil Minister Defects to Italy

- Former Libyan Oil Minister Defects to Italy

Wednesday, June 01, 2011
Deutsche Presse-Agentur (dpa)

Former Libyan oil minister Shokri Ghanem defected to Italy on Wednesday, telling journalists in Rome that he could no longer work in the current situation in his county.

Ghanem, who used to represent Libya at OPEC, said he was joining the rebels fighting Moamer Gaddafi.

He said he wanted to work for democracy in his country.

On Tuesday, eight Libyan military officers, including five generals, appeared in Rome to say they were part of a group of up to 120 military officials defecting from Gaddafi's regime.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Hyperdynamics, AGR Sign Contracts for Offshore Guinea Exploration Proj.

- Hyperdynamics, AGR Sign Contracts for Offshore Guinea Exploration Proj.

Wednesday, June 01, 2011
Hyperdynamics Corp.

Hyperdynamics announced that AGR Peak Well Management Ltd. has signed contracts on behalf of the Company for long-lead-time equipment, materials and professional services totaling approximately $12 million.

These purchases, which are included under several separate contracts, will cover Hyperdynamics' needs for the first two exploration wells that are planned offshore Guinea starting in the fourth quarter of this year.

The majority of the purchases include materials that will be used in the well itself, such as pipe and casing, a wellhead, drilling fluid and cement. Other contracts cover logistics and a variety of analytical services to evaluate underwater and sea floor conditions at the proposed well sites.

"These contracts are an important next step in our preparations for beginning Hyperdynamics' exploration drilling program later this year," said Ray Leonard, the Company's President and CEO.

"They cover the majority of the long-lead-time materials and services that we will need to drill wells one and two, and they represent the majority of equipment and services that will be used offshore. Between now and the initiation of drilling, working through AGR, we plan to engage additional contractors to move people and equipment between the drillship and shore and to secure shore-based facilities, materials and services."

AGR, based in Aberdeen, Scotland, is providing well management support services to Hyperdynamics.

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Subsea 7 Contracts BMT for CLOV Proj. Development

- Subsea 7 Contracts BMT for CLOV Proj. Development

Wednesday, June 01, 2011
Subsea 7

Subsea 7 has contracted BMT Scientific Marine Services (BMT) to provide riser monitoring systems for two Hybrid Riser Towers (HRT) and one Single Hybrid Riser (SHR) for the CLOV Development Project offshore Angola operated by Total E&P Angola.

These systems will monitor the integrity of the risers by measuring the buoyancy uplift and bending fatigue, as well as each riser's motions and set-down due to lateral excursions. Each system will include the BMT Subsea Strain Sensor Assembly; subsea data acquisition, motion and depth modules; and a rack-mounted display with BMT's WinMon software for riser monitoring systems. Data transmission will be via a hard-wired link to the FPSO. The system will be designed for 21 years subsea service.

BMT brings valuable experience to this project having supplied a Free Standing Hybrid Riser Tower tension, motion and position monitoring system for Petrobras's P-52 platform offshore Brazil, a Hybrid Riser Tower Monitoring System for BP's Greater Plutonio Block 18 and a comprehensive integrity monitoring system for the Cascade & Chinook Free Standing Hybrid Risers (FSHRs) and Disconnectable Turret Buoy. The company is also currently in the process of providing a Riser Tower Monitoring System to two single leg offset risers offshore West Africa for SAIPEM and an Integrity Monitoring System for four risers in the Usan Field Development Project for TOTAL E&P Nigeria Limited.

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FMC Technologies to Supply Workover System at Statoil's Statfjord Field

- FMC Technologies to Supply Workover System at Statoil's Statfjord Field

Wednesday, June 01, 2011
FMC Technologies Inc.

FMC Technologies has signed an agreement with Statoil for the manufacture and supply of a workover system to support the Statfjord field. The award has a value of approximately $70 million in revenue to FMC Technologies.

Statfjord is one of the oldest producing fields on the Norwegian continental shelf and one of the largest oil discoveries in the North Sea. Statoil will use the workover system to perform intervention activities on their subsea wells in order to increase performance and enhance oil recovery. It will be the first standardized workover system supplied to Statoil by FMC.

"This workover system is designed to support Statoil's rig scheduling program and its standardized subsea equipment," said Tore Halvorsen, FMC's Senior Vice President of Global Subsea Production Systems. "As a result, rig time can be more efficiently allocated, reducing costs and enhancing productivity."

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Energy Sector Update: June 1, 2011

- Energy Sector Update: June 1, 2011

Jun 1, 2011

Energy shares are down in mid-day trading as crude oil futures fall below $101 a barrel at the New York Mercantile Exchange. Light, sweet crude for July delivery is trading down 1.8% to $100.85 a barrel.

In mid-day news, shareholders for both Alpha Natural Resources (ANR) and Massey Energy Co. (MEE) today at their respective special stockholders' meetings said that they have approved various proposals related to Alpha's acquisition of all outstanding shares of Massey's common stock. The acquisition is anticipated to conclude later today.

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KBR Clinches Engineering Design Services Contract in AU

- KBR Clinches Engineering Design Services Contract in AU

Wednesday, June 01, 2011
KBR Inc.

KBR has been selected to execute engineering design services for three coal seam gas (CSG) pipelines designed to carry CSG from gasfields in central Queensland, Australia to an export facility on Curtis Island. The project will be executed for the McConnell Dowell/CCC joint venture (MCJV) on behalf of clients Queensland Curtis LNG (QCLNG) and Asia Pacific LNG (APLNG).

KBR will execute engineering design services including pipeline design, process, civil and structural, mechanical and electrical engineering and instrument controls for the three CSG pipelines. For QCLNG, KBR will design a pipeline from central Queensland to the coast that consists of more than 580 kilometers (360 miles) of pipelines, including: a 42-inch diameter coal seam gas (CSG) pipeline (approximately 374 kilometers/232 miles); a 42-inch diameter CSG collection header pipeline (approx 169 kilometers/105 miles); and six collection laterals of 12-24 inch diameter (5.4 kilometers/3.4 miles).

A second pipeline for QCLNG and a third pipeline for APLNG will both consist of a 42-inch diameter high pressure transmission pipeline from the main line valve on the Queensland mainland, across the Narrows to the Curtis Island delivery station. The shared design for the Narrows pipelines is the result of an agreement between QCLNG and APLNG to jointly contract to design build and deliver the two coastal pipelines.

"This contract award demonstrates KBR's commitment to be involved in delivering pipelines and associated infrastructure in the important and emerging coal seam gas industry," said Colin Elliott, President, KBR Infrastructure and Minerals. "The expertise we've developed in the gas pipeline sector in Australia to date will be integral to the successful execution for MCJV, QCLNG and APLNG and add to our capabilities in this rapidly growing market."

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Realm Energy, Halliburton to Jointly Evaluate Emerging Shale Plays

- Realm Energy, Halliburton to Jointly Evaluate Emerging Shale Plays

Wednesday, June 01, 2011
Halliburton Co.

In an effort to accelerate shale gas development, Realm Energy International has contracted Halliburton's Consulting and Project Management team to work with Realm Energy to significantly expand the technical evaluation and ranking of the highest-potential shale deposits found in emerging prospective basins globally.

Realm Energy and Halliburton's Consulting and Project Management team began their collaboration in 2009 with an emphasis on European basins. During this initial effort, Realm Energy, supported by Halliburton, targeted 10 discrete sedimentary basins in four European countries for evaluation. The collaboration identified key prospect trends, and Realm has now successfully acquired 650,000 gross acres and has 4.4 million acres under government application of contiguous tracts of land over significant shale resources.

"Realm Energy is now moving into an operational phase with our European leasehold and will contract with Halliburton to leverage its extensive shale-development knowledge, gained from Halliburton's significant presence in the North American market," said Realm Energy Chairman Craig Steinke. "We could not have achieved the quality of our European portfolio without the help of Halliburton's consulting organization; this is why we have expanded our collaboration to assess and rank shale resources globally."

"Halliburton has developed a rigorous and efficient approach to the assessment, appraisal and development of shale plays, based on our
extensive experience in North America," said Paul Koeller, vice president of Halliburton Consulting and Project Management. "Our work
with Realm on the European shale plays has significantly increased our knowledge base for unconventionals, and we look forward to working with Realm on a global level."

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Apache Shuffles Management

- Apache Shuffles Management

Wednesday, June 01, 2011
Apache Corp.

Apache announced the following promotions and appointments to its management team:
  • Jon Jeppesen has been promoted to the new role of executive vice president overseeing the operations of the Gulf of Mexico Shelf, Deepwater and Gulf Coast Onshore regions.
  • Jon Graham has been named vice president of the global environmental, health and safety organization.
  • Mark Bauer has been promoted to region vice president for the Gulf of Mexico Shelf.
  • Michael Bose moved up to region vice president and country manager for Argentina.
  • Graham Lawton was named vice president — liquefied natural gas (LNG) projects, leading the Kitimat project team for the LNG facility and Pacific Trail Pipelines.
  • Kenny Paterson has been named vice president, LNG marketing and shipping, of Apache Energy Ltd.

"Apache is fortunate to have a solid team of seasoned leaders to help manage our growing global portfolio," said Rodney Eichler, president and chief operating officer for Apache. "As people advance in our organization, other Apaches equipped with the experience, leadership skills and awareness of our culture and goals can step forward."

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Hertel Awarded Contract for Statoil's Valemon Field

- Hertel Awarded Contract for Statoil's Valemon Field

Wednesday, June 01, 2011

Hertel has been awarded the contract to design and build the living quarters for Statoil's new North Sea Valemon Topsides which is being supplied by Samsung Heavy Industries Co., Ltd.

The living quarters will be housed in a eight-story building totaling 1860 m2 and includes 40 single bed cabins, kitchens and galleys, recreational areas, a medical centre and a large control room. The structure of the building will also include a heli-deck.

Work start at Hertel's facilities in Rotterdam on June 1, with mechanical completion due in April 2013.

Peter Van Aken, Managing Director of Hertel Offshore, said, "This is an exciting project for us and the requirements for providing a highly complex living quarter will draw together the many skills we have within the business. We will also be using our vast experience of working in the North Sea."

The Valemon field will be one of Statoil's largest development projects on the Norwegian Continental Shelf in the time ahead. The field is estimated to contain about 206 million barrels of oil equivalent.

Statoil is the operator of the field with a 64.3% ownership. Its partners are Total (TOT) with a 2.5% stake, Royal Dutch Shell PLC (RDSA) subsidiary Enterprise Oil with 3.2% ownership and Norwegian state-owned Petoro with 30% ownership.

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EnerMech Bags Wood Group Contract

- EnerMech Bags Wood Group Contract

Wednesday, June 01, 2011
EnerMech Ltd.

EnerMech has secured a £20 million ($32.9 million) contract to supply tools and rental equipment to Wood Group PSN. The five year contract covers the UKCS and 12 jobs will be created by the Aberdeen company as a result of the contract win.

The deal includes the supply and rental of plant and equipment, including generators, air compressors and lifting and rigging equipment, the supply of hand tools and consumables and the repair, service, maintenance and storage of Wood Group PSN owned equipment.

EnerMech has invested £1.5 million ($2.5 million) on new air compressors, generators and tools and spent a further £400,000 on a new workshop at their Scottish headquarters to service the contract.

Doug Duguid, managing director of EnerMech, said his company's commitment to investing significant capital in new equipment and site facilities was a major driver in securing the contract, the largest in the firm's three year history.

Mr. Duguid said, "Our policy of continual investment in new equipment, technologies and in the latest interactive web-based systems which give clients 24-7 visibility of their assets, gives us a clear advantage over competitors.

"We have completed some ad-hoc work on behalf of Wood Group in the past but this deal signals what I hope will be the start of a long and mutually beneficial relationship, which should offer up further opportunities for both companies.

"Winning this award is a clear indication that Wood Group PSN trusts us to provide a high quality service, delivered by first class personnel and backed up with our extensive on-site facilities which are second to none in the north east of Scotland."

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FoundOcean Wins Saipem Contract in North Sea

- FoundOcean Wins Saipem Contract in North Sea

Wednesday, June 01, 2011

FoundOcean has been awarded the offshore grouting contract for a four-legged wellhead jacket in a greenfield location in the North Sea. The award forms part of a three year agreement between FoundOcean and Saipem UK. The jacket will be installed in 81m water depth and the grouting is via a sub-sea grouting system. The grout line connections are located at EL -42.70m.

Paul Burns, Operations Director for FoundOcean commented, "We're pleased to have the opportunity to work with Saipem on this project and look forward to continuing the long and successful relationship between our two companies."

The grouting operation will take place from onboard the S7000 and is due to mobilize in Q2 2011.

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Ford's U.S. May Sales Flat Year-Over-Year

- Ford's U.S. May Sales Flat Year-Over-Year

Jun 1, 2011

Ford Motor Co. reported essentially flat U.S. sales for the month of May, at 192,102, down 0.1% from 192,253 in May of 2010.

Ken Czubay, Ford vice president of U.S. Marketing, Sales and Service said, "Customers increasingly are demanding new products that deliver compelling fuel economy. Ford's new fuel-efficient products and powertrains arrived at the right time - just as fuel efficiency became even more of a consideration among consumers."

Sales of the company's small cars were strong. Sales of the Ford Focus remained very strong, at 22,303 in the month, up 32% from a year ago, while sales of the Fiesta were 7,120.

Sales of the Fusion midsize car were also strong, totaling 24,666, its second highest month ever, and up 10% from last May.

Explorer sales were exceptionally strong. The company noted, "In the first five months of 2011, the new Explorer is setting a torrid pace, with year-to-date sales totaling 55,401, up 120 percent. In June, Explorer will surpass last year's full-year sales total of 60,687."

Ford Motor has a potential upside of 37.1% based on a current price of $14.52 and an average consensus analyst price target of $19.91.

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Total May Sales for General Motors Declines 1% From May 2010

- Total May Sales for General Motors Declines 1% From May 2010

Jun 1, 2011

General Motors (NYSE:GM) reported total sales for the month of May down 1% year-over-year to 221,192, due to a large drop in fleet sales, as rental volumes declined 21%.

Retail sales grew 9% in the month compared to May 2010, and deliveries to commercial accounts rose 19%.

Don Johnson, vice president of U.S. Sales Operations for the company said, "Customers continue to demand better fuel economy and our commitment to produce high-quality, fuel-efficient vehicles is paying off. We expect that fuel prices will continue to be volatile and we're prepared to continue meeting the needs of an ever-changing market."

The Chevy Cruze had its best retail sales month since its launch, reporting 18,996 deliveries. The GMC Terrain and Chevy Equinox, GM's compact crossovers, saw a combined retail sales increase of 58% during the month.

Retail sales of passenger cars were up 32% altogether, and retail sales for crossovers were up 17%. Mr. Johnson added, "The Cruze, Regal and CTS Coupe are attracting new customers to GM. These vehicles are a strong reason why we're gaining share in key states like California, New York and Florida so far this year."

General Motors has a potential upside of 37.1% based on a current price of $31.25 and an average consensus analyst price target of $42.85.

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Santos Strikes Additional Oil Pay at Finucane South Well

- Santos Strikes Additional Oil Pay at Finucane South Well

Wednesday, June 01, 2011
Tap Oil Ltd.

Tap Oil provided the following update on Santos' Finucane South-1A exploration well, offshore Carnarvon Basin, Western Australia.

Logs have confirmed the well is a new field oil discovery encountering some 18.5m of excellent quality net oil pay in the Late Jurassic Angel Formation. The interpretation is based on both LWD (Logging While Drilling) and wireline logs, including pressure testing and sampling over the target interval. Early evaluation indicates the discovery could exceed the pre-drill mean estimate of 8 million barrels.


The Finucane South-1A well is located in permit WA-191-P, in the northern end of the Carnarvon Basin. The well location is latitude 19° 18' 17.927" S and longitude 116° 45' 31.697" E.


During the period from 06:00 hours WST on May 25, 2011 to 19:00 hours WST on May 30, 2011 the corrosion cap was set over Finucane South-1A with the well suspended. The rig was then ASXskidded over to the Finucane South-1 location and abandonment completed. The rig was released at 19:00 hours on May 30, 2011.


The Finucane South discovery is located at the northern end of the Carnarvon Basin, approximately 15km east of the Mutineer facility. Finucane South-1A was drilled to identify additional resources to supplement the discovered resources contained in the adjacent Fletcher Field.

Finucane South is a moderate-sized structural closure mapped at the base of the Cretaceous regional seal. Water depth at the well location is approximately 140m. Finucane South-1A was drilled 2km SSW of the Finucane-1 well (1978) which intersected oil shows at the top of the Angel Formation despite having been drilled off structure.

Based on Finucane South-1A's proximity to other wells in the area (notably Finucane-1 and the Fletcher oil wells) plus its coverage by reprocessed 3D seismic, the risk attached to drilling can be categorized as low-moderate.

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Toyota Recalling 106,000 Prius 2001 - '03 Models to Replace Steering Wheel Nuts

- Toyota Recalling 106,000 Prius 2001 - '03 Models to Replace Steering Wheel Nuts

Jun 1, 2011

Toyota Motor (NYSE:TM) announced today that it is conducting a voluntary recall of 106,000 Toyota Prii made from 2001 to 2003 globally, to replace nuts that hold the steering wheel in place that may come loose.

According to the company's statement, "If the steering wheel is repeatedly and strongly turned to the full-lock position, there is a possibility the nuts securing the pinion shaft of the steering gear box assembly may become loose."

Toyota dealers will install improved nuts at no charge to the owner. Notification letters will begin being sent in early July 2011, and the repair will take approximately four hours, depending on the dealer's schedule.

The recall includes 52,000 vehicles sold in the United States from the 2001 - 2003 period.

Shares of Toyota Motor are trading down 0.7% at $82.71.

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Colombia Aims to Put Caribbean Oil Exploration Back On Track

- Colombia Aims to Put Caribbean Oil Exploration Back On Track

Wednesday, June 01, 2011
Dow Jones Newswires
by Dan Molinski

Colombia hopes it can resolve before the end of the year environmental issues that have delayed an offshore oil exploration plan in the Caribbean Sea by Spanish oil major Repsol and Colombia's state-controlled Ecopetrol.

Armando Zamora, the head of Colombia's oil licensing agency ANH, told reporters Wednesday that it and the two oil companies hope to reach an agreement with community leaders on the Colombia-owned island of San Andres that would allow for exploration contracts to be signed for the Cayos 1 and Cayos 5 blocks.

Nonetheless, the Colombian government official warned that without final consent from the San Andres island community--which is concerned about the effects on coral reefs and the fishing community--oil exploration in the area west of Nicaragua might prove impossible.

"We're aspiring for a deal to be reached during this year," Zamora said. "But both we the government and the companies don't want to force anything on the island communities. If in the end the communities say 'no,' then it's going to be very difficult" to continue with exploration plans.

The two oil blocks were awarded to Repsol and Ecopetrol last year in a drilling round aimed at boosting production in Colombia's already-booming oil sector. Crude oil output in Colombia reached a record 903,000 barrels a day in April and the government hopes production will reach 1 million barrels a day by the end of 2011.

Colombia has been hoping the waters it owns near San Andres, far from mainland Colombia, could allow it to become an offshore oil driller for the first time. Drilling near mainland Colombia has so far proven to be more gas-prone than oil-prone, although exploration efforts continue in several areas, including the Tayrona block held jointly by Repsol, Ecopetrol and Brazil's state-run company, Petrbras.

An official at Repsol in Bogota confirmed Wednesday that it hasn't yet signed a contract for either the Cayos 1 block or the Cayos 5 block, and he said that until that were to happen the company can't make any comments.

The oil blocks are located in the Seaflower Biosphere Reserve, a marine protected area that reportedly contains 76% of Colombia's coral reefs and is a nesting site for sea turtles. For more than a decade the reserve has been part of the United Nation's network of biosphere reserves.

The plan to begin exploration in the two oil blocks was suspended earlier this year after local groups filed a lawsuit against ANH for awarding the blocks within a protected area before consulting first with fishermen and others in the area that could be affected.

Zamora said the ANH hopes to convince the communities over the coming months that oil exploration would be done in an environmentally friendly fashion, and that the projects could bring jobs and improve the economies for the island of San Andres and Old Providence, a smaller island that is part of the same archipelago and is also owned by Colombia.

The Colombian official said it is too early to estimate how much oil might exist in the area.

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

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BHP Billiton Gets BOEMRE Nod for GOM Drilling

- BHP Billiton Gets BOEMRE Nod for GOM Drilling

Wednesday, June 01, 2011

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has approved a drilling permit for the fifteenth deepwater well to comply with rigorous new safety standards implemented in the wake of the Deepwater Horizon explosion and resulting oil spill. This includes satisfying the requirement to demonstrate the capacity to contain a subsea blowout.

The approved permit is for BHP Billiton Petroleum (GOM) Inc. to drill a new development well in Green Canyon Block 653 in 4,232 feet water depth, approximately 120 miles off the Louisiana shoreline, south of Houma. Today's approval is for a new well being drilled under a Development Operations Coordination Document that was approved on May 31, 2011, for which BOEMRE completed a site-specific Environmental Assessment.

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Treaty Secures Rig for Belize Proj.

- Treaty Secures Rig for Belize Proj.

Wednesday, June 01, 2011
Treaty Energy Corp.

Treaty has acquired a Drilling Rig for its Belize oil project.

Andrew V. Reid, Chairman & CEO of Treaty Energy Corporation, stated, "Treaty Energy has made a final decision to drill the wells on the Belize concession using our own Texas-based drilling company, Treaty Energy Drilling, LLC."

Mr. Reid added, "Upon making the decision to expand our own drilling company and keep the drilling program in-house, we purchased a Schramm 450 Drilling Rig on a Chevrolet Flat Bed Diesel AWD platform, with a Sullair Drilling Compressor. This rig is capable of drilling to 4000 ft depth and therefore is suitable to the task of drilling all of the well sites that are currently in our Belize drilling program."

Treaty technicians and geologists expressed their opinions that based on findings an "air drilling" rig would be better suited to the areas that are to be worked as per the drilling program. The Schramm Rig is capable of drilling with air or mud, and thus provides the flexibility to drill with either method if faced with on site condition changes.

The Schramm Rig was purchased in Troy, Alabama and has been shipped to a Rig Service Center in Glenwood, Alabama for inspection and upgrades as needed, prior to June shipment to Belize.

Treaty Energy is in the process of acquiring a full complement of support equipment so as to be self sufficient and have complete oversight of quality control while drilling in Belize. These other components will be announced as the acquisitions are completed, most of which are within days of finalization.

In closing, Mr. Reid stated, "I am very excited that the Treaty board has taken an aggressive stance and made possible the acquisition of the Schramm Drilling Rig and the full complement of support equipment. Growing Treaty Energy Drilling, LLC, our own drilling company, is a significant step toward vertical integration of our oil and gas business."

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O&G Shows Found at American Petro-Hunter's Ok. Well

- O&G Shows Found at American Petro-Hunter's Ok. Well

Wednesday, June 01, 2011
American Petro-Hunter Inc.

American Petro-Hunter updated the progress of drilling activities currently underway at the NOM1H horizontal well located at the Company's North Oklahoma Project.

The well is making good progress and should reach its engineered lateral depth within the next few days. The operator has informed the Company that during the drilling of the horizontal section excellent oil and gas shows were encountered. The Company is very pleased to report it has been advised of strong oil fluorescence; gassy oil shows and gas kicks which are regarded as very positive developments.

Subsequently, the Company wishes to advise that the probability for the well to be completed as a commercial oil and gas producer is considered high. Once the well reaches the target distance of the lateral leg, the well bore will be immediately swab tested and further evaluated.

The NOM1H well is the first of a planned series of horizontal wells designed to test and develop oil and gas in the 100 foot thick limestone Mississippi Formation.

Company President Robert McIntosh stated, "We are extremely encouraged by the excellent oil and gas shows from our first horizontal well and couldn't be more pleased by the efforts of our operator and their engineering team as the initial information from them is beyond our expectations. As the well approaches completion, we are certain the partners will expedite the final tests and evaluation in anticipation of our inaugural horizontal well production."

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Buccaneer Wraps Up Ops at Kenai Loop Proj.

- Buccaneer Wraps Up Ops at Kenai Loop Proj.

Wednesday, June 01, 2011
Buccaneer Energy Ltd.

Buccaneer provided the following final flow testing results from its 100% owned Kenai Loop # 1 well.

  • Successfully completed 4 point flow test for 2 zones totaling 87';
  • Absolute Open Flow Potential (AOFP) calculated as 33.2 million cubic feet per day (4,150 BOEPD)
  • Long term production rate targeted at 6 - 8 MMCFD (750 - 1000 BOEPD)1; from 87' gross pay tested;
  • Net revenue of US $1.05 million per month at 7.0 MMCFD, US $12.6 million per annum;
  • 14 zones (423' gross pay) remain to be tested.

A flow test over 4 different choke sizes, a 4 point test, has been successfully completed. This test includes the measurement of pressures which allows for the calculation of the AOFP. The AOFP estimates the well's flow rate without a choke.

The AOFP was calculated as 33.2 million cubic feet per day (MMCFD) which is significantly higher than the expectations. The high AOFP demonstrates the excellent permeability and porosity of the 2 zones perforated and tested.

The long term deliverable production rate from the well has been estimated as 6 - 8 MMCFD (750 - 1000 BOEPD). This steady deliverable production rate is anticipated for approximately 2 years and will facilitate a favorable gas sales contract.

Based on the average production rate of 7.0 MMCFD and the expected floor price of gas in south central Alaska of US $7.00 / MCF this would result in net revenue to the Company of approximately US $1.05 million per month (US $12.6 million per annum). The gas price in
recent contracts has a floor of US $7.00 / MCF and cap of US $10.00 / MCF.

Net revenue is after all royalties, production taxes and expected normal operational costs and amount to ~US $2.00 / MCF. Fixed royalties account for approximately 65% of these costs. An upside potential exists in the area from the remaining 14 zones (423' of gross pay) that have not yet been tested. Buccaneer's contiguous block in the area is in excess of 8,900 acres. An internal estimate of recoverable reserves is currently being finalized after which the Company will engage a third party engineer to complete a reserve report.

Kenai Loop Development Program

The Company is in the process of finalizing a development program for the Kenai Loop project which will include:
  • Drilling Kenai Loop # 2 well;
  • Commencement of production;
  • Acquisition of new seismic; and
  • Additional drilling beyond Kenai Loop # 2 well.

Kenai Loop # 1 Previous Results

In the initial phase of the testing program, the Kenai Loop # 1 has successfully tested gas to the surface at a rate of 10 million cubic feet per day on a 20/64" choke with a FTP (flowing tubing pressure) of 3,495 psi.

The Company has up to 16 zones totaling 510' of gross pay identified by logs as test candidates in the Beluga and Upper Tyonek Formations. As the rig needed to be released back to Marathon on June 1, 2011, 2 of the 3 high graded zones in the Upper Tyonek
Formation were chosen to be perforated and tested.

The 2 zones total 87' of gross pay were described as follows:

Zone 1 has an upper sand of 37' of gross pay which logs have confirmed as being quality reservoir with high porosity and good permeability. This upper sand package had a "gas kick" during drilling operations. There is an additional 12' of lower sand which is a lesser quality sand, but remains attractive. Only the upper portion of this zone is included in the testing program.

Zone 2 is an additional massive sandstone zone of approximately 50' of gross pay which logs indicate has good porosity and permeability.

Depending on rig availability a second well is planned for the third quarter 2011. The Company is in the progress of formulating a development program for the field, including a production schedule, beyond the initially anticipated 2-3 wells.


The closest wells to the Company's Kenai Loop # 1 well are the Cannery Loop #3 and #4 wells located in the Cannery Loop Field, which were drilled from the same surface location approximately 6,325 feet (1.2 miles) from the Kenai Loop # 1 well location. The Cannery Loop # 3 and # 4 wells have produced a combined 25.5 BCF (3.18 MMBOE) from pay zones whose equivalents are expected to be present in the Kenai Loop # 1 well, but separated from the Cannery Loop Field by geological deposition rather than fault. Drilling to date in the Kenai Loop # 1 well has confirmed that the formations encountered to date are likely separated from the Field.

There were 11 wells in the adjacent Cannery Loop Field which produced 175 BCF (21.9 MMBOE) One well produced from the Sterling Formation which is not one a target in Kenai Loop # 1 well, the other 10 wells produced from the Beluga and Upper Tyonek. The Upper
Tyonek is the primary target Formation of the Kenai Loop #1 well.

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Santos' Evans Shoal Sale Falls Through

- Santos' Evans Shoal Sale Falls Through

Wednesday, June 01, 201
Santos Ltd.

Santos announced in March 2010 that it had agreed to sell its 40% working interest in NT/P 48 (Evans Shoal) in the Bonaparte Basin to Magellan Petroleum Australia Limited.

Santos today announced that the sale transaction will not complete because the conditions to completion have not been satisfied by the May 31, 2011 deadline.

Santos therefore will retain its 40% interest in NT/P 48 and will remain as operator of the permit. Santos will also retain a $15 million non-refundable deposit paid by Magellan.

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Samson O&G Repays Debt Facility

- Samson O&G Repays Debt Facility

Wednesday, June 01, 2011
Samson O&G Ltd.

Samson O&G has fully repaid its debt facility. After this final repayment of the facility, which once stood at US $21 million, Samson no longer has any debt on its balance sheet, and its current cash balance is approximately US $61.2 million. Samson holds its cash and cash equivalents in three US dollar denominated bank accounts ($54.8 million) and one Australian dollar denominated account (A $6.0 million).


The Everett #1-15H well has reached a total measured depth of 17,350 feet, as planned, and is currently conditioning the hole prior to running the 4 1/2 inch production liner. This liner will enable a 20 stage fracture stimulation to be undertaken. Oil and gas shows consistent with the balance of the Bakken wells in this field were observed whilst drilling the final part of the lateral.

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.


As expected, the remaining parted tubing was extracted from the stuck point and was tripped out of the hole to the vertical part of the well bore. As the fish was moved, a marked increase in the flow rate was observed, and this flow rate of approximately 1,200 BOPD was too high to safely trip the balance of the tubing out of the well at that time. The work over crew then stood down for the holiday weekend.

Forecasted high winds in the area have curtailed operations today, but the forward strategy is to pump a well control fluid into the well and trip the fish out of the hole. Inspection of that recovery will determine the next step; if the entire bottom hole assembly is recovered, then the balance of the plugs will then be drilled out.

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

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Marathon Oil to Purchase Eagle Ford Assets for $3.5B

- Marathon Oil to Purchase Eagle Ford Assets for $3.5B

Wednesday, June 01, 2011
Marathon Oil Corp.

Marathon has reached a definitive agreement with Hilcorp Resources Holdings, LP to purchase its assets in the core of the Eagle Ford shale formation in Texas in a transaction valued at $3.5 billion subject to closing adjustments, customary terms and conditions, and Hart-Scott-Rodino approval. Hilcorp Resources Holdings is a partnership between affiliates of Hilcorp Energy Company and Kohlberg Kravis Roberts & Co. LP. Along with other transactions expected to close by the end of 2011, Marathon's Eagle Ford acreage position is expected to more than double to 285,000 net acres. The Hilcorp transaction is expected to close Nov. 1, 2011 with an effective date of May 1, 2011.

Hilcorp acreage acquisition highlights:
  • Approximately 141,000 net acres (217,000 gross) primarily in Atascosa, Karnes, Gonzales and DeWitt counties in Texas
  • Potential opportunity to acquire approximately 14,000 additional net acres through tag-along rights and other leasing
  • Approximately 90 percent operated with 65 percent average working interest
  • As of May 1 there were 36 wells producing approximately 7,000 net (17,000 gross) barrels of oil equivalent (boe) per day, of which 80 percent is liquids (three-fourths of which is crude oil and condensate)
    • 10 additional wells drilled and awaiting completion
    • Six rigs currently operating and two dedicated hydraulic fracturing crews
    • Year-end production expected to be approximately 12,000 net boe per day
  • Total net risked resource potential of 400 - 500 million boe with upside potential from additional downspacing and other stacked pay potential
  • Potential to book up to 100 million boe of proved reserves by the end of 2011
  • Production expected to increase to approximately 80,000 net boe per day by 2016

"Marathon has captured a top-five acreage position in the core of the premier resource play in the U.S. since first entering the Eagle Ford in November 2010. This transaction enhances our already strong North America position focused on unconventional, liquids-rich resource plays that provide low-risk, scalable and profitable growth," said Clarence P. Cazalot Jr., Marathon president and CEO. "This and other projects under development serve as a catalyst for Marathon to increase our projected Upstream production growth to 5 - 7 percent on a compound average annual growth rate (CAGR) during the period 2010 - 2016.

"In addition to establishing our position in the highest value oil and condensate core area of the Eagle Ford shale, these assets will deliver immediate production and reserve additions, an active Company-operated drilling program, significant resource potential, as well as solid economic returns and profitability that are immediately accretive to earnings and operating cash flow, and expected to be self-funding by 2014.

"With our technical expertise and best-in-class drilling, along with our project execution skills, we are poised to maximize profitable reserve and production growth across our liquids-rich resource plays, particularly in the Eagle Ford. Importantly, our financial flexibility enables us to pursue this growth while maintaining a strong balance sheet," Cazalot said.

Marathon will use cash on hand and cash generated from operations to fund the transaction. With an anticipated fourth quarter closing, the Company's Upstream capital, investment and exploration spending for 2011 (excluding acquisitions) is not anticipated to increase materially as a result of this transaction.

Increased Production Growth Across North America

In addition to the six rigs currently under contract related to this acquisition and two in Marathon's other Eagle Ford acreage, Marathon has five drilling rigs on order and expects to be operating at least 20 drilling rigs in the Eagle Ford within 12 months of closing this transaction. As a result, the Company expects to grow production from its total Eagle Ford acreage position to a peak of approximately 100,000 net boe per day by 2016. A summary of the total Eagle Ford acreage listed by county is included below.

County Net Acres
Wilson 98,000
Atascosa 47,000
Karnes 46,000
Gonzales 34,000
Frio 22,000
DeWitt 11,000
Bee 10,000
Lavaca 9,000
Live Oak 6,000
McMullen 2,000
Total 285,000

This acquisition brings Marathon's holdings to nearly 1 million net acres across North American liquids-rich resource plays in the Eagle Ford, North Dakota Bakken, Oklahoma Anadarko Woodford, the emerging Niobrara in Colorado and Wyoming, and an in-situ position in Alberta Canada - with plans to continue to grow acreage and increase drilling activity in each of the U.S. basins. Within 12 months of closing this transaction, Marathon expects to be operating 35 - 40 rigs across the U.S. This drilling activity, along with a potential phased development of the Company's Birchwood in-situ acreage, provides a defined growth trajectory to achieve production from the Company's unconventional portfolio of approximately 175,000 net boe per day in the 2016 - 2017 timeframe.

The legal advisor to Marathon for this transaction is Baker Botts and the financial advisor is Barclays Capital. The legal advisor to Hilcorp Energy for this transaction is Andrews Kurth LLP and the legal advisor to KKR is Simpson, Thacher & Bartlett, LLP. Jefferies & Company, Inc. served as exclusive financial advisor to Hilcorp Resources Holdings for this transaction.

All production growth targets listed in this release are based on current estimates and exclude additional acquisitions or divestitures.

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Hyundai Heavy Secures $1.12B Drillship Order for Rowan

- Hyundai Heavy Secures $1.12B Drillship Order for Rowan

Wednesday, June 01, 2011
Hyundai Heavy Industries Co. Ltd.

Hyundai Heavy said it clinched a $1.12 billion order to build two drillships for drilling contractor Rowan Companies Inc. on May 31. This contract also includes an option exercisable by Rowan to order an additional same class drillship.

The vessels, measuring 229 meters in length and 36 meters in width, are rated for operations in water 12,000 ft (3,657 m) deep. They are scheduled to be delivered by the second half of 2013.

Winning this order brings Hyundai Heavy's total drillship new orders this year to 9, worth USD 5 billion with options to build three more drillships. This is the most drillships of any shipbuilder in the world.

The drillships will be equipped with a thruster canister, saving time in maintenance and operating costs. A thruster canister is housing for the thruster, which helps keep the ship in position while it is drilling. Ships with a canister do not need to be drydocked for maintenance as the thruster can be lifted onto the ship when work needs to be carried out.

Drillships Hyundai Heavy builds use the drillship-specific Gusto P10000 design making the best use of vessel space for drilling. The design helps stabilize the drillship while operating and uses less fuel by making thrusters operate less. A position controlling system, a computer propulsion system, and seven blowout preventers will also be installed in the drillships to enhance safety.

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Shell CEO Cautious on Rosneft Arctic Talks - Report

- Shell CEO Cautious on Rosneft Arctic Talks - Report

Wednesday, June 01, 2011
Dow Jones Newswires

Shell Chief Executive Peter Voser said talks last week with Russian Deputy Prime Minister Igor Sechin about the possible joint exploration of Russia's Arctic shelf had looked at a "multitude of blocks" but that it was "too early to say where this will go," the Financial Times reports Wednesday.

Last week's meeting between Voser and Sechin, who oversees the oil and gas sector, came two days after Russian Energy Minister Sergei Shmatko said he doesn't expect state-controlled oil giant Rosneft and BP to revive their strategic alliance after it was blocked by BP's existing Russian partners, a group of Soviet-born billionaires known as AAR.

BP and Rosneft announced in January plans for a $16 billion share swap and joint development of three blocks in Russia's Arctic Sea. But AAR, arguing the pact violated the terms of its agreement with BP in their TNK-BP Ltd. joint venture, went to court in the U.K. to block the deal.

After months of talks, discussions broke down earlier this month.

While BP said last week it is still discussing the joint exploration of the Russian Arctic with Rosneft, Shell has expressed renewed interest in that region. However, the idea of a share swap with Rosneft isn't under consideration, the company told Dow Jones Newswires.

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

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Mediterranean O&G Gets Extension Offshore Malta

- Mediterranean O&G Gets Extension Offshore Malta

Wednesday, June 01, 2011
Mediterranean O&G plc

Mediterranean O&G announced the following news on Offshore Malta Area 4 PSC (Blocks 4,5,6,7), the Guendalina Gas Field Development in Italy and the appointment of Panmure Gordon as joint broker.

  • 18 month extension of Malta Area 4 PSC exploration period to January 18, 2013
  • Advanced negotiations to farm out 75% of Malta Area 4
  • Guendalina Gas Field development progressing on schedule - first gas on track for September
  • Appointment of Panmure Gordon Limited as joint broker

Michael Bonte-Friedheim, the Company's CEO, stated, "We are very pleased to have reached an agreement with the Government of Malta to extend the exploration phase for all blocks of Area 4. The additional 18 months will allow us to progress our analysis of the acreage and hopefully identify attractive drilling targets.

We are in advanced discussions with a third party for the farm out of a 75% interest in Area 4 and are hopeful that the seismic survey will identify further prospects in the area and make the drilling of an exploration well attractive.

The Guendalina development is progressing well, the most critical phase having been completed successfully, and on schedule. The development represents one of the key milestones of the Company's business plan that will allow it to significantly increase net gas production and revenues, once this comes on stream.

We look forward to working with Panmure Gordon and, post the recent reorganization and fund-raising, believe it is the right time to strengthen the Company's team of advisers to help take the Company forward."

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Range Completes Acquisition of Trinidad Assets

- Range Completes Acquisition of Trinidad Assets

Wednesday, June 01, 2011
Range Resources Ltd.

Range Resources announced the completion of the acquisition of 100% of SOCA Petroleum which in turn holds 100% of three exploration and production onshore oil and gas licenses, along with 100% of a fully operational drilling subsidiary with five exploration drill rigs, four production drill rigs and associated equipment and operational personnel.

As previously mentioned in an earlier announcement, the completion of the acquisition now immediately triggers the commencement of an aggressive work program that is expected to see a rapid increase in production from the existing reserve base as it moves towards its targeted production rate of 4,000 bopd from existing P1 and P2 reserves (currently production is 650-700 bopd). The program will also target the deeper (and potentially bigger) Herrera formation and untested areas not currently forming part of the current reserve base.

The Company is currently updating the current reserve and valuation report across the Trinidad assets which will also include the Herrera potential which has not been included in previous reports.

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Rockhopper Encouraged by Sea Lion Appraisal Results

- Rockhopper Encouraged by Sea Lion Appraisal Results

Wednesday, June 01, 2011
Rockhopper Exploration plc

Rockhopper Exploration provided the following update on the 14/10-5 appraisal well:
  • Significant reservoir package and hydrocarbon column encountered
  • Wireline log analysis indicates 93.5m (306 feet) net pay in good quality reservoir
  • Average porosity greater than 20%
  • Average permeability of 100-200 millidarcies (mD) and up to 1,000mD
  • 79m net pay in main fan complex
  • 14.5m net pay in lower fan complex
  • No oil water contact observed
  • Rockhopper now intends to test the well

14/10-5 was drilled 600m north of the 14/10-2 discovery well to a total depth of 2,726m (drilled depth) and was the second appraisal well on the Sea Lion feature.

The well was designed to appraise the Sea Lion main fan reservoir and investigate hydrocarbon column and reservoir distribution.

The well has been highly successful, proving a very thick, high quality reservoir package and a substantial oil column. The geological prognosis once again came in very close to prediction.

The Sea Lion reservoir sands were encountered 22m updip from the 14/10-2 discovery well at a depth of 2,378m (drilled depth). A total reservoir package of 110m (360 feet) comprising one main sand and three thinner sands was encountered with a net to gross of 91% in the main sand and 25-80% in the lower sands. The gross oil column in the main Sea Lion fan is now 125m (410 feet). MDT pressures confirm oil gradients throughout all sands.

Wireline logging indicates that reservoir quality is good, with average porosity of greater than 20% and average permeabilities of 100-200mD.

79m (259 feet) of net pay has been encountered in the main fan complex with a net to gross of 91%. 14.5m (47 feet) of pay has been encountered in the lower fan complex with a net to gross of 25-80%. The lower fan was not prognosed to be well developed at this location.

64m (210ft) of conventional core was cut and recovered through the main sand.

The Company now intends to test the well. Tests will comprise both mini DST (downhole dual packer MDT) and a fully engineered drill stem test (DST). The Company intends to perform mini DST tests on both the upper and lower fans and to perform the fully engineered DST on the upper fan only. Testing operations are anticipated to take approximately a month and a further announcement will be issued once all testing operations have been completed.

Following completion of all testing operations, Rockhopper intends to drill a further appraisal well on Sea Lion located some 4.2km to the west of the 14/10-2 discovery well. This well will be located outside the Company's "low case" area and within the Company's "mid case" area for the main fan and is also intended to penetrate the lower fan in what the Company believes will prove a more optimal location.

Sam Moody, Chief Executive, commented, "This is an enormously encouraging result and is a testament to the quality of our technical team. The well test will be another key step on the road towards proving commerciality for the Sea Lion discovery."

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