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Oil and Gas Energy News Update

Monday, June 6, 2011

Oil & Gas Post - All News Report for Monday, June 06, 2011

Monday, June 06, 2011

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Commodity Corner: Oil Settles Lower on Demand Concerns

- Commodity Corner: Oil Settles Lower on Demand Concerns

Monday, June 06, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery ended the day at $99.01 a barrel Monday.

Monday's $1.21 day-on-day decline stems from pessimism about the prospects for crude oil demand, thanks in part to recent unimpressive economic data showing higher unemployment in the U.S. In addition, some analysts expect OPEC to raise its production ceiling when the cartel meets later this week.

Oil peaked at $100.68 and bottomed out at $98.64 Monday.

The futures price for natural gas moved in the opposite direction Monday, gaining 12 cents to settle at $4.83 per thousand cubic feet. Providing some of the momentum for gas was an International Energy Agency (IEA) report that projects a "golden age" for the fossil fuel. According to the IEA, natural gas use worldwide could exceed 2010 levels by more than 50 percent by the year 2035.

In the nearer term, more summerlike temperatures are expected to prevail in the Northeast and Midwest through this week. As a result, demand for cooling—and natural gas—is expected to increase in these key electricity markets.

July natural gas traded within a range from $4.74 to $4.855 Monday.

July gasoline slipped four cents to end the day at $2.95 a gallon. It fluctuated from $2.94 to $3.02.

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Coastal Touts Success at Bua Ban North Appraisal

- Coastal Touts Success at Bua Ban North Appraisal

Monday, June 06, 2011
Coastal Energy Co.

Coastal Energy announced the successful results of the Bua Ban North B-04 appraisal well.

The Bua Ban North B-04 well was drilled to 6,000 feet TVD and encountered 64 feet of net pay in the Miocene objective with average porosity of 27%. The B-04 confirms the discovery made by the B-02 well, which encountered 62 feet of net pay in the Miocene with 26% porosity. The B-04 well is currently being cased and will then be suspended pending the arrival of production equipment. The Company plans to drill a water disposal well before mobilizing the rig to its next planned location.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "We are pleased with the continued success in the Miocene trend at Bua Ban North B. Drilling is expected to be complete by mid-June and the Mobile Offshore Production Unit is scheduled to arrive in late June. A hydraulic unit will be used for completion operations and production testing is anticipated to begin in mid-July.

"The B-04 well further confirmed the Miocene trend at Bua Ban North B and the potential of the Miocene play across the Songkhla basin. Following Bua Ban North B, the rig will be mobilized to the Songkhla H prospect, which is in the middle of the basin between Songkhla A and Bua Ban. An exploration well will be drilled to test the Miocene and deeper zones at this location."

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Linc Expands US Acreage with Tx., La. Acquisitions

- Linc Expands US Acreage with Tx., La. Acquisitions

Monday, June 06, 2011
Linc Energy Ltd.

Linc announced that its wholly-owned subsidiary, Linc Gulf Coast Petroleum Inc., has acquired 14 producing oil fields (consisting of 156 leases covering approximately 13,400 acres) from ERG Resources LLC., for a price of US $236 million. The acquisition secures immediate oil production of approximately 3,300 barrels per day (BOPD), and a significant CO2 enhanced oil recovery (EOR) opportunity.

The 14 oil fields purchased from ERG Resources are located in Texas and Louisiana and are within the Gulf Coast Onshore and Inland Waters Regions and include all related infrastructure such as pipelines, tank batteries and processing facilities. All of the fields are either salt domes or faulted four-way closures related to deep-seated salt movement. Independent reports commissioned by Linc Energy indicate that the fields have the potential to increase recoverable oil by up to 24 million barrels by optimisation of current production and additional drilling operations.

Cumulative production for the 14 fields is estimated to be over 700 million barrels of oil to date with a regional recovery factor of approximately 40%, indicating a significant potential to achieve substantial increases in production from Enhanced Oil Recovery (CO2 flooding).

All of the acquired fields in the asset package are 100% operated by ERG Resources, with ERG Resources also holding 100% of the working interest in the majority of the fields.

A significant factor regarding this acquisition is that ERG Resources has to date only advanced significant development into one area, the Barbers Hill salt dome, achieving some excellent results. There are 6 more salt domes in the asset package that Linc Energy can assess to drill and expand with similar techniques to those that ERG Resources has utilized on the Barbers Hill field.

Texas oil fields

12 of the fields are located along the Texas Gulf Coast and Texas inland waters areas. The majority of the value at this stage is attributed to 5 of the 12 fields, being Barbers Hill, High Island, Port Neches, Atkinson Island and Cedar Point. Linc Energy anticipates additional value being attributed to the remaining assets once further evaluation has been completed.

Louisiana oil fields

Portions of the Leeville Field and the Black Bayou fields are part of the ERG Resources assets in Louisiana. The majority of the immediate opportunity in Louisiana is in the 100% owned and operated Black Bayou field. This field is one area that Linc Energy plans to aggressively drill in the coming 12 to 24 months to build production.

Key terms of the Agreement

The key terms of the Asset Purchase Agreement between Linc Energy and ERG Resources are as follows:
  • The purchase price of the assets is US $236 million (subject to completion adjustments and necessary consents from parties holding a "first right of refusal" over approximately 4,300 acres of the acquired oil fields).
  • The assets purchased consist primarily of oil & gas leases, property interests (including all related infrastructure such as pipelines, tank batteries and processing facilities) and 410 wells upon the Texas and Louisiana oil fields which are held directly by ERG Resources or by three wholly-owned subsidiaries of ERG Resources. Linc Energy will acquire the assets held by ERG Resources and will acquire 100% of the equity interests in the ERG Resources subsidiaries.
  • The total area of these leases is approximately 13,400 acres held across 156 oil & gas leases with 410 wells of which 177 wells are currently producing.
  • Completion of the transaction and operational handover is scheduled for 1 August 2011.

To support this acquisition and future expansion plans in the USA Gulf Coast region, Linc Energy will be opening a new office in Houston, Texas prior to the transaction completion date. At completion, Linc Energy will become the employer of most of the experienced team of professionals (approximately 25 staff), covering both field and office operations, who are currently employed by ERG Resources. These arrangements will ensure continuity of operations on the oil fields immediately on handover.


While Linc Energy can fund this acquisition from cash, the Company has mandated RBS (The Royal Bank of Scotland) to complete the financing to support both the ERG Resources asset acquisition and the first year of capital expenditure upon the ERG Resources (Gulf Coast) and the Rancher (Wyoming) assets to support Linc Energy's development plans. This debt financing will have minimal recourse to Linc Energy and the financing process is well underway. Under the current financing proposal, Linc Energy will provide approximately 25% of the capital.

Peter Bond, Chief Executive Officer of Linc Energy, said, "This acquisition is the next big necessary step that Linc Energy has taken to meet its two key business targets over the coming 12 to 18 months. The first of these targets is to achieve in excess of 20,000 barrels per day of oil production by the end of 2012, with at least 10,000 barrels of production by the end of 2011. The second key target for the Company, supported directly by achieving this first target, is to develop very profitable, solid cash flows from operations."

"Linc Energy has a number of excellent assets and will continue to acquire more. These assets will be systematically developed over the coming years, but to support the Company's long-term strategic plans, Linc Energy needs to focus on developing strong operational revenues that can support our growth. The reality is, Linc Energy can gain a permit to drill an oil well in days or at most a few weeks; we can then drill those oil wells similarly within weeks, meaning the time difference from project commitment to cash flow can literally be a few months. If I dare compare that timetable with the years of effort it takes to gain a permit on a coal mine or a GTL facility, you get the picture pretty quickly why it's necessary for the Company to be dynamic in its approach and to focus upon our immediate entrepreneurial targets and produce strong cash flows."

"Linc Energy's strategic plans have resulted in the Company gradually re-focusing its energies over the past several months, shifting its long term focus into three distinct areas covering our short, medium and long term goals. We are building the Company on 3 distinct fronts in Oil & Gas, Coal & Clean Coal and Clean Fuel & Clean Energy. On the Oil & Gas front, we are pursuing oil production assets that yield immediate revenue and profits. We are targeting assets that have the potential to increase production initially with aggressive drilling and workover campaigns, whilst also providing excellent long term opportunity to multiply our returns with Enhanced Oil Recovery from CO2 flooding that in some cases can last 10 to 20 years. This philosophy positions Linc Energy to obtain solid cash returns in the short term and yet keep those assets profitable and growing for many years to come."

"This ERG Resources asset package is a great example of what I'm saying. First, we already have good daily oil production of approximately 3,300 barrels per day, which is currently cash flow positive. Secondly there is a clear drilling and workover plan in place which is anticipated to effectively double this production to over 6,300 barrels per day in the next 12 to 18 months, improving cash flows and increasing the value of the assets."

"Finally, Linc Energy expects to use about 75% debt funding to purchase the ERG Resources assets. I've always run Linc Energy as a low to no debt company. However, my philosophy with ERG Resources and assets like them is that you borrow on cash flow positive assets that have the capability to comfortably pay their own debt down, minimizing the risk, whilst leveraging the upside opportunity. Simply put, because Linc Energy is buying cash flow positive oil production assets which we believe can easily cover their respective debt arrangements; and because we expect to increase oil production in the short-term from these oil assets, we can lower real cost and risk of funding. Combine all of this with the strong Australian dollar and suddenly it makes perfect sense to debt fund these assets."

"Personally, I strongly believe that Linc Energy can grow to greater than 100,000 barrels of oil per day production within the next 5 years, and I'm pleased to say this ERG Resources acquisition is the first BIG step towards that very goal, whilst also ticking another Linc Energy milestone. As always I look forward to updating you on the journey ahead. There will be a lot to keep up with, because there is now a lot of traction in the business," Mr Bond said.

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Carrizo Adds Eagle Ford Acreage

- Carrizo Adds Eagle Ford Acreage

Monday, June 06, 2011
Carrizo O&G Inc.

Carrizo O&G provided the following update on selected Company operations.

Expansion of Eagle Ford Shale Acreage Position and Acceleration of Drilling Schedule

Carrizo has recently entered into firm agreements to acquire over 13,000 net acres of Eagle Ford Shale mineral interests, bringing its total net Eagle Ford land position to approximately 33,000 acres. These newly acquired acres are located in the condensate trend in La Salle County, Texas. The up-front cash cost associated with these acquisitions is approximately $1,650 per acre. The remainder of the lease acquisition costs will be in the form of a drilling carry that will fund certain of our partners' share of development costs, where applicable, in the acreage and will be dependent on the timing and density of development drilling on the properties.

In order to further accelerate our Eagle Ford Shale activity, our remaining Barnett Shale rig (H&P 332) has been relocated to South Texas and is now on location drilling the Ivey Ranch 10H in Dimmit County. Current plans call for this rig to remain in the Eagle Ford until it is replaced by a new purpose-built rig currently scheduled for arrival in December 2011, at which time the H&P #332 rig will return to its drilling schedule in the Barnett. Given the current backlog of wells waiting on completion in the Barnett Shale, the Company believes this rig move should have no impact on estimated 2011 Barnett production.

The Company's newest rig, a purpose-built H&P Flex 3S, just arrived in the Eagle Ford and is drilling on our recently acquired RPG project in northwestern McMullen County. The Company currently has three rigs drilling on its Eagle Ford properties. Although we expect the number of Eagle Ford wells drilled during 2011 to increase above projections due to this rig relocation, uncertainty associated with the timing of well completions and initiation of oil sales precludes the Company from increasing its previous guidance for 2011 oil production until a frac schedule is finalized. The three wells waiting on completion located on the Mumme lease in LaSalle County are scheduled for fracture stimulation later this month as previously announced.

  • In the Niobrara Formation in Weld and Morgan Counties, Colorado
    • Carrizo's fourth Niobrara well, the Orlando Hill 26-44-8-61, recently reached total depth and is being prepared for completion, currently scheduled to begin by the end of June
    • The Niobrara rig is being moved to its next location to drill the Nelson 17-44-9-60
    • The Company intends to maintain a one rig Niobrara drilling program for the remainder of the year
  • In the Marcellus Shale in northeast Pennsylvania
    • Carrizo now has 8 gross wells drilled waiting on completion in Susquehanna and Wyoming Counties
    • Stimulation and completion of the back-log of drilled wells is scheduled to begin in July
    • First gas sales from Susquehanna County are expected to begin in August following completion of the Laser Pipeline
  • The Huntington Development Project in the North Sea
    • The ENSCO jack-up is on location over the Huntington Field and has completed setting surface casing for all planned production wells
    • The Project's pace of development, including work on the FPSO, the Sevan Voyager, continues to be on schedule to allow for first oil production by the end of the first quarter of 2012
  • Current Production and Second Quarter 2011 Realized Hedging Gains
    • The recent connection of a seven well pad in the Barnett Shale helped elevate the current total Company production rate to approximately 133,000 mcfe/day
    • The oil component of the daily rate is approximately 1,700 bbls/d
    • Net realized oil and gas hedging gains for the second quarter of 2011 are expected to be in the range of $3.5 to $3.7 million

Management Comment

Carrizo's President and CEO, S. P. "Chip" Johnson, IV, commented on recent developments, "Nearly simultaneous with the close of the sale of our non-core Barnett Shale properties on April 17th for approximately $104 million, we were able to reach final agreements for several Eagle Ford Shale lease purchases. Our ability to reinvest much of the capital raised so quickly in such a high return area bodes well for our future cash flow growth. We were able to defer much of the cost for the new Eagle Ford land so that additional payments in the form of drilling carries better coincide with future cash flows. We expect that the final lease purchase price for these acres will fall below $5,500 per acre on a present value basis. We need more clarity as to our probable frac schedule for the additional Eagle Ford wells we will be drilling before we update production guidance, but we believe we may be able to do this by the time of our second quarter conference call."

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Black Elk Finalizes PSA in GOM

- Black Elk Finalizes PSA in GOM

Monday, June 06, 2011
Black Elk Energy Offshore Operations, LLC

Black Elk has closed on its Purchase & Sale Agreement with a private equity company to acquire 40 fields with current production of approximately 8,200 net BOEPD. This acquisition includes a geographically diversified set of Gulf of Mexico assets with significant proved non-producing and proved undeveloped opportunities. This transaction represents the eighth acquisition by Black Elk since 2008. The purchase includes 399 wells, with an estimated 20 net million barrel equivalent of proven reserves.

"This acquisition shifts Black Elk Energy into the next level within the oil and gas industry. Black Elk has once again doubled in size within a very short time frame and this acquisition moves us into the top Quartile of Private E & P producers within the United States," said John Hoffman, President and CEO of Black Elk Energy. "Though I see continued growth for our company, our level of commitment to safety and the environment will not change as our portfolio expands. We will continue to apply our experienced exploitation skills to our enhanced asset base while fully-employing our operating expertise. This acquisition is a step forward in Black Elk's focus within the Gulf of Mexico and is consistent with our pledge to deliver resources to satisfy America's growing energy needs." Future drilling and recompletion projects within these new fields and current properties within Black Elk's asset portfolio hold substantial resource potential for the company and highlight a very positive road ahead.

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FMC Technologies Lands Subsea Contract for Statoil's Visund Nord Field

- FMC Technologies Lands Subsea Contract for Statoil's Visund Nord Field

Monday, June 06, 2011
FMC Technologies Inc.

FMC Technologies has signed an agreement with Statoil for the manufacture and supply of subsea production equipment to support the Visund Nord offshore development. The contract has a value of approximately $50 million in revenue to FMC Technologies.

Visund Nord is a fast-track oil and gas field located in water depths of approximately 1,150 feet (380 meters) in the Norwegian sector of the North Sea. FMC's scope of supply includes the manufacture of two subsea production trees, one manifold and associated subsea and topside control systems. The equipment will be based on a standard subsea solution designed by FMC for Statoil. The integrated structure and wellhead systems will be delivered in the spring of 2012 and final deliveries will occur in the first quarter of 2013.

"Visund Nord is the fifth fast-track project we have been awarded from Statoil in the last two years," said Tore Halvorsen, FMC's Senior Vice President of Global Subsea Production Systems. "We are pleased that Statoil continues to recognize our strengths and capabilities in supporting their tie-back and fast-track developments."

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Northern O&G Updates Operations

- Northern O&G Updates Operations

Monday, June 06, 2011
Northern O&G Inc.

Northern O&G announced recent completion results and current drilling activity.

Northern Oil participated in the Mustang #1-22H, a successful Bakken test well operated by Slawson Exploration in Mountrail County, North Dakota. Northern Oil controls a 39.56% working interest in the well, which had an initial production rate of 1,829 barrels of oil per day ("BOPD"). Northern Oil's BOPD rates do not take into account flared natural gas production. The well had an initial tubing pressure of 1,900 psi on an 8/64th choke.

In an important extensional discovery into eastern Montana, Northern Oil participated in the Tveit 25-36 #1H, a successful Bakken test well operated by URSA Resources in Richland County, Montana. Northern Oil controls a 39.54% working interest in the well, which had an initial production rate of 501 BOPD.

Northern Oil recently participated in the Alamo #2-19-18H, a successful Bakken test well operated by Slawson Exploration in Mountrail County, North Dakota. Northern Oil controls a 29.98% working interest in the well, which had an initial production rate of 1,286 BOPD. The well had an initial tubing pressure of 2,500 psi on a 13/64th choke.

To the south, Northern Oil participated in the Porcupine #1-19H, a successful Bakken test well operated by Sinclair Oil and Gas in Dunn County, North Dakota. Northern Oil controls a 29.02% working interest in the well, which had an initial production rate of 1,566 BOPD. The well had an initial tubing pressure of 3,800 psi on a 26/64th choke. Directly offsetting the Porcupine well, Northern Oil is currently awaiting completion on the Sinclair operated Bighorn #1-6H (48.79% working interest (WI)) and the Sinclair operated Crosby Creek #1-5H (29.63% WI) wells. These wells are expected to be fracture stimulated in early June.

In an important discovery drilled in the upper Bakken shale on the edge of the Elm Coulee field in Richland County, Montana, Northern Oil participated in the Rascal #1-18H, a successful upper Bakken shale test well operated by Slawson Exploration. Northern Oil controls a 20.00% working interest in the well, which had an initial production rate of 707 BOPD. The well had an initial tubing pressure of 1,600 psi on a 12/64th choke. This well represents the third successful upper shale test by Slawson Exploration in Richland County, Montana. Slawson and Northern refer to this exploration program as the Big Sky/Lambert prospect.

In an additional Three Forks delineating well, Northern Oil recently participated in the Goodson #1-28H, a successful Three Forks test well operated by Continental Resources in Divide County, North Dakota. Northern Oil controls an 18.75% working interest in the well, which had an initial production rate of 690 BOPD. The well had an initial tubing pressure of 1,350 psi, of which the choke was not available. Importantly, this well continues to define the expanding productive area of the Three Forks formation.

Northern Oil also participated in the Hunter #1-8-17H, a successful Bakken test well operated by Slawson Exploration in Mountrail County, North Dakota. Northern Oil controls an 11.74% working interest in the well, which had an initial production rate of 1,668 BOPD. The well had an initial tubing pressure of 2,200 psi on a 13/64th choke.

Michael Reger, Chief Executive Officer, commented, "We believe 2011 will be another record breaking year of production growth as we continue to execute our business plan by turning high quality acreage into production and cash flow. The wells detailed above represent the expansion of the delineated area of high-quality Three Forks production, the extension of the field into Montana and the continued success of Slawson's drilling program in southern Mountrail County. We continue to execute our strategy of acquiring high quality, non-operated acreage and turning it efficiently to production and cash flow. The story and asset base of Northern Oil are narrowly-defined and Northern Oil's business continues to trend upward. We believe 2011 will be a year of phenomenal growth for Northern Oil and for the Bakken and Three Forks play in the Williston Basin. Northern Oil retains significant excess liquidity and financial flexibility which provide the tools to execute its strategy. With our significant inventory of wells drilling or completing, we continue to add meaningful production and cash flow."

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W&T Offshore Prices Senior Notes

- W&T Offshore Prices Senior Notes

Monday, June 06, 2011
W&T Offshore Inc.

W&T Offshore has priced at par its private offering of $600 million aggregate principal amount of 8.5% senior notes due 2019 (the "Senior Notes"). The offering is expected to close on June 10, 2011, subject to customary closing conditions.

W&T Offshore intends to use the net proceeds from the Senior Notes offering to fund the purchase price of its cash tender offer (the "Tender Offer") for any and all 8.25% senior notes due 2014 (the "2014 Notes"). To the extent less than all of the outstanding 2014 Notes are tendered or the Tender Offer is not consummated, W&T Offshore will use the net proceeds from the Senior Notes offering to redeem or repurchase any or all of the 2014 Notes remaining outstanding. The remaining net proceeds will be used to repay outstanding indebtedness incurred under its revolving bank credit facility that was used to fund a portion of its recent acquisition in the West Texas Permian Basin.

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

This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

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CAMAC Appoints New CFO, Senior VP of E&P

- CAMAC Appoints New CFO, Senior VP of E&P

Monday, June 06, 2011
CAMAC Energy Inc.

CAMAC announced the appointment of Edward G. Caminos as Senior Vice President and Chief Financial Officer of the Company, effective as of July 1, 2011, and the appointment of Alan W. Halsey as Senior Vice President, Exploration and Production, of the Company, effective as of June 6, 2011.

Mr. Caminos, 48, has been Chief Financial Officer of BPZ Resources since May 2007. From October 2006 until May 2007, Mr. Caminos served as BPZ's Vice President - Finance and Chief Accounting Officer. Mr. Caminos served as BPZ's interim Chief Financial Officer from June 2006 until October 2006 and as Corporate Controller of BPZ from January 2005 until October 2006. During the 15 years prior to joining BPZ, Mr. Caminos gained valuable experience in the energy sector through various managerial level roles including, Director—Financial Reporting for the Americas Division at Duke Energy, Financial Reporting Manager and, prior to its sale, as interim Controller for Reliant Energy Europe Divisions, and Regional Controller – Latin America for the seismic division of Schlumberger. Mr. Caminos began his career with the international accounting firm KPMG Peat Marwick Main.

Mr. Caminos is a Certified Public Accountant and graduated from Bloomsburg University of Pennsylvania, with a Bachelor's degree in Business Administration — Accounting, in 1984.

Mr. Halsey, 61, joined the Company as its Senior Vice President, Exploration & Production, on June 6, 2011. Prior to joining the Company, he managed his private investment interests after leaving Transmeridian Exploration in 2008, where he had served as Vice President and Chief Operating Officer for this company that had producing assets in Kazakhstan and other exploration interests in the former Soviet Union. He joined Transmeridian in 2006 following a short hiatus after taking early retirement from Texaco Inc. in 2002, where he had served for almost 21 years in positions of increasing responsibility that included Chief Petroleum Engineer for Texaco's Latin America/West Africa group in Miami and, most recently, Chairman and Managing Director of the Texaco Upstream Companies in Nigeria. Prior to that time he served as President of Texaco's affiliate in Colombia, South America and as General Manager of Texaco's Angola oil and gas operations. Mr. Halsey graduated from Imperial College of Science and Technology, University of London with a degree in Oil Technology in 1971 and subsequently worked in Latin America, USA and the North Sea before joining Texaco in 1981.

Dr. Kase Lukman Lawal, Chief Executive Officer, Chairman and Director of CAMAC, commented, "We are extremely pleased to welcome both Ed and Alan to their new roles with CAMAC. Their many years of collective experience and leadership in the oil and gas industry will be of great benefit to the new vision for growth of CAMAC."

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Keppel On Track to Deliver P-56 FPU to Petrobras

- Keppel On Track to Deliver P-56 FPU to Petrobras

Monday, June 06, 2011
Keppel Corp. Ltd.

The consortium of Keppel Offshore & Marine Ltd (Keppel O&M) and Technip Engenharia S/A is on track to deliver the P-56 Floating Production Unit (FPU) to Petrobras Netherlands BV (PNBV), safely, on time and within budget.

The first FPU completely built in Brazil, P-56 achieved 9 million man-hours without lost time incidents. With a displacement of 50,000 tonnes, this massive FPU, one of the world's largest, measures 110 meters in length and width, and 125 meters in height.

Brazilian President HE Dilma Rouseff witnessed the christening of P-56 by congresswoman Luiza Erundina at Keppel FELS Brasil's BrasFELS shipyard in Angra dos Reis. Also present were the Governor of Rio de Janeiro, Mr Sergio Cabral, Petrobras' President Mr Jose Sergio Gabrielli, Keppel's management and over 8,000
Brazilian shipyard workers.

Mr Choo Chiau Beng, Chairman of Keppel O&M and non-resident Ambassador of Singapore to Brazil said, "P-56 is a shining example of the technology expertise and execution capabilities built up by BrasFELS and Brazil's offshore and marine industry. This achievement has been built up incrementally through previous projects such as the P-52 and P-51 FPUs. Today, we have turned vision into reality in establishing Brazil as a center for world class shipbuilding, with the first 100% Brazilian-built rig.

"We are proud to be able to support Brazil and Petrobras as they grow their fleet of highly capable production units. Through our near market, near customer strategy, Keppel remains committed to Brazil and her comprehensive oil and gas development program to increase output from Brazilian oil fields with significant local content."

When completed, P-56 will be capable of processing and treating 170,000 barrels of liquids and 100,000 barrels of 16º API oil, 6 million cubic meters of natural gas, and of injecting some 280,000 barrels of water in the reservoir. P-56 will be positioned at depths of 1,670 meters off the Marlim Sul field in the Campos basin.

P-56 is another significant milestone in a series of firsts achieved by Keppel in Brazil since its BrasFELS yard was established in 2000. Notably, BrasFELS carried out the first ever in-country FPSO conversion of P-48 and delivered the P-52, the first project for which Petrobras imposed a minimum 60% local content requirement.

This was followed by the delivery of P-51 in 2008 and the Floating Production Storage and Offloading vessel (FPSO), P-57, in October 2010. P-51, P-52 and P-57 were done in collaboration with Keppel's yards in Singapore and the synergy enabled significant technological and knowledge transfers to Brazil.

Mr. Choo added, "We have a longstanding partnership with Brazil having delivered 19 major projects since 1994 for the country, five of which were completed in BrasFELS. Over the years, we have been equipping BrasFELS and training our workers to take on more sophisticated jobs. We are committed to continue deepening our roots here and be the choice provider of solutions to the Brazilian market.

"One of the most comprehensive offshore and marine facility in Latin America, BrasFELS has an established track record that Petrobras and our customers can rely on to provide local content and support Brazil's requirements as a net oil exporter."

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Petrobras Board Approves Rig Construction Program

- Petrobras Board Approves Rig Construction Program

Monday, June 06, 2011
Rigzone Staff

Petrobras' Board of Directors has approved the bidding process for the construction of up to twenty-one drilling rigs to be built in Brazil. Drilling contractors that are awarded a contract to build a rig will also be awarded a contract with Petrobras for the chartering of the unit. Each participating company can bid to build as few as one rig or as many as twenty-one rigs. The drilling units must be built using local content as certified by the ANP.

This tender is part of Petrobras' overall strategy to hire up to twenty-eight new rigs to be built in Brazil for deepwater exploration primarily in pre-salt fields.

Earlier this year, Petrobras awarded a rig construction package to Sete Brasil for the construction of seven deepwater drillships. These rigs will be built by Estaleiro Atlantico Sul, a consortium made up of Samsung Heavy Industries, Queiroz Galvao and Camargo Correa.

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Banda Results Poor But Still Encouraging

- Banda Results Poor But Still Encouraging

Monday, June 06, 2011
Kosmos Energy Ltd.
by SubseaIQ

Kosmos announced that the company's Banda-1 exploration well has discovered oil offshore the Republic of Ghana on the West Cape Three Points Block. The results of drilling, wireline logs and reservoir fluid samples show the Banda-1 well penetrated net oil-bearing pay of 3 meters (10 feet). Oil samples recovered from the Cenomanian-age reservoir indicate oil of approximately 40 degrees API gravity.

The Banda-1 discovery opens a new play fairway not previously encountered on the West Cape Three Points Block or adjacent Deepwater Tano Block. The Paradise-1 exploration well, recently drilled by Hess, successfully penetrated a hydrocarbon-bearing, equivalent-age reservoir. The Paradise-1 well is located 32 kilometers (km) (20 miles) southwest of the Banda-1 well location. The Banda-1 well also was designed to test the Upper Campanian interval, which was water bearing. Additional technical evaluation will be required to analyze the impact and extent of this new play discovery, which is deeper than existing Campanian and Turonian discoveries on Kosmos' Ghana blocks.

The Atwood Hunter semi-submersible rig drilled the Banda-1 well in a water depth of 921 meters (3,021 feet) to a total depth of 4,580 meters (15,022 feet) in the eastern portion of the West Cape Three Points Block. The well is located 28 km (17 miles) east of Kosmos' Mahogany-1 exploration well that discovered the Jubilee oil field in 2007.

Tullow's Exploration Director Angus McCoss commented, "The Jobi-East-1 and Mpyo-3 well results mark an excellent start to this next phase of our exploration and appraisal campaign in the Lake Albert Rift Basin. We look forward to many more exciting wells as we endeavor to determine the total oil resource base which will underpin the basin-wide development preparations currently in progress."
West Cape Three Points Block Ownership Interest

Kosmos Energy is the operator of the West Cape Three Points Block in which the company holds a 30.875% interest. An affiliate of Anadarko Petroleum Corporation has a 30.875% interest; an affiliate of Tullow Oil plc has a 22.896% interest; E.O. Group Limited has a 3.5% interest; Sabre Oil & Gas Holdings Limited has a 1.854% interest; and Ghana National Petroleum Corporation has a 10% carried interest.

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Hamworthy Wins Goliat FPSO Order

- Hamworthy Wins Goliat FPSO Order

Monday, June 06, 2011
Hamworthy plc
by SubseaIQ

Hamworthy has won a major contract from Hyundai Heavy Industries (HHI) to supply a complete inert gas generator system, as part of the shipbuilder's latest Floating Production Storage and Offloading (FPSO) newbuild contract.

The contract calls for delivery of a fully assembled inert gas system (IGS) to the Goliat FPSO, to be located in the Barents Sea.

HHI has an engineering, procurement and construction contract with ENI Norge, operator of the Goliat field, with an ownership share of 65%. Statoil holds the remaining 35%.

The IGS plant is being manufactured and tested at Hamworthy's site in Moss and will be delivered early in 2012. It will be fitted inside a tailor-made enclosure, ensuring that the system is protected from the harsh Barents Sea environment.

"This contract award follows previous successful deliveries to HHI and we are proud to once again be selected as the supplier for such a technically advanced project," said Odd Ivar Lindløv, Hamworthy Moss, Offshore Business Unit Director.

The Goliat order follows Hamworthy's supply of the inert gas system for the FPSOs Usan and Akpo, to be deployed offshore Nigeria, which were also constructed by HHI. These vessels are two of four, two million barrel storage capacity FPSOs under construction for Total to which Hamworthy is contributing complete inert gas systems.

The Goliat FPSO will have a production capacity of around 110,000 barrels of oil per day, gas processing capacity of almost 4 million m3 per day and an oil storage capacity of one million barrels of oil. It has been designed according to the strict environmental requirements demanded by operations in the Barents Sea, to minimise emissions and ensure no discharges during normal operations.

Mr. Lindløv said the latest contract followed a pattern set by recent orders, drawing on Hamworthy's extensive experience in supplying environmentally friendly, safe and efficient solutions to the offshore exploration and production sector. "As well as FPSOs, these solutions benefit other vessels engaged in every stage of oil field development, from exploration and construction through to production and maintenance, including: seismic vessels, drillships, semi-submersible rigs/jack-up rigs, gas carriers and shuttle tankers."

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Lukoil to Raise Funds for Uzbek Proj.

- Lukoil to Raise Funds for Uzbek Proj.

Monday, June 06, 2011
OAO Lukoil Holdings

Lukoil intends to raise USD 500 million to finance on a limited recourse basis the development of Khausak-Shady-Kandym project in Uzbekistan.

The lenders consortium is expected to include international financial organizations, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) and commercial banks: BNP Paribas (Suisse) SA, Korea Development Bank, Crédit Agricole CIB and UniCredit Group. The commercial part of the facility structure is expected to include risk insurance to be provided by ADB and the Multilateral Investment Guarantee Agency (MIGA).

The banks are now seeking internal approval for the transaction. However, the transaction is still subject to the government approval from the Republic of Uzbekistan. It is expected that financing will be closed in 3Q 2011.

The loan proceeds will be used to finance the investment program of the Kandym field development and production enhancement at the Khauzak-Shady field.

The agreement on the Khauzak-Shady-Kandym project was signed on June 16, 2004. The Khauzak gas field was commissioned in November, 2007 as per schedule. LUKOIL's share of proved reserves is 569 million BOE. The projected production rate is 12 billion cubic meters of gas per year.

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STEP Offshore to Deliver CRI System to Maersk Jackup

- STEP Offshore to Deliver CRI System to Maersk Jackup

Aker Solutions' wholly-owned subsidiary STEP Offshore has won a contract to deliver an integrated cuttings re-injection (CRI) system to Maersk Drilling's jackup rig Maersk Reacher.

Aker Solutions and STEP Offshore will supply a complete system for slurrification and re-injection of drill cuttings. The state-of-the-art system enables next generation HSE performance and drilling efficiency. The scope of supply includes process equipment, control system, installation supervision, commissioning, offshore start-up assistance and training.

"We are very proud to be awarded this contract by Maersk Drilling and look forward to working with them on this project," said Pål Eriksen, President of STEP Offshore. "We believe STEP Offshore won this important contract due to our ability to meet Maersk Drillings tight time schedule and our superior technical solutions."

The CRI Unit will be delivered in 2Q 2011. The value of the contract is NOK 25 million.

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Oil Industry, Environmentalists Pleased With New Bill

- Oil Industry, Environmentalists Pleased With New Bill

Monday, June 06, 2011
Odessa American, Texas
by Gabriella Lopez

Drilling is a way of life in West Texas, but not everyone knows exactly what chemicals go into the ground during the process.

Frac fluid, a combination of sand, water and various chemicals, opens up the oil and natural gas molecules locked in the micro pores of rocks, Ben Shepperd, president of the Permian Basin Petroleum Association said.

The Texas Legislature passed the country's first hydraulic fracking fluid disclosure bill last week, requiring oil and gas companies to publicly list the specific chemicals used in drilling.

"We're in favor of it, actually," Shepperd said, explaining the importance of providing the public with that information.

The bill still needs to be signed by Gov. Rick Perry and will be published in the Texas register for public comment.

After that, the Railroad Commission will vote to adopt the rules for implementation, although the length of the rule making process isn't definite, Railroad Commission of Texas spokeswoman Ramona Nye said.

"The timeline can vary," Nye said.

While some companies have concerns about revealing trade secrets through disclosure, others have already been disclosing information about the chemicals they use.

"Haliburton discloses the ingredients used in its fracturing operations," Haliburton representative Teresa Wong said in an email. "In fact, Haliburton goes a step further than the law requires by disclosing the constituents and additives used in typical fracturing formulas in its website."

And trade secrets would not be disclosed under the new bill, Texas Oil and Gas Association representative Deb Hastings said.

The chemicals would be posted on Frac Focus, the same website hazardous or carcinogenic chemicals are now voluntarily disclosed, Hastings said.

However, since non-hazardous and non-carcinogenic chemicals will also be disclosed due to the new bill, the Railroad Commission will need to create a system for listing these additional chemicals online, Hastings said.

Already some companies decide to list them with the other chemicals on Frac Focus, but the Railroad Commission may create a new spreadsheet for this additional group of chemicals, Hastings said.

The goal is to have all of the chemicals listed in one place, but the exact method is still being discussed, Hastings said.

While some environmental groups wish the bill were stricter, they still see it as a positive step.

"It still represents a major shift," Matt Watson of the Environmental Defense Fund said.

Sometimes during drilling chemicals can accidentally leak into the ground, Watson said.

And the main concern is that those chemicals could contaminate groundwater, Watson said.

Understanding the ramifications of contamination is difficult when the exact chemicals are unknown, Watson said.

Also, without knowing the exact chemicals involved it would be difficult to tell whether any plant life could be affected by leaks into the ground, Watson said.

When asked whether leaking chemicals were common, Shepperd said it was rare and usually came from a bad cement job or a casing leak.

"It has happened in the past," Shepperd said, adding that to his knowledge no actual fracking fluid had gotten into the drinking water.

But he didn't see plant-life contamination through the ground as an issue.

"(The chemicals) are rarely spilled on the ground," Shepperd said.

Most frac fluid is removed after drilling is completed, Shepperd explained, and he said drilling companies keep layers of cement and tubing between the drill site and fresh water.

The Texas Railroad Commission is required by law to begin the rule-making process by Sept. 1, but Hastings said she expected it to begin before then.

And after the rules to enact the potential law are created, it will become mandatory for oil and gas companies to provide a public listing of the chemicals, Hastings said.

"Texas will be better off for the bill having passed," Watson said.

Copyright (c) 2011, Odessa American, Texas

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Police Arrest Greenpeace Activists at Oil Rig Off Greenland

- Police Arrest Greenpeace Activists at Oil Rig Off Greenland

Monday, June 06, 2011
Knight Ridder/Tribune Business News
by Lennart Simonsson, dpa, Berlin

Greenland police on Saturday arrested 18 members of Greenpeace, hours after the activists boarded an exploration oil rig off western Greenland.

It was the second protest in a week staged against test drilling in environmentally sensitive Arctic waters.

All 18 activists were to be taken to Greenland's capital, Nuuk, "for further processing," Greenland deputy police chief Morten Nielsen told the German Press Agency dpa.

Preliminary investigations suggested activists were nationals of Britain, the Netherlands, Finland, Spain and Italy, he said.

Greenpeace said the protest aimed at getting rig operator, Scotland-based Cairn Energy, to present contingency plans in case of an oil spill.

Two activists on Sunday breached an exclusion zone around the Leiv Eiriksson rig, and secured themselves in a survival capsule on the rig.

The two arrested early Thursday face charges of trespassing and violating a safety zone around the rig. A decision to expel them from Greenland has been appealed, Nielsen said.

Test drilling began Friday off Greenland's west coast. The rig was located some 240 kilometers from the coast, and Greenpeace vessels were positioned in Greenland's economic zone where the police has no jurisdiction, he said.

Authorities in Greenland have earlier criticized the Greenpeace action, saying Greenland, which in 2009 gained more autonomy from Denmark, had a right to exploit its natural resources for the benefit of its population,

The drilling was conducted under strict environmental and safety requirements, the Greenland authorities said.

Several energy groups hope to be able to tap in to gas and oil finds believed to be off Greenland.

Copyright (c) 2011, dpa, Berlin

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American Petro-Hunter: Production Testing Underway at N. Oklahoma Proj.

- American Petro-Hunter: Production Testing Underway at N. Oklahoma Proj.

Monday, June 06, 2011
American Petro-Hunter Inc.

American Petro-Hunter reported that the recently completed NOS122 well is undergoing production testing and appears to be a strong producer and is outperforming expectations to date.

The NOS122 well is located at the Company's North Oklahoma Project. The production test and evaluation phase has been ongoing over the past few weeks with high gravity light oil produced to the storage tank from a 6 foot pay zone. The oil cut has been steadily over 90% with some associated gas. The well has been producing oil at rates in a broad range generally between 50 and 70 barrels per day.

Although a stable daily production rate hasn't yet been established, the Company has been informed by the operator that the pay zone would benefit from a light fracture stimulation which would in all likelihood allow a significant increase in daily rates. The partners are now preparing a simple fracking plan that will be implemented in the upcoming days.

The establishment of a full tank battery and ancillary production facilities is in the final stages of construction on the lease. Currently, oil in the onsite storage tank is being prepared for sale to the local purchaser and inaugural sales are expected shortly. As reported earlier, the partners have identified a minimum of 3 additional offsets to the NOS122 for future development.

Company President Robert McIntosh stated, "We are very pleased at the early test results at NOS122 and to be producing oil at levels that have exceeded our expectations. The plan to stimulate the reservoir and bring on even more oil, as well as our intent to drill additional wells very shortly, is rapidly moving this leasehold into becoming a key component of our growing production portfolio."

American Petro-Hunter has a 50% working interest in the NOS122 and oil is sold to Sunoco, the regional purchaser.

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Constellation Energy Terminates Agreement to Sell Quail Run Plant in West Texas

- Constellation Energy Terminates Agreement to Sell Quail Run Plant in West Texas

Jun 6, 2011

Constellation Energy Group (CEG) today announced it has terminated an agreement to sell the 550-megawatt Quail Run natural gas plant in West Texas to High Plains Diversified Energy. The agreement was first announced in December.

With the termination of the sale agreement, CEG will retain ownership of the plant, which provides power to the west zone of the Electricity Reliability Council of Texas (ERCOT). Quail Run will provide energy to support customers in West Texas, including those served by StarTex Power, a Houston retail electricity provider recently acquired by the company.

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Cenovus Boosts Output Target for Next Decade

- Cenovus Boosts Output Target for Next Decade

Monday, June 06, 2011
Cenovus Energy Inc.

Cenovus is advancing development of its vast oil assets and bringing forward the value of its resource for shareholders. The company has approved a 2011 strategic plan that builds upon its original strategy created in 2010 and establishes new timelines and significant oil production increases for the next decade.

The plan targets:
  • total oil production of about 500,000 barrels per day (bbls/d) net by the end of 2021
  • oil sands production of more than 400,000 bbls/d net by the end of 2021, about six times greater than current oil sands production
  • conventional oil production of 120,000 bbls/d to 130,000 bbls/d by the end of 2016, nearly double current production of about 70,000 bbls/d
  • a new oil sands project phase expected on stream every 12 to 18 months
  • an increase in total production capacity at Foster Creek to between 270,000 and 290,000 bbls/d gross, through increased production capacity at phases F, G and H and future phases
  • drilling about 450 stratigraphic (strat) wells per year for the next five years to prepare for the development of oil sands opportunities
  • doubling of net asset value in the 2010 to 2015 time-frame

"Based on the strong performance delivered by our teams over the past year, we believe we can bring on substantially more oil production earlier than initially planned," said Brian Ferguson, President & Chief Executive Officer of Cenovus. "We plan to expand current conventional oil and oil sands opportunities and bring on new projects. Our industry-leading oil sands capital efficiencies and low operating costs will help us achieve even greater total shareholder return."

The company expects to be producing 500,000 bbls/d net oil production by the end of 2021; with more than 400,000 bbls/d from its oil sands operations. Foster Creek and Christina Lake are expected to contribute about two-thirds of that oil sands production. The company now expects to reach approximately 350,000 bbls/d of oil sands production by the end of 2019, compared with the 300,000 bbls/d milestone it had set in its 2010 strategic plan. To achieve its production growth, Cenovus is working to have 400,000 bbls/d to 500,000 bbls/d net of oil sands projects approved by regulators by 2015.

The strong resource base at Foster Creek has prompted the company to increase expected total gross production capacity to between 270,000 bbls/d and 290,000 bbls/d, from the previous expectation of 235,000 bbls/d gross. Foster Creek phases F, G and H are now each planned to have production capacity of 35,000 bbls/d, which is 5,000 bbls/d more than initially anticipated at each phase. Cenovus is also moving up the anticipated timelines for first production from phases G and H as well as future phases. Steaming at Christina Lake phase C is underway, about six weeks ahead of schedule. Construction of phase D is more than half complete and is three to six months ahead of schedule. Cenovus is assessing whether it will be able to increase the production capacity of future phases at Christina Lake and accelerate the timing of those projects. The Narrows Lake project is still expected to begin producing in 2016 and Grand Rapids in 2017. Foster Creek, Christina Lake and Narrows Lake are jointly owned with ConocoPhillips and project timing is subject to partner approval.

"We're able to proceed with our growth plans thanks to our strong balance sheet and our anticipated cash flow being well in excess of what's needed for approved projects," Ferguson said. "We're continuing down the path created by our strategic plan last year - just moving a little faster."

Cenovus remains committed to bringing forward value from oil sands holdings not currently included in near-term development plans by entering into a strategic transaction by the end of 2011. This could include a potential partnership, farm out, swap or divestiture. Companies from around the world have shown interest in this opportunity and Cenovus is assessing which potential transaction would provide the best value for the company.

Capital investment will be focused on growing the company's oil assets with a total average annual investment of about $3.0 billion to $3.5 billion planned over the next decade. Cenovus is committed to maintaining its cost-efficient manufacturing approach with all its oil sands expansions, allowing it to implement improvements with each new phase and deliver expansions on time and on budget. The company expects to continue achieving industry-leading low steam to oil ratios (SORs) and capital efficiencies of between $22,000 and $23,000 per flowing barrel at Christina Lake phases C, D and E and between $25,000 and $28,000 per flowing barrel at Foster Creek phases F, G and H. There is considerable flexibility built into Cenovus' capital plan since most of the investment is discretionary with only $1.1 billion of the 2012 plan considered to be committed capital needed to maintain current operations and construct currently approved oil sands expansions. Cenovus anticipates an average of $0.8 billion to $1.0 billion in committed capital for each of the remaining years of the next decade.

Cenovus plans to take a balanced approach to its use of cash flow in excess of committed capital. A priority is expected to be placed on using excess cash flow to grow the dividend after 2011. Organic growth opportunities will be funded with the balance of free cash flow and the prudent use of balance sheet capacity. If necessary, additional debt financing will be used to support capital investment for the first half of the 10-year plan. The company is committed to maintaining strong investment grade status and anticipates its debt to capitalization and debt to adjusted EBITDA ratios will track to the low end of its targeted ranges.

While the bulk of Cenovus' future growth will be in the oil sands, the company also expects significant near-term growth in conventional oil production. The strategic plan anticipates oil production from operations such as Pelican Lake, Weyburn, southern Alberta, Saskatchewan Bakken and Lower Shaunavon will increase to between 120,000 bbls/d and 130,000 bbls/d by the end of 2016 from about 70,000 bbls/d currently. Additionally, the company plans to assess the potential of new oil projects on its existing properties and new regions, especially tight oil opportunities.

Cenovus will continue to steward its natural gas operations as financial assets that contribute significantly to its oil growth projects. Over the next decade, the managed decline of natural gas production, combined with expected production increases from oil properties, should result in an even greater percentage of cash flow coming from oil operations. Natural gas is expected to provide only 5% of the company's operating cash flow in 2021 compared with about 20% in 2011. Cenovus plans to continue to protect its cash flow and capital program by hedging as much as 75% of its natural gas production although the company expects to reduce the amount of oil it hedges in the coming years.

A key enabler for the company's long-term plan is access to attractive markets for its heavy oil production. Heavy refining capacity will increase when the coker and refinery expansion (CORE) project at the company's Wood River Refinery is complete, expected later this year. However, Cenovus' oil sands growth plans will eventually result in more heavy production than the company has the capacity to refine at its two U.S. refineries, both jointly owned with ConocoPhillips. Over the coming years, Cenovus will look at opportunities to protect a greater percentage of its future heavy volumes from the light-heavy differential.

Cenovus expects to maintain industry-leading low operating costs at its oil sands projects and remains committed to the goal of doubling its net asset value between 2010 and 2015. It plans to accomplish this by growing production internally with no acquisitions required. The company also plans to continue developing innovative techniques to improve recovery and unlock development opportunities on its expansive oil sands resource.

"We are fostering a culture at Cenovus that encourages innovative thinking," Ferguson said. "The technology modifications and breakthroughs being developed by our staff are expected to result in improved project economics, more resources being placed in the contingent category and a reduced impact on the environment."

The company will maintain its goal of commercializing at least one new research and development (R&D) technology every year and plans to continue to have more than 60 projects in various stages at all times. Cenovus has 10 field pilots underway or planned to help understand recovery schemes and demonstrate commercial potential. Technology development at Cenovus will continue to focus on increasing recovery factors while enhancing environmental performance, with three-quarters of current R&D projects offering potential environmental benefits.

NOTE: Between 2012 and 2021, Cenovus' strategic plan assumes WTI oil prices that range from US $85.00/bbl to US $105.00/bbl, NYMEX natural gas prices that range from US $4.00/Mcf to US $6.00/Mcf and a Chicago 3-2-1 crack spread of US $9.00/bbl.

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KCA Deutag Awarded FEED Contract for Browse LNG Development

- KCA Deutag Awarded FEED Contract for Browse LNG Development

Monday, June 06, 2011
KCA Deutag

KCA Deutag has been selected by Woodside Energy as one of two drilling contractors to carry out a major Front End Engineering Design (FEED) contract relating to a 3,000HP Modular Platform Drilling Rig (MPDR) for the Browse Liquefied Natural Gas (LNG) Development, offshore North West Australia.

The MPDR will be capable of drilling large bore gas wells up to 9,000m measured depth and of being transferred between Dry Tree Units (DTUs) based on a tension leg platform design. The DTUs will be positioned over the Calliance and Brecknock Fields, located approximately 270km from the Kimberley Coast, Western Australia.

Woodside is Australia's largest independent publicly traded hydrocarbon exploration and production company and one of the world's leading producers of LNG. The Browse LNG Development is a joint venture between Woodside, BHP Billiton, BP, Chevron and Shell.

FEED work has commenced and is being carried out by KCA Deutag's engineering division RDS in its London offices. It will take approximately six months to complete, include more than 30 persons, and involve interfacing with Woodside's two selected DTU contractors, Aker Solutions in Oslo and MODEC in Houston.

Neil Stevenson, KCA Deutag's Director, Business Development and Commercial, said, "This is an extremely important contract for KCA Deutag for a new client, and on one of the largest offshore LNG developments in the world. It also provides a major breakthrough into the expanding Australia onshore and offshore drilling market and builds upon our established presence in Southeast Asia. The award is very much aligned with our strategy of seeking involvement in new projects from the very early conceptual and front end stages and then being retained and accountable for the drilling performance of the rig during the operations phase."

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McDermott Secures EPCI Contract Offshore Trinidad

- McDermott Secures EPCI Contract Offshore Trinidad

Monday, June 06, 2011
McDermott International Inc.

McDermott's subsidiary has been awarded full engineering, procurement, construction and installation (EPCI) of a 750-ton compressor module for BG Trinidad & Tobago's Hibiscus field development offshore Trinidad. The contract is valued at more than US $50 million and will be included in McDermott's second-quarter 2011 bookings.

"We are pleased to be working for the BG Group again to deliver this full scope compressor module for the Hibiscus gas field, which will enable BG to increase gas supply to its Atlantic LNG trains," said Stephen M. Johnson, McDermott's Chairman, President and Chief Executive Officer. "Where we add value to this field development is by providing the full range of engineering and construction services and managing the project interfaces in house."

Detailed engineering design of the compression module will be carried out by McDermott's Houston-based engineering office along with procurement for the module equipment and some specialty items. McDermott's Morgan City fabrication facility will handle procurement of bulk items and construct the module on site in Louisiana.

Engineering commenced in the first quarter of 2011 and fabrication is due to begin by the first quarter of 2012 - with loadout and transportation scheduled for the first quarter of 2013.

McDermott's heavy lift vessel DB50 will set the compressor module at the installation site on the existing Hibiscus platform, in a water depth of 500 feet, before performing the compressor module tie-in, hook-up and commissioning on site. The field lies 28 miles off the north coast of Trinidad.

The Hibiscus field is part of BG T&T's North Coast Marine Area development to supply gas to trains 2, 3, and 4 of Atlantic LNG in Point Fortin, South Trinidad.

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Dominique Strauss-Kahn Pleads Not Guilty in Manhattan Court

- Dominique Strauss-Kahn Pleads Not Guilty in Manhattan Court

Jun 6, 2011

Ex-IMF Chief, Dominique Strauss-Kahn pleaded not guilty Monday morning on charges of attempted rape and sexual assault at a New York Supreme Court.

He was charged on May 15th on seven counts, including attempted rape, criminal sexual assault, unlawful imprisonment, sex abuse and forcible touching.

After his arrest last May, Strass-Kahn stepped down as IMF leader and has been under house arrest in a downtown Manhattan apartment and currently in a deluxe townhouse.

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General Motors To Invest $130 Million, Add 25 Jobs in Warren, Mich Plant

- General Motors To Invest $130 Million, Add 25 Jobs in Warren, Mich Plant

Jun 6, 2011

General Motors (NYSE:GM) will invest $130M to build an enterprise data center at its Technical Center campus in Warren, Mich., adding 25 high-tech jobs and expanding and renovating a former administrative building. Design is under way on the renovation and construction, with the final phase scheduled for completion in 2015.

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Dollar Thrifty Announced Its Board Recommended Its Shareholders Not Tender Their Shares Pursuant

- Dollar Thrifty Announced Its Board Recommended Its Shareholders Not Tender Their Shares Pursuant

Jun 6, 2011

Dollar Thrifty (NYSE:DTG) announced its board of directors recommended that shareholders not tender their shares pursuant to Hertz Global Holdings (NYSE:HTZ) offer to acquire all of the outstanding shares for $72 per Dollar Thrifty share, which consists of $57.60 in cash and 0.8546 shares of HTZ common stock.

Scott L. Thompson, President and Chief Executive Officer said, "Given the uncertainty surrounding the length and outcome of the regulatory process as Hertz and Avis Budget work towards antitrust clearance, the Board is recommending that Dollar Thrifty shareholders take no action with respect to the Hertz exchange offer at this time. We will be monitoring the antitrust regulatory process and other circumstances carefully, and our Board will reconsider its recommendation if the situation warrants."

Dollar Thrifty Automotive is currently above its 50-day moving average (MA) of $73.08 and above its 200-day of $55.29.

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Operators Look to Unlock Tuscaloosa Marine Shale Potential

- Operators Look to Unlock Tuscaloosa Marine Shale Potential

Monday, June 06, 2011
Rigzone Staff
by Karen Boman

The Tuscaloosa Marine shale play, located on the border of southwestern Mississippi and northeast Louisiana, could emerge as the next big oil shale play as oil and gas producers shift their focus from gas to oil drilling and seek to unlock unconventional resources in unexplored shale plays.

The Louisiana Department of Natural Resources Office of Conservation will hold a public hearing on June 7 in Baton Rouge to approve a drilling production unit that Devon Energy has applied for in the Tuscaloosa play near Ethel in East Feliciana Parish.

Devon holds 250,000 acres in the Tuscaloosa Marine shale play. Devon spokesperson Chip Minty said it is still too early to quantify the liquids content of this acreage. The company plans to drill two horizontal wells this year on its Tuscaloosa shale acreage, which Devon officials said is stratigraphically equivalent to the Eagle Ford shale play and has a low average acreage cost of $180/acre. The company will have a rig on site in this year's second quarter.

The company's Tuscaloosa activity is part of Devon's goal of identifying and establishing large acreage positions in highly economic plays at reasonable prices. "We have continued building these new venture positions and now have roughly 850,000 net acres and a handful of new plays, primarily targeting oil and liquid rich gas," the company said.

The Tuscaloosa shale on Devon's acreage is approximately 200 to 400 feet thick, at depths of 11,000 to 14,000 feet across Devon's acreage position. Oil production has been established, up dip in the play from the Tuscaloosa Shale, said David Hager, Devon's executive vice president of exploration and production, during Devon's first quarter 2011 earnings conference call in early May. "We plan to utilize horizontal drilling and fracture simulation to enhance the productivity of the reservoir in both the oil and liquids-rich portion of the play."

Denbury Resources recently signed a small joint venture covering its Tuscaloosa Marine Shale acreage wherein the partner will complete one well and drill another at no cost to us, leaving Denbury with a small retained interest in future activities. Denbury in late 2009 agreed to acquire EnCore, which had drilled four horizontal wells targeting the Tuscaloosa Marine Shale play in 2007 and 2008. The JV will allow Denbury to develop this acreage it acquired with the EnCore acquisition.

The first Tuscaloosa Marine shale well was tested in 1975; to date, five well have been tested and produced. The Tuscaloosa Shale has an unproven unconventional resource estimate of 7 billion barrels of oil, according to a report by researchers at Louisiana State University in Baton Rouge.

The marine shale section lies between sands of the upper and lower Tuscaloosa sections and varies in thickness from 500 feet in southwestern Mississippi to more than 800 feet in the southern part of the Florida parishes in Louisiana. The Tuscaloosa Marine Shale is very similar in geology to the Eagle Ford, and is believed to have the same potential for development and production.

Brammer Engineering and Indigo II Louisiana Operating hold permits in the same area as the Tuscaloosa shale. Indigo Chairman and Chief Executive Officer Bill Pritchard said he sees potential for Tuscaloosa shale production in the acreage it received from Roy O. Martin Minerals, Louisiana's largest private landowner, in exchange for equity in Indigo.

The company put together about 240,000 acres in central Louisiana, of which half has been leased to timber companies; Indigo will focus its Tuscaloosa exploration efforts on the remaining half. Indigo drilled the Bentley Lumber 32-1 vertical well, and will drill the Indigo Bentley Lumber 23H-1 horizontal well in July.

The company's acreage is northwest of the area where Devon and EnCore have drilled, but the interval Indigo is targeting sits above the Edwards carbonate formation; to the east, the Eagle Ford/Tuscaloosa play overlies the main body of the Lower Tuscaloosa sandstone. Indigo's acreage features a higher percentage of calcite, which makes it more brittle and easier to frack. The company set intermediate casing just above the shale and drilled with oil based mud. "That and the fact that we are more calcitic through the section allowed us to drill through the TMS [Tuscaloosa Marine Shale] without incident," Pritchard said.

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