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Oil and Gas Energy News Update

Monday, June 13, 2011

Oil & Gas Post - All News Report for Monday, June 13, 2011

Monday, June 13, 2011

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Commodity Corner: Oil, Natural Gas Settle Lower

- Commodity Corner: Oil, Natural Gas Settle Lower

Monday, June 13, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery settled at $97.30 a barrel Monday.

The $1.99 day-on-day decline reflected investors' pessimism about the outlook for U.S. oil demand and the direction of the national economy. Oil traded within a range from $96.13 to $99.32.

Also falling Monday was the natural gas futures price, which lost 11 cents to settle at $4.65 per thousand cubic feet. The July contract price has enjoyed an uptick lately as temperatures in key U.S. cooling markets have exceeded normal ranges. As conditions in the Northeast and other areas moderate, however, the demand for cooling should fall. Moreover, nuclear power plants are concluding maintenance-related downtime and returning to normal operating levels. Consequently, demand for natural gas to generate electricity should decrease.

July natural gas peaked at $4.81 and bottomed out at $4.61 Monday.

Front-month gasoline lost two cents to end the day just under $3.00 a gallon. The July contract price fluctuated from $2.955 to $3.05.

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Penn West Expects A Hit Due To Canadian Wildfire

- Penn West Expects A Hit Due To Canadian Wildfire

Jun 13, 2011

Penn West Petroleum Ltd. (NYSE: PWE) expects a hit on its cash flow from wildfires that are still blazing through northern Alberta, Canada. The company's chief operating officer Murray Nunns stated at a conference Monday that they expect to see a C$60 million to C$70 million hit due to the fires.

The wildfires are affecting around 35,000 barrels of oil a day as well as production. Nunns stated that about half of the shut-down facilities are ready to restart, and all of them will be ready by the end of June. By July, they expect to be back at full production.

Penn West Petroleum has a potential upside of 32.3% based on a current price of $23.13 and an average consensus analyst price target of $30.78.

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Kinder Morgan Announces $67 Million Acquisition of Petroleum Coke Terminal in Port Arthur, Texas

 - Kinder Morgan Announces $67 Million Acquisition of Petroleum Coke Terminal in Port Arthur, Texas

Jun 13, 2011

Kinder Morgan Energy Partners L.P. (NYSE:KMP) announced today it has acquired a new petroleum coke terminal in Port Arthur, Texas, for approximately $67 million from TGS Development Group.

Kinder Morgan will operate the facility from Total Petrochemicals USA, Inc's recently expanded Port Arthur refinery, and provide services including conveying, storage and ship loading to Total pursuant to a 25-year contract.

Kinder Morgan expects the deal to be immediately accretive to cash distributable to KMP unitholders.

Jeff Armstrong, president of Kinder Morgan's Terminals segment said, "We are pleased to expand our large petcoke handling network and look forward to providing superior service to Total through this long-term contract." Kinder Morgan is the largest handler of petroleum coke in North America and expects to process more than 13 million tons in 2011.

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Facebook Will Likely Go Public in Q1 of 2012

- Facebook Will Likely Go Public in Q1 of 2012

Jun 13, 2011

The growing social networking behemoth, Facebook, Inc, will likely go public in the first quarter of 2012 with a valuating that could top $100 billion, according to people familiar with the matter cited in a CNBC report.

One factor in the timing of the company's IPO is the Securities and Exchange Commission's requirement that companies must disclose financial information if they have more than 500 private investors.

Facebook, which is approaching 700 million registered users, is also facing pressure from current employees who, because of internal restrictions, cannot sell their private shares on the secondary market, according to the unnamed sources.

SharesPost, a private exchange that buys and sells shares of non-public companies, last sold 100,000 shares of the company for $3.4 million, putting Facebook's valuation at $85 billion.

In March, the investment firm General Atlantic bought one tenth of one percent of Facebook, valuing the company at $65 billion, and the Goldman Sachs (NYSE:GS) deal worth $1.5 billion just six weeks before that valued the company at $50 billion, meaning the value of the social networking website had grown 30% in that short time.

Meanwhile, the company reported user losses in several key markets, including a drop of 6 million in the United States and 1.5 million in Canada. User counts also dropped by over 100,000 in the UK, Norway, and Russia, according to Inside Facebook.

It has been noted that once Facebook reaches around 50% of the total population in a given country, growth generally slows to a halt. Facebook still added 11.8 million users overall in May, driven by strong growth in Brazil, Mexico, Thailand, Argentina, India, Colombia and the Philippines. Last year, the typical growth rate was about 20 million users per month.

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Cuba Oil Plans Raise Prospect of Changing U.S. Embargo

- Cuba Oil Plans Raise Prospect of Changing U.S. Embargo

Monday, June 13, 2011
Knight Ridder/Tribune Business News
by David Goodhue, The Reporter, Tavernier, Fla.

The potential for vast oil reserves off the coast of Cuba, and the possibility that drilling there could start by the beginning of fall, has some saying that the United States could end or soften its Cold War-era trade embargo on its neighbor to the south.

Rice University political science professor and Latin American expert Mark Jones said ending the 50-year-old embargo remains a political non-starter among Florida politicians who feel it would make them appear "soft," which would result in a backlash from anti-Castro Cuban-Americans and cost them elections.

But, he said, Americans' appetite for the embargo is weakening and younger generations of Cuban-Americans are finding it harder to justify continuing the punitive policy.

"In the past, that threat [from anti-Castro voters] was real, but in recent years it is increasingly hollow with the proportion of the Cuban-American population that strongly supports the embargo diminishing, both due to a softening of attitude and particularly to generational turnover," Jones said in an e-mail this week.

The gateway for the United States to end or weaken the embargo may be the giant oil rig, the Scarabeo 9, which could be on its way to the Florida Straits from a shipyard in Singapore any day now. The Spanish oil company RepSol is the first of several foreign energy companies scheduled to explore for oil in deep water 50 miles from Key West. Drilling could begin by September.

Blocked by embargo

The operation is worrisome to Floridians and those in other coastal states in large part because the trade embargo would make it difficult for the United States to lend equipment, manpower and expertise to the area should there be an oil spill like the BP DeepWater Horizon disaster that lasted for months in the spring and summer of 2010.

The Obama administration has signaled it wants to improve relations with Cuba's communist government. In a controversial move, President Barack Obama last year lifted some travel restrictions for Cuban-Americans visiting relatives and friends on the island. Going any further, however, could prove too politically risky. But if the Cuban half of the Straits becomes an oil-producing hub, lifting sanctions may make more sense and appear justified, Jones said.

"What the oil production angle allows the administration to do is present to Floridians a self-interested rationale for softening or ending the embargo; if we do not, there could be a BP-type catastrophe, and the presence of the embargo would adversely impact the ability to keep the spill from harming the Florida coast and fisheries," Jones said.

Lawmakers respond

But Sen. Bill Nelson, Florida's senior senator, said through spokesman Bryan Gulley that the U.S. government already has licenses in place that it could authorize to allow companies and others to provide assistance in a disaster situation.

Gulley added that Nelson would not support lifting or easing the embargo "unless it was tied to democratic reforms in the country, including free and open elections and the release of political prisoners."

Representatives for Sen. Marco Rubio, Florida's Republican senator, did not respond to interview requests for this report.

Rep. Ileana Ros-Lehtinen, South Florida's Republican congresswoman, remains steadfastly against granting any leeway to the Castro regime. Her office e-mailed a statement regarding the question of lifting the embargo that started, "I don't deal in hypotheticals, but in what is actually happening now."

"I favor maintaining the embargo until in Cuba there is free expression, multi-party elections, freedom for political prisoners and human rights are respected," she said.

Both Nelson and Ros-Lehtinen have introduced legislation in response to the Scarabeo 9 project that would punish companies that help Cuba in its energy-production endeavors. Nelson last month asked Secretary of State Hillary Rodham Clinton to apply diplomatic pressure on Spain to convince RepSol to abandon the project.

Attitude change

But Jones thinks a lot can happen in the next year or two, especially if RepSol finds a lot of oil. He said he expects the Obama administration to stay quiet on the embargo through the November 2012 presidential elections. But if Obama wins re-election and the straits prove to be rich with crude, Jones said to expect a ramped-up effort on Obama's part to end the embargo.

"During his second term, assuming substantial oil reserves are found and significant production begins in Cuban waters, I would expect him to amplify the administration's movement towards better relations with Cuba, a major component of which would be ending or limiting the scope of the embargo and setting up bilateral mechanisms by which to deal with any potential oil spill or related catastrophe," Jones wrote in an e-mail.

Lee Hunt, president of the International Association of Drilling Contractors, favors relaxing certain aspects of the embargo, especially when it comes to oil exploration. But he said there is still avid support for maintaining the embargo among many Floridians and an equally strong opposition toward drilling off the state's coast. These factors together place doubt on Jones' theory, he said.

"I don't think Floridians are so 'fuel hungry' as to concede a half century's ideology for a few barrels of oil," Hunt said.

He said he did agree that if any significant change happens in the United States' Cuban policy, it won't be until after the 2012 elections.

"However, we are continuing to work to create a narrow exception to the embargo for services required in the event of a spill, i.e. in U.S. interests in protecting its coast and environment," Hunt said.

Jorge Pinon, a former energy industry executive and current visiting research fellow at the Cuban Research Institute at Florida International University, said changes could be coming in the embargo, but only in terms of oil equipment and services. He agreed with Nelson that these exemptions would be given only in cases of emergency and could be made by the president issuing a "general license."

"Remember it is Congress, not even the president, who can get rid of the U.S. economic embargo against Cuba," Pinon said.

Copyright (c) 2011, The Reporter, Tavernier, Fla.

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Ascent Concludes Drilling Ops at Slovenia Well

- Ascent Concludes Drilling Ops at Slovenia Well

Monday, June 13, 2011
Ascent Resources plc

Ascent has successfully completed the drilling of the Pg-11A well in the Petišovci Project in Slovenia. Initial results are encouraging and have confirmed the presence of good quality gas and well logs indicated the discovery of approximately 114m of new net additional reservoir in the deeper Miocene. The drilling rig is now moving to drill the second redevelopment well, Pg-10. Meanwhile, a workover rig will now be mobilized for a completion testing program on Pg-11A, designed to optimize the production completions for Pg-11A, Pg-10 and other future redevelopment wells.

  • Petišovci Project appraisal drilling proceeding according to plan;
  • Good initial results from the Pg-11 and Pg-11A drilling with a substantial increase in gas-in-place for the project following the discovery of 114m new net pay in deeper Miocene reservoirs;
  • Short term work program objectives are to drill Pg-10 as a second development well and for the delineation of the lateral extent of the new gas bearing reservoirs; to determine the optimum completion methodology and to commence production;
  • Medium term objectives are to define recoverable reserves of the project and to commence the implementation of the field re-development.

The Petišovci Project in eastern Slovenia targets the redevelopment of the major Middle Miocene Badenian tight gas reserves, which were partially produced in the 1980's. The project has a core area in which RPS Energy Limited, an independent reserves auditor, has ascribed a P50 gas-in-place estimated of more than 400 Bcf (c. 12 Bm3; 69 MMboe). Their estimate excludes additional gas volumes which were encountered in Pg-11A within deeper reservoirs, and exclude any upside volumes associated with a number of undrilled exploration prospects within the concession. Once data from the Pg-10 well is available an updated gas-in-place assessment will be commissioned.

The Pg-11 and Pg-11A wells successfully confirmed the main technical parameters for the Middle Miocene Badenian tight gas reservoirs and also discovered the deeper gas reservoirs, which will substantially increase gas-in-place estimates for the project. The Pg-11A well logs indicated approximately 114m of net reservoir in the new section drilled between 3,000m and 3,500m, on which analysis continues to confirm the exact geological age. The top part of these reservoirs was tested openhole and flowed good quality gas. Further tests in this section are planned using a more representative cased hole procedure following the installation of the completion by the workover rig. These results will help determine the configuration of the initial production completions for both the Pg-11A and Pg-10 wells and whether conventional completions or simple, low cost fracture stimulations of the vertical wellbores are best suited to optimize any commercial production. The Company currently has sufficient financial resources available to put these wells into production under either scenario. The use of horizontal side-tracks are not considered to be cost effective at this time.

Ascent's Managing Director Jeremy Eng commented, "This project continues to provide very good results for the Company, starting from the 3-D seismic acquired back in 2009 through to the drilling results of Pg-11 and 11A. We have confirmed the presence of gas in all the previously known Badenian reservoirs and proven the newly discovered deeper reservoirs to be productive for gas. The Badenian reservoirs, the original focus of the field redevelopment plan, already provided the Company with a substantial project. However, if the Pg-10 well, which is close to the area of the original field development in the Badenian, also confirms the presence of gas in the deeper reservoirs in the western part of the field, the additional upside in gas volumes should be very significant indeed."

Ascent, through its wholly owned subsidiary Ascent Slovenia Limited, has a 75% interest in the Petišovci Project. Ascent's partner is Geoenergo with a 25% interest in the Project. Geoenergo d.o.o. is the holder of the Petišovci Exploitation Concession and is a company jointly owned by Nafta Lendeva, the Slovenia State Oil Company and Petrol, the leading energy conglomerate in Slovenia.

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Oil-Extraction Method Could Reduce Greenhouse Gas

- Oil-Extraction Method Could Reduce Greenhouse Gas

Monday, June 13, 2011
The Columbus Dispatch, Ohio
by Spencer Hunt

A gas tied to climate change could someday bring new life to old Ohio oil fields.

State officials are investigating whether carbon dioxide could be used to draw millions of barrels of crude oil from fields that were all but played out.

Energy companies have injected carbon dioxide into old oil fields in Texas and California for decades. The gas increases the pressure underground and mixes with the oil, freeing it from nooks and crannies.

"It lightens the oil. It fluffs it up," said Larry Wickstrom, chief of the Ohio Geological Survey. "It actually makes it so you can push (the oil) through."

Wickstrom oversaw Ohio's first test, during which 81 tons of carbon dioxide were pumped into a low-yield well about 10 miles southeast of Canton in Stark County.

After the injection in 2008, the well produced 58 percent more oil. The results were so promising that they inspired a state proposal for more-extensive testing by Columbus-based research giant Battelle and $11 million in federal funding.

Officials say the project could help reduce climate change and increase U.S. oil production.

"There is a substantial opportunity here," said Neeraj Gupta, Battelle's senior research leader for geological carbon storage.

The idea isn't embraced by all. Environmental advocates say that a substantial amount of carbon dioxide returns to the surface with the oil.

"I don't doubt the workability of enhanced oil recovery," said Nachy Kanfer, the Midwest coordinator of the Sierra Club's coal-to-clean-energy campaign. "I doubt carbon dioxide's ability to remain underground."

Carbon dioxide was first used in the oil fields of western Texas in 1972. Wickstrom said it hasn't been used in Ohio's oil fields because there is no readily available supply.

That might seem a little strange, considering the millions of tons of carbon dioxide that coal-fired power plants in Ohio emit each year. But capturing and transporting the gas is not cheap.

FirstEnergy's Sammis plant and American Electric Power's Cardinal plant, which are along the Ohio River, emitted a combined 23.1 million tons of carbon dioxide in 2010. They are within about 40 miles of the test site.

The process to draw a pure stream of carbon dioxide can consume one-third of a power plant's electricity. Power companies still are testing equipment that could do that.

Gary Spitznogle, AEP's director of new-technology development, said power plants probably would charge $80 to $100 per ton to cover their costs. He estimated that commercial carbon dioxide sells for $20 to $40 a ton.

Wickstrom and Gupta said the money made by wringing more oil out of the ground could help offset those costs.

The test site was at the 175,000-acre East Canton oil field in Carroll, Harrison, Stark and Tuscarawas counties. Officials say that more than 1 billion barrels might remain there. Pumping carbon dioxide into the wells could draw as much as 279 million barrels from the field.

A more-extensive test at the site, involving as much as 20,000 tons of carbon dioxide injected over months, would help to confirm those early estimates, officials say.

Wickstrom said the state and Battelle have applied for an $11 million U.S. Department of Energy grant to help conduct that test. They won't know until September whether they'll get the money.

In the meantime, Battelle is involved in several federally funded projects to see whether carbon dioxide can be safely injected and stored underground. It's also helping AEP test a system that captures and injects 1.5 percent of the carbon dioxide produced by its Mountaineer power plant in West Virginia.

As far as using carbon dioxide to free oil, a larger test also would show how much of the gas resurfaces with the oil.

Wickstrom said that, on average, 20 to 30 percent of the carbon dioxide that's injected comes back up.

Gupta said wells in Texas and California include equipment to capture the carbon dioxide that comes off the oil so that it can be recycled and reinjected.

"There is a huge economic potential for more oil supply and storage of CO2 if we can make this work," Gupta said.

Copyright (c) 2011, The Columbus Dispatch, Ohio

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Chesapeake Energy Boosts Payout; Sees Regular Increases

- Chesapeake Energy Boosts Payout; Sees Regular Increases

Monday, June 13, 2011
Dow Jones Newswires

Chesapeake said Monday it raised its common-stock dividend by 17%, marking the natural-gas company's first increase since June 2008.

"It is our goal to be able to increase our common-stock dividend regularly in the years ahead," said Chief Executive Aubrey K. McClendon.

The company raised its quarterly dividend to 8.75 cents a share from 7.5 cents; the increased payout will cost the company an additional $32.9 million a year.

"From a value perspective, this announcement is negligible though it does paint a positive picture from an optical standpoint," analysts with Canaccord Genuity wrote in a note to clients.

Chesapeake Energy, the second-largest U.S. natural-gas producer after Exxon Mobil Corp. (XOM), joins a long list of companies that have increased payouts to shareholders in recent months using stockpiled cash. Last month, Chesapeake Energy reported that it swung to a first-quarter loss on steep derivatives losses and a 42% drop in revenue as energy prices declined, while production increased from a year ago.

On Friday, shareholders demonstrated dissatisfaction with the company's board and pay practices as about 22% of votes were withheld in McClendon's re-election as chairman, up from only 4% that opposed his election in 2008. In an advisory say-on-pay vote, only 58% said they approved of Chesapeake's executive-compensation plan.

Chesapeake spokesman Jim Gipson said Monday that the dividend hike had "been planned for many months" and wasn't made in response to Friday's shareholder votes.

Shares, which have risen 19% in the last year, recently traded down 77 cents, or 2.63%, at $28.47.

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

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Pacific Rubiales Declares Cash Dividend

- Pacific Rubiales Declares Cash Dividend

Monday, June 13, 2011
Pacific Rubiales Energy Corp.

Pacific Rubiales announced a cash dividend in the aggregate amount of US $25,000,000 which translates to US $0.093 per common share. The dividend is payable on June 30, 2011 to shareholders of record as of June 17, 2011. The ex-dividend date is June 15, 2011. For shareholder trading on the Colombian stock exchange, the peso equivalency shall be calculated based on the exchange rate as certified by the "Superintendencia Financiera de Colombia" (the "SFC") on the date of monetization and will be published on the SIMEV website at the proper time.

Subject to approval from the Board of Directors, the Company expects to pay a dividend on a quarterly basis, with such decision being determined based on funds from operations, earnings, financial requirements, commodity price levels, legal requirements and other conditions existing in the future. This policy will continue to be reviewed by the Board of Directors, as needed, from time to time. Future dividends on Pacific Rubiales common shares are not guaranteed.

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Keppel Clinches Floatel Contract

- Keppel Clinches Floatel Contract

Monday, June 13, 2011
Keppel Corp. Ltd.

Keppel FELS has been awarded a contract worth about US $260 million by returning customer, Floatel International Ltd (Floatel), to build a new generation accommodation semisubmersible (semi) for delivery in 1Q 2014.

This new rig developed by Keppel O&M's Deepwater Technology Group, will be built to the SSAU4000NG design with Dynamic Positioning (DP) 3 capability. It marks Keppel FELS' third accommodation semi project with Floatel, after the delivery of Floatel Reliance (SSAUTM 3600 with DP2) and Floatel Superior (DSSTM 20NS with DP3) last year.

The SSAU4000NG is an enhancement of the proven SSAUTM 3600 design, with improved capability and operability. It meets the stringent UK HSE requirements to work in the UK sector of the North Sea as well as the Gulf of Mexico, Brazil and Western Australia.

Equipped with state of the art accommodation and recreational facilities, the SSAU4000NG provides increased comfort for the 500 persons it can accommodate in one-man and two-man cabins.

Mr. Peter Jacobssen, Chief Executive Officer of Floatel International Ltd said, "What Keppel FELS has built for us previously have been well received by the market. Both units are working successfully in their respective fields. We have ordered this third unit as we continue to see strong demand for such highly capable accommodation vessels, and we believe we are well positioned to strengthen our niche offering in this area.

"As we grow our fleet of next generation accommodation semis to meet the needs of the market, Keppel FELS is the ideal partner for us in terms of reliability and quality. Their suite of proprietary designs has proven to be cost effective solutions for offshore accommodation and we believe the SSAU4000NG will be just as successful as her predecessors."

Featuring the latest technology such as DP3 and enhanced Station-Keeping, the SSAU4000NG is capable of operating alongside fixed platforms, floating platforms and Floating Production Storage and Offloading Vessels, with a full complement of deck cranes and fire fighting capabilities.

Mr. Wong Kok Seng, Managing Director of Keppel FELS said, "We are pleased that Floatel has entrusted us to build their third accommodation semi to our proprietary design. As more E&P activities move into deeper waters and harsher environments, the SSAU4000NG with its new and improved features is customized to meet these challenges.

"We have built up a good track record with Floatel, having delivered Floatel Reliance and Floatel Superior to their satisfaction. This contract reinforces our win-win partnership and we look forward to provide yet another quality vessel to Floatel safely, on time and within budget."

Floating accommodation platforms are needed to provide additional living quarters for drilling and production personnel. Such support is required during hook-up and commissioning in the development phase, for maintenance and upgrading during the production phase, as well as for decommissioning.

Well-timed with market demand, the two Floatel rigs delivered in 2010 have been chartered for work - Floatel Reliance to Petrobras for five years in Brazil's Campos Basin and Floatel Superior to Statoil in Norway's Oseberg field.

Keppel FELS' track record for designing and building accommodation semis also includes the delivery of Prosafe's Safe Concordia in 2005. Safe Concordia, which can accommodate 400 persons, has been chartered to Petrobras for work in Brazil.

The latest newbuild contract is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.

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BOMERE to Begin Offshore Inspections with Multi-Person Teams

- BOMERE to Begin Offshore Inspections with Multi-Person Teams

Monday, June 13, 2011

Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich announced that the bureau will begin to use multiple-person inspection teams for offshore oil and gas inspections. This internal process improvement will improve oversight and help ensure that offshore operations proceed safely and responsibly. The new process will allow teams to inspect multiple operations simultaneously and thoroughly, and enhance the quality of inspections on larger facilities.

"We are bolstering our inspection program with additional resources and new approaches," said BOEMRE Director Michael R. Bromwich. "As more inspectors are hired, we will be deploying multi-disciplinary inspection teams instead of individual inspectors, providing broader oversight to ensure that offshore operators are complying with federal regulations and conducting their operations in a safe and environmentally responsible manner."

In addition to on-the-job training, BOEMRE recently established the National Offshore Training Center and has developed the agency's first formal training curriculum, which has been piloted with new BOEMRE inspectors. An initial introductory course for new inspectors was recently held for 13 new BOEMRE inspectors. In the coming months, 24 additional courses will be developed covering specific areas of offshore inspections. BOEMRE is currently in the process of hiring a training director who will be have the responsibility to further develop the bureau's training policies, procedures, and programs and improve the technical and professional capabilities of offshore inspections and compliance personnel.

"We are extremely proud of the steps we have taken to bolster our inspections program," said Director Bromwich. "We believe that establishing a formal curriculum for inspector training is central to developing a more rigorous and consistent inspections program across the agency."

Multiple reviews and investigations, including by the National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, the Department of the Interior's Inspector General, the Department's Safety Oversight Board, and multiple Committees of the House and Senate, have highlighted the need for reform in the bureau's inspections program. The multi-disciplinary team approach and the need for a national training program were recommended by BOEMRE's Inspections Strategies implementation team, one of several internal implementation teams that have been analyzing critical aspects of BOEMRE's structures, functions and processes, and implementing needed changes.

BOEMRE will continue to focus its recruiting efforts to attract more subject matter experts to bolster existing expertise in the bureau's district offices. Specifically, the bureau is looking to expand expertise in well operations, production operations, safety and environmental management systems, accident investigations, measurement systems and deepwater drilling.

Director Bromwich has conducted two nationwide recruitment tours to colleges and universities for positions in BOEMRE's engineering and environmental sciences career fields. The Director highlighted, among many benefits, that the bureau offers a Student Loan Repayment Program to petroleum engineers, civil engineers, geologists and geophysicists who join BOEMRE.

The bureau has also made efforts to contact various petroleum engineer organizations to encourage retired professional engineers to bring their experience, expertise and familiarity with complex technological and engineering issues associated with offshore drilling to BOEMRE. These efforts are ongoing and will assist with the goal of expanding the number of BOEMRE offshore oil and gas inspectors.

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Petrobras Director to Resign

- Petrobras Director to Resign

Monday, June 13, 2011

Petrobras announced that Mr. Antônio Palocci Filho resigned from the Board of Directors to which he was elected at the General Shareholders Meeting on April 28, 2011.

Petrobras thanks Mr. Palocci for his contribution during the period which he worked for the Company.

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RAK Petroleum Elects New DNO Chairman

- RAK Petroleum Elects New DNO Chairman

Monday, June 13, 2011

Shareholders at the DNO International Annual General Meeting held in Oslo elected Bijan Mossavar-Rahmani as the company's new Chairman. Mr. Mossavar-Rahmani is Chairman of the Board and CEO of RAK Petroleum Public Company Limited, the Middle East based independent oil and gas exploration and production company, which is DNO International's largest shareholder with a 30 percent stake. Mr. Mossavar-Rahmani was elected to the board at an Extraordinary General Meeting held on March 10, 2011.

Three other current directors, Gunnar Hirsti, Marit Instanes and Shelley Watson, were also re-elected as directors and Karen Sund, Founder and Chairman of Sund Energy AS, an Oslo-based energy consulting firm, was elected as the only new independent director. Mr. Hirsti is the Company's new Deputy Chairman.

"DNO International has a solid foundation in assets and importantly, in people," said Mr. Mossavar-Rahmani. "We believed this as we acquired our large position in the company and we believe it today as we take a more active role, in collaboration with shareholders, directors and management, to stabilise DNO International and then drive it to realize its full potential," he said.

"The operations group is first rate and the speed with which discoveries have been brought on production is truly impressive," said Mr. Mossavar-Rahmani. But he emphasized the need to bring best practices to the company in terms of governance, transparency, accountability, cost control and regulatory compliance while improving its relationships with host governments.

Mr. Mossavar-Rahmani acknowledged the service of the outgoing director.

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Keppel to Deliver FPSO to Bumi Armada

- Keppel to Deliver FPSO to Bumi Armada

Monday, June 13, 2011
Keppel Corp. Ltd.

Keppel is on track to deliver its latest Floating, Production, Storage and Offloading (FPSO) project, Armada TGT 1, to Bumi Armada Berhad (Bumi Armada).

Mr. Nelson Yeo, MD of Keppel Shipyard, said, "We would like to thank our valued customer Bumi Armada for entrusting Keppel Shipyard with the conversion of all their FPSOs.

"The success of any complex conversion project depends on the trust and teamwork between a shipyard and its customers. Keppel Shipyard was privileged to have the full support of Bumi Armada in the safe and timely execution of Armada TGT 1, for which we had provided a full range of conversion services, including the fabrication of the topsides and turret."

Armada TGT 1 will be deployed in the Te Giac Trang (TGT or White Rhinoceros) oil field, in Vietnam's Cuu Long Basin, for Hoang Long Joint Operating Company. This FPSO is expected to strike first oil in the third quarter 2011. At full capacity, the unit will be able to produce 55,000 barrels of oil per day and store 620,000 barrels of oil.

Mr. Hassan Basma, Executive Director and CEO of Bumi Armada, elaborated on the vessel's specifications, "This FPSO has been specifically designed to process difficult crude with a low wax appearance temperature and to withstand, sustain and remain moored under 100 year return environmental conditions including cyclones and tsunamis prevalent offshore Vietnam; this too in shallow waters of less than 43 meters. The completed topside is more than 12,000 tonnes and incorporates state-of-the-art technologies and a different layout to similar class FPSO resulting in a lighter topside and improved operability and safety considerations."

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Barclays: Worldwide Spending to Pass Half Trillion Mark in 2011

- Barclays: Worldwide Spending to Pass Half Trillion Mark in 2011

Monday, June 13, 2011
Rigzone Staff
by Karen Boman

Worldwide exploration and production (E&P) spending in 2011 is expected to rise to 16 percent to $529 billion, compared with $458 billion in 2010, with strong year-over-year improvement in spending driven by large increases inside and outside North America, Barclays Capital today reported in its global E&P capital spending update.

E&P spending in North America is now forecast to be up 16.2 percent in North America and 15.5 percent outside of North America, compared with forecast increases in December 2010 of 11 percent globally, including seven percent in North America and 12 percent outside of North America. Barclays reports budgets have been revised dramatically higher in the U.S. and internationally for U.S. and European based independents, Southeast Asian companies and companies focused on the Middle East.

Spending increases this year will be led by North America, where high oil prices and the continued shift towards drilling in oil and liquids rich plays have resulted in solid growth. E&P capital spending for North America is expected to increase by 16.2 percent from $127.6 billion in 2010 to $148.3 billion in 2011.

Latin America, Europe and the Middle East are expected to be the strongest regions internationally for E&P spending. Petrobras' multi-year pre-salt development offshore Brazil and ambitious plans by Colombian state energy company Ecopetrol are driving the forecast increase in capital spending by Latin American companies, with spending in the region expected to be up 26 percent in 2011 to $65.5 billion from $52.1 billion in 2010, Barclays reported.

Spending increases of roughly 23 percent are anticipated both in Europe and the Middle East, with spending estimated at $39.9 billion this year in Europe and $22.1 billion in spending in the Middle East. India, Asia and Australia spending will be up 15 percent this year to $79.3 billion. Russian spending is expected to rise by three percent to $36.1 billion this year from 2010.

Capital expenditures for North Africa, where the "Arab Spring" of political demonstrations and civil war across the region has affected government and the economy, are anticipated to be down by over 16 percent to $25.2 billion this year due to sizable spending reductions by Egyptian General Petroleum Corp. and National Oil Corporation, as well as a reduction by Sonangol and lower spending for Nigeria National Petroleum Corp. as an election cycle concludes in Nigeria.

The U.S. continues to attract the majority of worldwide E&P spending at 21 percent; however, this percentage has continued to fall each cycle. Internationally, the India, Asia and Australia region absorbs the largest share of spending, which is being driven by large investments by Chinese national oil companies and Southeast Asian companies such as Malaysia's Petronas and Indonesia's Pertamina. In India, ONGC and Reliance are making significant investments in the region.

U.S. and European independents are stepping up spending internationally, with U.S.-based independents now forecasting international spending increases of 23 percent, up from four percent in December, while the European independents are anticipating spending growth of 23 percent versus 12 percent at the end of 2010. "We believe this is in part due to higher oil prices, higher cash flows, new exploration programs, and recent exploration success," Barclays said.

Spending among supermajors is expected to rise by 16 percent this year, led by Total, BP and Shell, compared with average spending growth of eight percent over the past five years. This increase is due to engineering and construction-related spending for several large liquefied natural gas projects, increasing Iraq spending, and increased deepwater drilling, especially in West Africa and Brazil.

While ExxonMobil remains the largest capital spender worldwide for oil and gas this year, Petrobras is quickly catching up; Petrobras and PetroChina may overtake ExxonMobil in spending in the next few years. Ninety percent of the top 20 spenders are expected to increase capital expenditures this year, with the exception of Russia-based Gazprom, which Barclays believes is primarily currency-related due to currency fluctuations in 2012, and Sonangol in Angola.

Barclays noted that the correlation between increased E&P spending and inflation-adjusted oil prices is significant, and expects a higher oil price environment to persist over the next several years driven by accelerating decline curves, continued difficulty finding and developing large reserves, increased demand in emerging markets, and tight spare capacity.

"Based on our view of a continued high oil price environment, we expect 2011 to mark the first year of multi-year double-digit spending growth internationally," Barclays said.

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Chesapeake Energy Raises Dividend 17%

- Chesapeake Energy Raises Dividend 17%

Jun 13, 2011

Chesapeake Energy Corporation (NYSE:CHK) announced today a quarterly dividend of $0.0875 per share, to be paid July 25th to shareholders of record as of July 1st.

The dividend represents a 1.2% annual yield based on the stock's closing price Friday of $29.24 per share.

Aubrey K. McClendon, Chesapeake's CEO commented: "We are pleased that our Board has approved a significant 17% increase in Chesapeake's common stock dividend. This is our first dividend increase since June 2008 and reflects the Board's confidence in Chesapeake's steadily strengthening financial position. It is our goal to be able to increase our common stock dividend regularly in the years ahead."

Chesapeake Energy has a potential upside of 34.3% based on a current price of $29.24 and an average consensus analyst price target of $39.26.

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Goodrich Adds Acreage in Tuscaloosa Play

- Goodrich Adds Acreage in Tuscaloosa Play

Monday, June 13, 2011
Goodrich Petroleum Corp.

Goodrich has purchased leases totaling approximately 74,000 net acres in the Tuscaloosa Marine Shale oil trend in Louisiana and Mississippi. The Company paid approximately $13 million, or an average of $175 per net acre for the acreage.

The Company anticipates development to commence in the first quarter of 2012.

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Victoria O&G Contracts Austin Maritime for Logbaba Field

- Victoria O&G Contracts Austin Maritime for Logbaba Field

Monday, June 13, 2011
Victoria O&G plc

Victoria O&G announced that, following the award of an Exploitation Authorisation by Presidential Decree on the April 29, 2011, the Company has executed a contract with a Cameroon civil engineering contractor, Austin Maritime, for the site civil works and the pipeline trenching, jointing and installation.

The contractor mobilized on May 31 and its offices, containers and equipment have been moved to site where excavation commenced on June 11.

The Company has also mobilized horizontal drilling and high density polyethylene pipe, ('HDPE') jointing experts and a pipeline engineer from the UK. These personnel will supervise and train staff from Austin Maritime in HDPE pipeline jointing, installation, testing and commissioning procedures.

Pipeline installation is scheduled to commence before the end of June and involves three construction teams and a horizontal drilling team to complete fourteen horizontal sections. The project schedule envisages completion of 100 meters of pipeline per day although rates of up to 200 meters per day are achievable in certain circumstances. All the equipment required to deliver first gas to customers is now in Douala, either at the EXPRO site, (operators of the processing plant,) at the Douala Port or at VOG's site at Logbaba.

The pipeline installation coincides with the rainy season in West Africa. Our construction plan includes shoring of all trenches deeper than 1.2 meters and the use of temporary drainage and pumps to keep the pipeline route clear of water. Jointing will be conducted under cover to ensure that pipeline ends are kept dry and clean. Austin Maritime has recent experience of installing 400 km of pipeline in similar conditions for gas export from oil fields in Chad.

The Company has also commenced work on the production trees and baseline caliper logs of the wells to prepare the wells for commissioning. This work will be complete at the end of June.

The Company currently has 11 gas sales agreements ('GSAs') signed and executed together with a further 10 GSAs which have been contractually agreed subject to legal due diligence and final approval. Gas supplies in all contacts are priced at $16 per million British thermal units ('btu') or $96 per barrel of oil equivalent.

Logbaba has proven and probable reserves of 212 billion cubic feet of gas (35.3 million barrels of oil equivalent) and the Company expects gas sales of 8 million standard cubic feet per day ('mmscf/d') in the first year of operations rising to 44 mmscf/d (7,300 barrels of oil a day equivalent) by the end of 2014. The pipeline has a capacity of 60 mmscf/d, which is of sufficient size for the Douala industrial market over the medium term. Condensate separated from the gas at the process plant will be stabilized and stored for transport to the Sonara refinery at Limbe in Cameroon. Condensate production is forecast at the rate of 20 barrels per million cubic feet of gas.

Logbaba's current proved and probable reserves of 212 Bcf are sufficient to supply an average consumption of 30 mmscf/d for the next 20 years. In the longer term, as further reserves are proven, gas may be supplied to large gas fired power stations connected to the grid, with either VOG investing in an independent power producer joint venture or selling gas to third parties.

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Kodiak Reports Weather Impact on 2011 Production

- Kodiak Reports Weather Impact on 2011 Production

Monday, June 13, 2011
Kodiak O&G Corp.

Kodiak updated its operations in the Williston Basin and discussed the first-half 2011 impact of weather conditions on Kodiak operations across the Basin.

The Company's operations were adversely impacted by breakup from a record winter snowfall, sustained heavy rainfall, and periods of flooding throughout the second quarter. Certain state highways and counties have imposed intermittent road restrictions on heavy trucks, causing limited trucking, which has resulted in some of the Company's wells being shut-in due to the inability to transport oil. While there has been some relief from the weather, current conditions continue to make operations challenging. The ultimate impact on Kodiak's second quarter 2011 production is not yet fully known. However, despite the difficult weather conditions, Kodiak estimates that its second quarter 2011 sales volumes should represent an approximate 35% increase over the Company's first quarter 2011 sales volumes.

Revised Full-Year 2011 Production Guidance and Reaffirmation of Year-End Exit Rate

Due to the protracted adverse inclement weather conditions in the Williston Basin, the Company has revised its production outlook for the full-year 2011. Previously, the Company had expected net 2011 production to average near the lower-end of the range of 5,500 barrels of oil equivalent per day (BOE/d) to 6,500 BOE/d. The Company now expects that its annual production will average in the range of 4,500 BOE/d to 5,000 BOE/d.

Despite the inclement weather, road closures, flooding and other impediments to normal oilfield operations in North Dakota endured by industry during the first half of 2011, Kodiak continues to expect a December 31, 2011 production exit rate of 9,000 BOE/d. The Company's 2011 estimated capital expenditure budget of $230 million also remains unchanged. The 2011 drilling program contemplates the drilling of 42 gross wells, 26 of which are net to the Company's interest. This estimate has been upwardly revised from previous estimates of 38 gross and 23.4 net wells.

Operations Update

Kodiak currently operates a three-rig drilling program in the Williston Basin, with the rigs drilling on multi-well pads in three of the Company's core projects areas: Dunn County, N.D., and Koala and Smokey in McKenzie County, N.D. The Company expects to take delivery of a fourth operated rig this week and a fifth operated rig in the fourth quarter 2011.

Kodiak currently has six gross (four net) operated wells waiting on completion. The wells are comprised of a two-well pad on the Koala block which is scheduled for completions from late June and into July 2011 and a four-well pad in Dunn County where completions are expected to commence during July and into August 2011. Drilling rigs were moved off of these pads in May 2011 and work is being completed to build-out the production facilities.

Kodiak has also participated in the drilling of four gross (two net) non-operated wells that are awaiting completions in its Dunn County core operating area. These completions are anticipated for the late second quarter and early third quarter of 2011. Drilling operations continue on this non-operated block of acreage where Kodiak controls a 40% to 50% working interest in the wells being drilled. Kodiak expects that this drilling and completion pace will continue through at least the end of 2011.

Kodiak achieved 30-day production rates on the Koala #9-5-6-5H well [95% working interest (WI); 78% net revenue interest (NRI)] of 35,042 barrels of oil and 50.2 million cubic feet of natural gas (MMcf) for 43,408 barrels of oil equivalent (BOE). The well was drilled in the middle Bakken member. The Company also drilled a well, the Koala #9-5-6-12H3 (95% WI; 78% NRI), in the Three Forks Formation from the same pad. The well achieved 30-day production numbers of 25,495 barrels of oil and 36.1 MMcf of gas or 31,512 BOE.

Management Comment

Commenting on ongoing operations, Kodiak's President and CEO Lynn A. Peterson said, "We have certainly been hampered by the elements during the first half of 2011. The roads conditions have been challenging and from time to time were impassable, causing difficulty in crude hauling and in moving equipment. However, we have continued to move forward with our capital program, and while we have had some delays moving equipment and building facilities, we do not expect these conditions to carry over to our drilling and completion activities during the second half of the year.

"Our drilling operations did not suffer any material adverse weather impact which can be largely attributed to our pad drilling, eliminating the need to constantly move rigs. All of Kodiak's rigs are currently on two well pads and we continue to efficiently drill ahead. We are making progress in connecting our wells into pipelines; however, that work has also experienced weather-related delays. With many of our wells projected to be producing into pipelines by year-end, future crude hauling disruptions should be mitigated and future winter production should improve.

"When we have been able to produce our wells, the results continue to be very encouraging. Producing a combined total of 60,500 barrels of oil and 86 MMCF of gas during the first 30 days of production from our first two wells completed on our Koala block in McKenzie County is a strong indicator of the productive potential of this block. Lastly, we continue discussions with our pumping service provider to add days to our dedicated frac crew and believe that we will have an adequate number of days to accommodate our accelerated completion schedule."

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Harvest Natural Hits Oil Pay Offshore Gabon

- Harvest Natural Hits Oil Pay Offshore Gabon

Monday, June 13, 2011
Harvest Natural Resources Inc.

Harvest Natural Resources has encountered oil in the wildcat well Dussafu Ruche Marin-1 (DRM-1) drilled in the Dussafu Marin PSC, in the offshore waters of Gabon, West Africa. Harvest operates the Dussafu PSC, holding a 66.667 percent interest. The well was spudded on April 28 and is being drilled to test the potential of the pre-salt Gamba and Dentale Formations.

Drilled with the Transocean Sedneth 701 semi-submersible drilling unit in 380 feet of water, the DRM-1 well has reached a vertical depth of 9,953 feet within the Upper Dentale Formation. Log evaluation, pressure data and samples indicate that Harvest has discovered approximately 55 feet of pay in a 90 foot oil column within its primary objective, the Gamba Formation.

Additional technical evaluation will be required to appraise this Gamba discovery. Forward plans include deepening the well to test Middle and Lower Dentale exploration potential and sidetracking to appraise the extent of the Gamba oil discovery.

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ATP Acquires Licenses Offshore Israel

- ATP Acquires Licenses Offshore Israel

Monday, June 13, 2011
ATP O&G Corp.

ATP O&G and its wholly-owned subsidiary ATP East Med have acquired the Shimshon, Daniel East and Daniel West licenses in offshore Israel and the Israeli government has approved these licenses. Based on the acquired licenses, ATP through ATP East Med anticipates spending between $3 and $5 million in 2011 in offshore Israel for acquisition costs, seismic and preliminary exploration plans.

ATP East Med, as operator of the licenses, has assumed the drilling contract with Transocean Drilling Israel Ltd. for the Sedco Express drilling unit at the Shimshon location where it anticipates initial drilling during the second quarter 2012. ATP expects to spend between $24 and $29 million during 2012 related to the initial exploratory well on the Shimshon license for its 40% working interest.

ATP notes that Isramco Negev, its partner in Shimshon, on March 6, 2011 reported that it received an independent reservoir engineering evaluation from Lockwood & Associates estimating gross potential natural gas reserves at Shimshon. According to Isramco Negev, "Lockwood & Associates considers the calculated assessment of the total geological and geophysical exploration probability of success of 20 percent to be reasonable. Lockwood said its high estimate was for 3.4 TCF, the low estimate was 1.5 TCF and its best estimate was 2.3 TCF."

Additional information on the Daniel East and Daniel West licenses will be provided as drilling and exploration plans are approved. ATP East Med is also party to two other licenses in offshore Israel which are awaiting approval by the Israeli Ministry of National Infrastructures.

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Saipem Secures More Than $1B in E&C Offshore Contracts

- Saipem Secures More Than $1B in E&C Offshore Contracts

Monday, June 13, 2011
Saipem SpA

Saipem has been awarded new E&C Offshore contracts in Egypt, in the North Sea and in Russia, worth in excess of $1 billion.

In Egypt, Burullus Gas Company awarded Saipem the EPIC contract for new subsea developments in the area of the West Delta Deep Marine Concession, located about 90 kilometers offshore the Northwest Nile delta, at water depths between 400 and 1,000 meters.

The development encompasses the engineering, procurement, construction and installation of a total of seven new subsea wellheads and relevant infrastructures, umbilicals and flowlines.

Saipem has already carried out two earlier phases of the West Delta Deep Marine Concession's subsea development. The work will be connected to existing infrastructure. The offshore activities will be carried out mainly by the highly-specialized vessel, Saipem FDS.

Saipem has also been awarded contracts to operate in the Norwegian and British sectors of the North Sea, mainly relevant to the deployment of the Saipem 7000 vessel for platform transportation and installation, and to the deployment of the Castoro 7 vessel for the installation of subsea pipeline and structures.

Among these contracts, some are EPIC and, in addition to the activities mentioned above, include engineering and procurement phases.

Offshore activities will be performed in different periods during summer 2012 and 2013.

In Russia, Caspian Pipeline Consortium (CPC) awarded Saipem the contract for the expansion of the structures relevant to the CPC marine export terminal, near Yuhznaya Ozereyevka on the Black Sea shores in the Krasnodar region of the Russian Federation.

The development includes the engineering, procurement and installation of a new offshore export pipeline for hydrocarbon transportation which will have a diameter of 42 inches and a length of about 5 kilometers and for the installation of a new offshore mooring system for hydrocarbon export. Offshore activities will be carried out during the second half of 2012 by the S355 vessel.

Furthermore, Saipem has agreed to increase the scope of its work on existing contracts in the Caspian sea and the Gulf of Mexico.

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Max Petroleum Spuds Kazakh Appraisal Well

- Max Petroleum Spuds Kazakh Appraisal Well

Monday, June 13, 2011
Max Petroleum plc

Max Petroleum has commenced drilling the BOR-3 appraisal well in the Borkyldakty Field. The total depth of the well will be approximately 1,800 meters, targeting Triassic reservoirs.

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Sterling Disappointed with Sangaw North Results

- Sterling Disappointed with Sangaw North Results

Monday, June 13, 2011
Sterling Energy plc

Sterling provided the following update for the Sterling operated Sangaw North block in Kurdistan (53.33% working interest).

A flow test has been completed across the open hole section of the Sangaw North-1 well between 3,338 meters and 4,190 meters. This interval contains target horizons in the Jurassic Mus and Butmah formations and the Triassic Kurra Chine formation.

The well flowed at a stabilized rate of approximately 4.6 million standard cubic feet of gas and 7,280 barrels of formation water per day during a 12 hour flow period through a 1.5 inch choke with a wellhead pressure of 470 pounds per square inch.

Approximately 74 percent of the produced gas was hydrocarbon gas with the remainder comprising 24 percent hydrogen sulphide and 2 percent carbon dioxide.

A wireline logging operation was attempted to identify the contribution from individual zones within the open hole section but was unsuccessful due to mechanical restrictions within the flow testing equipment.

No further flow testing is planned in the open hole section of the well and this section is being isolated with cement plugs.

The joint venture partnership has elected, based on gas shows while drilling, to conduct two cased hole flow tests; the first across a 100 meter interval within the Jurassic aged Sargelu formation and the second across a 100 meter interval within the Cretaceous aged Kometan formation. Each flow test, including preparatory operations, is expected to take approximately three weeks to complete.

Angus MacAskill, Sterling's Chief Executive said, "We are disappointed that the open hole flow test has not demonstrated commercial hydrocarbon flow rates within the deeper horizons of the Sangaw North-1 well. The data acquired during this test will be integrated with all the other data acquired in well operations to determine the potential of these horizons. We look forward to the outcome of the two cased hole flow tests to be conducted in shallower formations."

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Global Deficit Between Oil Consumption and Production Remains the Norm

- Global Deficit Between Oil Consumption and Production Remains the Norm

Monday, June 13, 2011
Rigzone Staff
by Trey Cowan

The Economist Online recently posted a short article entitled "Running Dry" which offered another perspective that would support OPEC raising its quotas. Taking a page out of BP's recently released "Statistical Review of World Energy 2011", The Economist highlighted BP's global data showing that average daily crude oil consumption exceeded production by over five million barrels per day during 2010. This is the widest daily gap on record going back to 1965. As you can see from our graphic which subtracts annual consumption from production, you have to go back to 1981 to find the last year where production outpaced consumption. So to sound any alarms based on the most recent year of BP's data seems a bit short-sighted.

However, looking at the data over the long run still seems to verify the obvious facts. First, new discoveries coming on line at levels sufficient to offset reservoir declines and growing global energy demand is not the current reality. Second, the growing fundamental imbalance between supply and demand will favor increasing prices over an extended time period.

But we did find something in the data that we thought readers would also find interesting. Whether coincidental or not - you be the judge. When the annual surpluses and shortages are added together, starting with 1965, the first year in BP's Statistical Review; the point where crude oil actually went into a deficit position (per BP's data) is around the same time oil prices really started to surge (i.e. 2004).

Our commentary is that current prices reflect the anticipated levels of supply and demand, whether an imbalance will or does exist, and whether it's growing or shrinking. Setting aside storage costs and the time value of money; out month futures for crude at higher prices than current suggest the world's level of supply is not sufficient. However, a persistent global economic slowing over the next six to twelve months (if it does occur) would likely prove OPEC's decision leave quotas as is, a good call. Considering the mixed agenda's behind OPEC's recent quota setting (instead of a unified view that there is plenty of oil available to meet world demand), then if they did get it right this time it will likely be for the wrong reasons.

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Chevron to Abandon Shetland Well

- Chevron to Abandon Shetland Well

Monday, June 13, 2011
Faroe Petroleum plc

Faroe announced that drilling has reached target depth on the Lagavulin exploration well (Faroe 10%), operated by Chevron, in the UK Atlantic Margin to the west of the Shetland Islands.

Well 217/15-1z, on the Lagavulin prospect was spudded in October 2010 and drilled in 1,567 meters water depth. Total depth was reached on June 10, 2011. Hydrocarbons and a working petroleum system have been confirmed, however no workable reservoir system was found to be present at this location and the well will be plugged and abandoned. Extensive data gathering has been undertaken in the well and detailed analysis is underway to fully evaluate the well results.

The well was drilled with the Stena Carron drillship. Progress was slower than expected, principally due to a number of operational and technical challenges, notably poor weather conditions and variable drilling formation. As a result of these delays, the cost of this well was greater than projected.

Faroe Petroleum has, since its formation in 1998, been at the forefront of basalt exploration in the Atlantic Margin, in partnership with several Major oil companies, including Chevron, BP, Eni and Statoil. The material potential the region offers continues to attract super-Majors such as Exxon, who joined with Statoil earlier this year in committing to further sub-basalt drilling in the Atlantic Margin region in the coming period. The results of the Lagavulin exploration well will significantly advance our understanding of the geology and ability to unlock the high potential basalt play in the Atlantic Margin region.

The Company pursues a portfolio exploration business model, which is managed to mitigate the negative impact that any single well can have on our continuing well program. Among the fully-funded 17 firm and expected wells in our schedule to end 2013, the Company is participating in two further near-term high impact exploration wells in the west of Shetlands area, namely the shallow water Fulla well, in which Faroe holds a 50 percent interest, and the deep water North Uist well. The first of these to be drilled, Fulla, is located close to the producing Clair oil field, in shallow water and is expected to commence in June, with Faroe as operator, while North Uist is now expected to be drilled in early 2012. Furthermore, three wells are scheduled to spud in Norway in the coming months: Butch and T-Rex in August and Kalvklumpen in October. T-Rex will be Faroe's third well on the Halten Terrace, in the same area in which the Company made the two discoveries, Maria and Fogelberg, in 2010.

Graham Stewart, Chief Executive of Faroe Petroleum, commented, "Lagavulin was a true high risk frontier exploration well, offering material upside in a success case. While the outcome of the well is a disappointment, the presence of hydrocarbons has however now been proven and offers encouragement to continue our deep water exploration plans in the region."

"The Group is well funded and, despite the cost over-run on Lagavulin, none of our forward drilling program will be impacted. Faroe has a healthy cash balance and strong cash flows from our portfolio of production assets, with group production expected to be approximately 9,000 barrels of oil equivalent per day (boepd) by the year end. Furthermore, it should be noted that, following the recent completion of our Blane acquisition, the proceeds from sale of its accumulated oil inventory resulted in a significant unbudgeted windfall gain by the Company which more than offsets the cost over-run on Lagavulin."

"From an operational standpoint, Lagavulin was a deep and complex well, with no neighboring drilling history, and it was drilled safely by the partnership led by Chevron. A great deal has been learned from this well, which will serve to significantly reduce the cost of any future wells in the region. As we now proceed to analyze the data from the well, our exploration program continues on apace through 2011 and beyond, as we test our considerable portfolio, which currently has a 17 well, fully funded program, offering very material upside potential."

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Chesapeake Energy CEO Re-Elected to Board as Chairman

- Chesapeake Energy CEO Re-Elected to Board as Chairman

Monday, June 13, 2011
Dow Jones Newswires
HOUSTON (Dow Jones Newswires)
by Ryan Dezember

Chesapeake Chief Executive Aubrey McClendon was re-elected Friday as chairman of the Oklahoma City energy producer, though the voting results showed a significant decline in shareholder support for one of the highest paid executives in the U.S.

McClendon, who had come under fire from an influential advisory firm that called for his ouster from the board, garnered about 78% of the votes cast at Chesapeake's annual shareholder meeting. Friday's vote ensures the 51-year-old executive will remain chairman into 2014, but the results signal diminished shareholder support for McClendon, who received more than 96% of the vote in 2008, the last time he stood for re-election to the board.

"This is a remarkable level of opposition," said Carol Bowie, head of compensation policy at Institutional Shareholder Services, the proxy advisory service that called for McClendon's departure from the board. Corporate board elections rarely yield opposition greater than 10%, Bowie said.

Chesapeake spokesman Jim Gipson said the vote shows "overwhelming support for management and for our board." He added that in 2008, McClendon's nearly unanimous re-election came as the company's stock climbed to a record high of $74 on historically high natural gas prices. Chesapeake shares traded Friday at $29.34, off 1.41% amid broader market declines.

McClendon, who helped found Chesapeake in 1989 and build it into the second-largest natural gas producer in the U.S., has been one of the highest paid executives in any sector in recent years, collecting compensation valued at more than $152 million since 2008. His 2010 pay package was valued at more than $21 million, according to securities filings.

ISS recommended shareholders remove McClendon from the board, citing an executive compensation system that is not tied to performance standards.

On Thursday, just ahead of the meeting, Chesapeake seemed to cave in to some of ISS's pressure, when it announced it hired an "independent compensation consultant" and committed to implement a pay system recommended by that firm that "includes objective performance criteria."

On Friday, Chesapeake's shareholders narrowly approved the company's executive compensation plan, giving the proposal about 58% of the vote, indicating widespread shareholder discontent.

As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, corporations must now provide shareholders with a nonbinding advisory vote on the compensation of named executive officers. So far, opposition to pay plans has been rare. According to ISS, shareholders have opposed proposals at only 31 companies out of 2,230 that had held votes by June 1.

In a separate tally, shareholders overwhelmingly asked that the plan be reviewed annually, following the board's recommendation.

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

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