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Oil and Gas Energy News Update

Wednesday, June 15, 2011

Oil & Gas Post - All News Report for Wednesday, June 15, 2011

Wednesday, June 15, 2011

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Commodity Corner: Oil Plummets on Stronger Dollar

- Commodity Corner: Oil Plummets on Stronger Dollar

Wednesday, June 15, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery plunged Wednesday as fears of an escalating debt crisis in Greece contributed to a stronger dollar.

Oil lost $4.56 to settle at $94.81 after the dollar index, a gauge of the greenback's value against other major currencies, increased by 1.5 percent Wednesday. The euro lost 2.1 percent against the dollar, weighed down by Greek government officials' scrambling to gain support for austerity measures. The government must agree to such measures to address the country's debt crisis in order to qualify for a bailout from the European Union and International Monetary Fund.

Providing a softer landing for oil was a U.S. Energy Information Administration report showing a larger-than-expected decline in crude oil stocks last week. According to the EIA, total oil inventories decreased by 3.4 million barrels to 365.6 million barrels as of June 10. Analysts surveyed by Platts, meanwhile, had projected a 1.9 million-barrel draw.

Front-month crude traded within a range from $94.01 to $99.95 Wednesday.

July natural gas remained flat during midweek trading, ending the day at $4.58 per thousand cubic feet. Milder-than-normal temperatures throughout the Upper Midwest and Northeast are curbing demand for natural gas to generate electricity for cooling in these regions.

Natural gas peaked at $4.605 and bottomed out at $4.52 Wednesday.

The gasoline futures price lost 15 cents to settle at $2.92 a gallon. During Wednesday's session, July gasoline fluctuated from $2.91 to $3.07.

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Germany Unveils New Africa Policy, Drops Sudan Visit

- Germany Unveils New Africa Policy, Drops Sudan Visit

Wednesday, June 15, 2011
Deutsche Presse-Agentur (dpa)

Germany unveiled its new policy towards Africa, which shifts the stress away from selfless development aid and puts more emphasis on the German interest in obtaining minerals and oil.

Foreign Minister Guido Westerwelle set out the details just before he was due to leave Berlin on a visit to Sudan. His trip was however cancelled because drifting ash from a volcano erupting in Eritrea, made aviation in the area unsafe.

German business is to be encouraged to negotiate deals that combine investment in the 53-nation continent with extraction rights under the new policy.

The European country's approach to Africa would be "internally consistent, set realistic objectives and serve our values and interests," according to the policy paper.

The center-right government's policy is binding on all ministries and agencies dealing with Africa.

Germany was a colonial power in Africa until the end of the First World War in 1918, when it lost control of all the territories that are today known as Namibia, Tanzania, Rwanda, Burundi, Cameroon and Togo.

Its interest in Africa revived in the post-colonial period, with many Germans eager to use their wealth to end world poverty, but disillusionment soon set in amid reports of waste and corruption.

Under the new policy Berlin adopts a tougher approach to Africa, that requires future development aid spending to achieve "value for money" and better market access for German companies. The 29-page policy document talks of a "partnership between equals" and gives "peace and security in our neighborhood" as Germany's prime objective.

The document also mentions "irregular migration" from Africa as something Berlin wants to prevent.

The paper said Germany will stress its own values in Africa, including good governance and democracy, and hopes the 32 African nations that allow the death penalty will abolish it.

Berlin will also push for more rights for women and an end to laws against homosexuality. However the policy paper does not suggest that aid would be conditional on such countries changing their laws.

"We don't need to infect Africa with the germ of a love of freedom. It exists there already," said Westerwelle.

Referring to the revolts in North Africa, he said, "What we are experiencing in Africa is perhaps the most fascinating proof that the world is changing."

Africa was not being given a big enough place in world diplomacy, according to Westerwelle, noting that no African nation had a permanent UN Security Council seat.

"Africa is seriously under-represented in the global balance," he said.

Several aid groups in Berlin criticized the proposals to put aid under tough scrutiny and require it to yield economic benefits.

A joint response by several non-government organizations said the policy ignored the reality of the lives of the majority of Africans who live in rural areas, putting business interests ahead of beating poverty.

One aid group, Welthungerhilfe criticized the policy's hostility to import controls that protect African industries.

"Sometimes it serves economic development to protect newly created markets for a certain time," said the group's secretary, Wolfgang Jamann.

Chancellor Angela Merkel's cabinet meanwhile passed a resolution to recognize southern Sudan as Africa's 54th independent state when it gains independence from Khartoum on July 9. Westerwelle had been set to visit both parts during his scheduled three-day trip.

Germany will be chairing the UN Security Council when the new state is admitted to the UN next month.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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NZOG Granted Permit in Gulf of Gabes

- NZOG Granted Permit in Gulf of Gabes

Wednesday, June 15, 2011
New Zealand O&G Ltd.

NZOG (New Zealand Oil & Gas Ltd) has been granted a permit in the Mediterranean's Gulf of Gabes, an established oil and gas producing region off the coast of Tunisia.

A formal signing agreement involving Tunisia's Minister of Industry and Technology, the Director-General of Energy, and the Chairman of the state owned petroleum company, took place in Tunis this morning.

NZOG Chief Executive David Salisbury traveled to Tunis for the signing ceremony. He says NZOG has been assessing opportunities in Tunisia since 2008.

"NZOG's strategy is to grow our business through exploration and acquisition in New Zealand and by establishing a couple of new core areas outside of New Zealand.

"During NZOG's search for suitable overseas opportunities, our attention has returned repeatedly to Tunisia due to its combination of good prospectivity, established exploration and production activity levels, reasonable fiscal terms, and ease of doing business.

"Through our screening process we identified an attractive overlooked oil prospect in an open area of the Gulf of Gabes. In August last year we submitted a permit application and have been working with the Tunisian authorities since then to finalize arrangements. I'm delighted that we have been successful and can now further assess this opportunity."

A two year prospecting permit has been awarded, with priority rights to apply for a subsequent four year exploration permit.

The Diodore permit extends over an area of 1,236 sq km in the relatively shallow (<100 meters) water depth of the southern Gulf of Gabes.

The permit is surrounded on all sides by discovered and producing oil and gas fields. David Salisbury said it is a very productive region which will add diversity to NZOG's exploration portfolio through access to lower risk opportunities. "Tunisia gives us diversity, by adding a lower risk/smaller reward core area to our portfolio.

The exploration targets tend to be of moderate size - so do not generally attract the interest of the really big industry players - but the likelihood of striking oil is typically higher than what we experience in New Zealand.

"In particular, with our newly acquired permit, adjacent producing fields prove that there is an active regional oil source - what we need to do is identify the structures where oil may be trapped."

David Salisbury says the move towards more open democracy in Tunisia enhances its attractiveness as an investment destination.

"We have made a number of visits to Tunisia, engaged very capable local representatives and are already well linked in with government agencies and other oil companies that already have a presence in the region. We are appointing an experienced explorationist as our country manager and are in the process of opening a Tunis office."

The Prospecting Permit provides an exclusive right for two years, requires no well commitment, and gives NZOG a priority right to apply for an Exploration Permit but with no commitment to do so.

NZOG's work program during the two year Prospecting Permit period is focused on processing and analyzing existing data and acquiring 350km of new 2D seismic data. The cost commitment for NZOG is approximately US $3MM. David Salisbury said the permit provides an entry point to assess other Tunisian opportunities.

"This is a further step in a long term growth strategy. We are already in discussions with other companies regarding their Tunisian interests. Establishing an initial foothold in Tunisia allows us to focus on identifying further opportunities for exploration or asset acquisition."

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AsherXino Farms-Out Stake Offshore Nigeria

- AsherXino Farms-Out Stake Offshore Nigeria

Wednesday, June 15, 2011
AsherXino Corp.

AsherXino has executed formal documents with a leading international oil service company for US $10,000,000 in relation to the farm-out of an 8% working interest in its Nigeria offshore concession.

This transaction follows an additional farm-out for US $7,500,000.

AsherXino had previously entered into a farm-in agreement for a 40% working interest in the Nigeria offshore concession, upon payment of a required signature bonus of US $12,500,000 to the Nigeria government. The remaining 60% of the concession is held by the Nigeria local partner in compliance with the Nigeria local content law.

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PA Resources Claims Azurite Production Levels In Line with 1Q

- PA Resources Claims Azurite Production Levels In Line with 1Q

Wednesday, June 15, 2011
PA Resources AB

PA Resources reported an update on production and sales at the Azurite Field offshore Republic of Congo.

The last production well on the Azurite Field was commissioned as communicated on June 8 and is presently being monitored after initial clean-up.

Present level of production on the Azurite Field is in line with the average production level seen in the first quarter of 2011.

PA Resources has over the last couple of days performed a lifting from the Azurite Field priced at approximately USD 114 per barrel.

PA Resources has a 35 percent working interest in the production sharing contract for the Azurite Field, the operator Murphy Oil Corporation has a 50 percent working interest and Société Nationale Petroles du Congo 15 percent.

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Parker Hannifin Awarded Mooring Contract by Subsea 7

- Parker Hannifin Awarded Mooring Contract by Subsea 7

Wednesday, June 15, 2011
Parker Hannifin Corp.

The Energy Products Division of Parker Hannifin Corporation has been awarded a contract from Subsea 7 for one of the world's largest mooring projects. Parker will supply the steel wire tether system for the deep water Guara and Lula NE submerged buoys in Brazil. Subsea 7 has been contracted by Petrobras to provide engineering, procurement, installation and pre-commissioning of four decoupled riser systems in this field.

Parker will provide Subsea 7 with 34 sheathed tethering lines each measuring more than 6,000 feet (over 1850 meters) in length. These steel tethers will keep the submerged buoys securely moored to the seabed of the Guara and Lula NE fields. The mooring lines will be engineered and constructed at the Tønsberg, Norway manufacturing location.

EPD's General Manager, Craig Anderson, stated, "We are proud to have been selected to provide our mooring products for the Guara and Lula NE development, and we look forward to partnering with the Subsea 7 project team on this world-class project."

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Americas Petrogas Increases Stake in Apache's Huacalera Block

- Americas Petrogas Increases Stake in Apache's Huacalera Block

Wednesday, June 15, 2011
Americas Petrogas Inc.

Americas Petrogas has completed the acquisition of Energicon S.A. as initially announced on June 3, 2011.

As a result of this acquisition, the Company now holds a 39% working interest in the Huacalera block, which contains Vaca Muerta shale source rock. The block is currently being drilled by the operator of the block, a subsidiary of Apache Corporation.

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Gastar Posts Public Offering

- Gastar Posts Public Offering

Wednesday, June 15, 2011
Gastar Exploration Ltd.

Gastar announced that Gastar Exploration USA, Inc., the wholly-owned subsidiary of the Company ("Gastar USA"), is commencing an underwritten public offering of 600,000 shares of perpetual and non-convertible 8.625% Series A Cumulative Preferred Stock (liquidation preference of $25.00 per share).

The Company will guarantee the payment of dividends that have been declared by the board of directors of Gastar USA, amounts payable upon redemption or liquidation, dissolution or winding up, and any other amounts due with respect to the Series A Cumulative Preferred Stock, to the extent described in the prospectus supplement. The offering is being made on a "best efforts" basis pursuant to an effective shelf registration statement that the Company and Gastar USA previously filed with the Securities and Exchange Commission (the "SEC"). Upon issuance, the Company anticipates that Gastar USA's 8.625% Series A Cumulative Preferred Stock will be listed for trading on the NYSE Amex under the ticker symbol "GST.PR.A."

McNicoll, Lewis & Vlak LLC is acting as book-running manager for the offering.

The Company intends to use net proceeds from the offering to repay borrowings under Gastar USA's revolving credit facility, which were incurred to pay for the Company's capital expenditure program and for general corporate purposes. Any remaining proceeds will be used to fund additional capital expenditures or to provide working capital for general corporate purposes.

The offering is being made pursuant to an effective shelf registration statement that the Company and Gastar USA previously filed with the SEC. A final prospectus supplement relating to the offering will be filed with the SEC.

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Cooper Seeks New Managing Director

- Cooper Seeks New Managing Director

Wednesday, June 15, 2011
Cooper Energy Ltd.

Mr. Scott has indicated his desire to hand over the reins of the Company and the Board of Cooper Energy has resolved to seek a new Managing Director to take the Company to the next growth level.

Mr. Scott will step down as the Managing Director and Director of Cooper Energy and all subsidiaries and will continue in a staff position to assist the Company to maintain its course during the search for a new Managing Director. Upon a new Managing Director being located, Mr. Scott will serve out his contractual notice period of six months and handover the responsibilities of running the Company to
the new Managing Director. The Board has initiated the search for a suitable replacement.

Mr. Michael Scott, current Managing Director, commenced with Cooper Energy on February 4, 2004. At that time the Company was an emerging Cooper Basin producer with 3 oil wells producing 600 barrels of oil per day and six exploration blocks in the Cooper Basin in South Australia. The Company now has ten oil fields with an oil production capacity in excess of 1,500 barrels of oil per day in Australia and Indonesia and a deep international exploration and appraisal/development portfolio across Australia, Indonesia, Tunisia, Poland and Romania. The Board thanks Mr. Scott for his contribution to the Company over the last seven and a half years.

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Strike Secretary Resigns

- Strike Secretary Resigns

Wednesday, June 15, 2011
Strike Energy Ltd.

Strike Energy advised the resignation of Mr. Tony Brazier as Company Secretary with effect from June 15, 2011.

The Board expresses its appreciation for the contribution Mr. Brazier has made to the Company's growth and expansion. Mr. Andrew Dimsey has been appointed Company Secretary.

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Schlumberger Launches Latest Additions to ACTive Family of CT Services

- Schlumberger Launches Latest Additions to ACTive Family of CT Services

Wednesday, June 15, 2011
Schlumberger Ltd.

Schlumberger announced the release of the latest additions to the ACTive family of coiled tubing (CT) services. The ACTive gamma ray (GR) and ACTive tension and compression (TC) make up a new downhole platform that allows operators to obtain a variety of downhole measurements to enable real-time decisions and operational control.

The new platform delivers downhole measurements specifically for internal and external pressure, temperature, casing-collar locator (CCL) depth correlation and optional gamma ray or tension and compression, all in real time. Premium pressure measurements and modularity enable increased confidence and overall job efficiency during CT interventions.

"The ACTive service allows operators to optimize stimulation design, reduce time on location and improve operational success. Additionally, raw reservoir properties are measured and downhole tool status can also be provided with the latest ACTive family additions," said Dominique Malard, president, Schlumberger Well Services. "This knowledge translates to the optimization of resources and increased production."

On-depth perforating and effective placement of packers is achieved through real-time depth correlation against the formation with a pump-through GR module. Wellbore and reservoir depth correlation can also be achieved with these latest ACTive family additions, as well as the industry's first pump-through, pressure compensated downhole tension and compression measurements. Depth accuracy for precision applications such as perforating and zonal isolation is given with the combination of the real-time collar location and GR measurements.

Saudi Aramco was looking for a solution to decrease water cut and revive oil production in a slanted openhole producer well that was drilled and completed in 2002. The ACTive in-well live performance service was selected, including the ACTive TC and ACTive GR, in combination with the CoilFLATE coiled tubing through-tubing packer, to isolate the production zone from the water source and create a precise cement placement. The well was successfully revived, with postjob production rising to 13,500 bbl/d of oil with just 10% water cut on a fully open choke.

The ACTive family of services provides live downhole measurements that are conveyed on a fiber-optic enabled CT. The system is made up of a bottomhole assembly, surface electronics and dynamic interpretation software. The ACTive family offers solutions for various applications such as matrix acidizing, wellbore cleanout, perforating, zonal isolation, lift operations and Distributed Temperature Survey profiling.

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WATER STANDARD Inks Global Frame Agreement with Shell

- WATER STANDARD Inks Global Frame Agreement with Shell

Wednesday, June 15, 2011

WATER STANDARD has signed a global frame agreement with Shell for engineering services related to the development of water based enhanced oil recovery methods and produced water treatment.

"We are extremely pleased to be working with Shell in support of Shell's ground breaking global enhanced oil recovery programs" said Amanda Brock, CEO of WATER STANDARD. "WATER STANDARD has been working with Shell to develop sustainable long term water treatment solutions. We look forward to our continued collaboration."

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Dron & Dickson Seal Deal with Nexen

- Dron & Dickson Seal Deal with Nexen

Wednesday, June 15, 2011
Dron & Dickson

Dron & Dickson has secured a long-term contract with Nexen Petroleum U.K Ltd.

The three-year deal, with the option of two one year extensions, covers Nexen's UK North Sea assets Scott/Telford and Buzzard. The contract will involve provision of all electrical goods including lighting, distribution boards and instrumentation equipment to support maintenance of these assets.

Dron & Dickson operations director Colin Maver said, "Securing the contract with Nexen further establishes our reputation for providing quality products and a high-caliber service for operators across the North Sea.

"We have invested heavily in developing exceptional QHSE standards and a competency-assured workforce and work with our clients to offer bespoke solutions incorporating the very latest industry and safety legislation."

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Ford Hoping To Maintain First-Quarter Success

- Ford Hoping To Maintain First-Quarter Success

Jun 15, 2011

The second biggest U.S. automaker Ford Motor Co. (NYSE:F) plans to see profits slow down after their 13-year high reported from the first quarter. The company expects second-quarter earnings to be right around first-quarter levels, but they expect to see the second half of the year to be slightly weaker.

Bob Shanks, vice president and controller said at an investors' conference on Wednesday that they "continue to expect our structural costs this year to increase...we also continue to expect that commodity costs will increase by about $2 billion." The company reported a first-quarter profit of 61 cents per share, totaling $2.55 billion, and way above any analysts' predictions.

Shanks understands that the global economy may be losing momentum and what that means for Ford. "Clearly there is a lot of nervousness out there. We're prepared for what's coming at us one way or the other. I think we're in a relatively good place from what could happen to us from an economic standpoint," he said.

Ford has a potential upside of 50% based on a current price of $13.28 and an average consensus analyst price target of $19.91.

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Poll: Pennsylvania Voters Say, 'Drill, Baby, Drill'

- Poll: Pennsylvania Voters Say, 'Drill, Baby, Drill'

Wednesday, June 15, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted, The Pittsburgh Tribune-Review

Pennsylvania voters, by a more than 2-1 margin, say the economic benefits of gas drilling in the Marcellus shale outweigh the environmental impacts, a statewide poll shows.

They also believe by a 69-24 percent margin that companies doing the drilling should be taxed, according to the poll of 1,277 registered voters by Quinnipiac University. The poll released today has a margin of error of plus or minus 2.7 percentage points

"'Drill, baby drill' is the call from Pennsylvania voters and 'tax, baby tax,' is the follow-up as voters see natural gas drilling in the Marcellus shale as an economic plus more than an environmental negative," said Tim Malloy, assistant director of the university's polling institute.

Republican Gov. Tom Corbett, who advocates regulated drilling but opposes a tax, saw his still-low approval rating begin to stabilize in the poll. His approval rating was 39 percent with 23 percent undecided, the poll found. Thirty-eight percent disapproved.

There's a growing gender gap with women disapproving of the job Corbett is doing by a 43-30 percent margin, the poll said. He took office in January and has proposed budget cuts to make up a $4.2 billion state deficit.

"Gov. Tom Corbett gets a mixed overall approval rating, despite getting a negative approval rating for his handling of the budget. Voters like him personally more than they do his policies," Malloy said.

"The good news for the governor is that his numbers apparently stabilized after falling off sharply in our last poll in April. Also, he is not in the negative territory like other Republican governors such as Florida Gov. (Rick) Scott and Ohio Gov. (John) Kasich," Malloy said.

A May 25 Quinnipiac poll found just 29 percent of Florida voters approve of the job Scott is doing, compared to 57 percent who disapprove. Kasich has an approval rating of 38 percent, with a 49 percent disapproval rate, according to a May 18 Quinnipiac poll.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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House OKs Bill to Boost Drilling for Natural Gas

- House OKs Bill to Boost Drilling for Natural Gas

Wednesday, June 15, 2011
The News & Observer, Raleigh, N.C.
by Michael Biesecker

In a largely party-line vote, the state House approved a Republican-backed bill that rewrites state energy policy to promote and approve of drilling for natural gas on land and off the coast.

Supporters of Senate Bill 709 said drilling would create revenue for the cash-strapped state government and jobs for North Carolinians by creating a regulatory atmosphere that is more "pro business."

Republican lawmakers brushed aside concerns raised by Democrats about the potential for an offshore spill to negatively affect coastal tourism and the possible contamination of drinking wells through the use of a controversial gas drilling technique that relies on the hydraulic fracturing underground rock, known as fracking.

"It's time to get crackin' on frackin'," said an enthusiastic Rep. John Blust, a Greens boro Republican. "If we're worrying about tourism, do you think $4 a gallon gas is going to affect tourism? We need more fossil fuels in this country."

Democrats objected to the often-repeated GOP talking point that drilling for natural gas will reduce gasoline prices and reduce the nation's dependence on foreign oil. There are not believed to be sizable deposits of oil off the North Carolina coast.

After a study was quoted as saying that increased domestic oil production would have a negligible effect on gasoline prices, Blust countered that such economic analyses were produced by "wackos in an ivory tower."

An attempt by Rep. Pricey Harrison, a Greensboro Democrat, to amend the bill to add renewable energy sources such as wind power and wave power to the list of options for creating new energy was defeated.

Harrison pointed out that tourism generates many more jobs and revenue in the state than even the rosiest forecast for drilling.

"We have a tourism economy that depends on a clean coast," Harrison said.

Republican supporters countered that the bill designates the first $500 million the state earns through offshore drilling royalties to a special fund to clean up the environmental damage from any accident or spill.

The bill, a version of which has already passed the Senate, was approved 67-44.

Copyright (c) 2011, The News & Observer, Raleigh, N.C.

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GE O&G Secures Services Contract for Petrobras

- GE O&G Secures Services Contract for Petrobras

Wednesday, June 15, 2011

GE O&G announced that its Wellstream business, acquired in March, has been awarded a long-term, flexible pipe and subsea equipment logistics services contract by Petrobras, one of the largest companies in Latin America which also controls significant energy assets in 18 countries worldwide. The long-term contract is initially valued in excess of $200MM.

To perform the long-term contract, GE will build a dedicated 55,000 sq. meter, $90MM investment Wellstream flexible pipe and subsea equipment Logistics Base in Niterói, a commercial hub located 14 kms outside Rio de Janeiro. Petrobras will use the new facility to support its development of pre-salt oil and gas field projects in the Campos and Santos basins offshore Brazil.

Luis Araujo, president—Wellstream Brazil, GE Oil & Gas said, "We are delighted to be selected by Petrobras for this contract and to strengthen our relationship with a new, $90MM investment logistics facility dedicated to directly meeting Petrobras' ongoing subsea logistics requirements. The Wellstream Logistics Base will further expand GE's presence in Brazil and create up to 500 new jobs, helping to build local skills and expertise. This clearly demonstrates that, within the GE family, Wellstream is delivering value for customers and shareholders."

The new Logistics Base will be strategically positioned close to a number of key Petrobras components and services suppliers and adjacent to GE-Wellstream's existing Niterói manufacturing facility which supplies Petrobras and other operators in Brazil with high-quality, flexible risers and flowline products for oil and gas transportation subsea.

As well as dedicated warehouses, de-washing and flushing stations, the new facility will feature state of the art loading and handling equipment, including: capacity to store 140 reels, to handle loaded reels with 300 tonnes, and to berth installation and commercial vessels simultaneously with 8.5 meters draft and 220 meters in length. The project will create approximately 250 direct jobs and 250 indirect jobs by the start of its operation in the third quarter of 2012.

GE Oil & Gas has an established presence in Brazil and serves its deepwater segment with integrated drilling & production subsea equipment and services, as well as high-tech unit and modular gas turbines and compressors solutions for fixed & FPSO applications.

In March, GE completed its $1.3 billion acquisition of Wellstream, a leading engineer and manufacturer of high-quality flexible pipeline products for oil and gas transportation in the subsea production industry. The transaction broadened GE Oil & Gas' extensive subsea production systems equipment and service capabilities and positions GE for continued growth in key deepwater regions worldwide, including Brazil, Africa and Asia.

GE will open a new $100MM investment Global Research Center in Rio de Janeiro in 2012.

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Weatherford Plans to Sell Up To $1B in Assets -Wells Fargo

- Weatherford Plans to Sell Up To $1B in Assets -Wells Fargo

Wednesday, June 15, 2011
Dow Jones Newswires
by Ryan Dezember

Weatherford plans to sell between $500 million and $1 billion worth of assets, according to analysts with Wells Fargo Securities, who said company officials briefed them on the plan in a recent meeting.

The divestitures would be of "mostly non-oilfield subsidiaries Weatherford has accumulated through its myriad acquisitions over the years," the analysts wrote in a client note.

Weatherford officials were not immediately available to respond to requests for comment.

Shares of Weatherford were up 0.28%, or 5 cents, at $17.66 in midday trading.

In selling the assets, the company's goals "are to free up both capital and managerial attention currently dedicated to these businesses," the analysts wrote.

Oilfield-service profits have risen rapidly from the recession as producers raced to exploit North America's unconventional onshore reserves amidst high oil prices. Weatherford's earnings, however, have lagged behind competitors Halliburton, Schlumberger, and Baker Hughes.

The Wells Fargo analysts said their meeting with Weatherford officials in Houston on Monday was one of several in which the executives are meeting with investors and "working on rebuilding the company's credibility."

In early March, Weatherford disclosed errors in its tax accounting for 2007 through 2010, which forced the company to adjust previously reported earnings. The March 2 disclosure pushed shares, which had been trading near a 52-week high, down 12.6%.

Late last month, in a rare rebuke, shareholders voted against the company's executive compensation plan in an advisory say-on-pay tally.

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

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AMEC to Design, Deliver Expansion in MWCC's Containment System

- AMEC to Design, Deliver Expansion in MWCC's Containment System

Wednesday, June 15, 2011
AMEC plc

AMEC has been selected by the Marine Well Containment Company (MWCC) to design and deliver components of MWCC's expanded containment system.

"I am pleased that AMEC's track record of excellent execution, particularly of complex and challenging projects, has gained this recognition," said Simon Naylor, president of AMEC's Natural Resources Americas business. "This project is of significance to the reputation and future of our industry and it is a testament to our people that we have been given the responsibility to deliver a significant part of it."

AMEC's role covers project management, engineering, fabrication, integration, and commissioning of modular equipment to be utilized by the capture vessels of the Marine Well Containment System. AMEC's recent acquisition, qedi, will be supporting AMEC on the integrated completions and commissioning services. When completed, the modular assemblies will be stored and maintained at permanent shore base locations.

The expanded containment system, scheduled for delivery in 2012, is designed to operate in up to 10,000 feet of water in the Gulf of Mexico, and capture up to 100,000 barrels of fluid and 200 million cubic feet of gas per day.

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Diamond Offshore to Move Rig from US GOM to Vietnam

- Diamond Offshore to Move Rig from US GOM to Vietnam

Wednesday, June 15, 2011
Dow Jones Newswires
by Ryan Dezember

Diamond Offshore said that it will move one of its deep-water rigs from the U.S. Gulf of Mexico later this year to drill wells off Vietnam for BP.

When the Ocean Monarch is moved, it will be the third Diamond rig to leave the Gulf of Mexico since BP's deadly Deepwater Horizon explosion in April and the subsequent shut-down of deep-water drilling in U.S. waters.

Diamond said in a fleet status report that the Ocean Monarch should conclude its current contract with Marathon, for which the driller earned about $290,000 per day, in mid-August.

The rig, capable of drilling in up to 10,000 feet of water, is scheduled to arrive in Vietnam in November to drill two wells for the British oil giant with options to drill two more. That contract carries a day rate of about $340,000, Diamond said.

The Ocean Monarch's move did not come as a surprise as Diamond has talked about its intentions with analysts, said Simmons & Co. analyst Pearce Hammond, who said the day rate is "in line" with expectations.

The Ocean Monarch, which was featured in the 1997 Bruce Willis movie "Armageddon," was stripped down and rebuilt in 2006 after it was acquired by Diamond.

It was drilling for Anadarko when U.S. regulators shut down Gulf operations. Anadarko sued Diamond in a U.S. court in Houston, claiming that the drilling moratorium triggered cancellation clauses in its contract.

Anadarko and Diamond last month decided to dismiss claims against one another as the companies entered into a pair of long-term drilling contracts for rigs that are now under construction.

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

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Ivanhoe Updates Exploration, Development Projects

- Ivanhoe Updates Exploration, Development Projects

Wednesday, June 15, 2011
Ivanhoe Energy Inc.

Ivanhoe issued an operational update on the company's major initiatives and outlined the company's priorities to advance domestic and international projects toward production.

"Ivanhoe Energy is well positioned to take advantage of current economic conditions and continue to advance the development of our heavy oil and conventional oil and gas projects in key resource regions around the world," President and Chief Operating Officer David Dyck said.

"We have a diverse portfolio of high-quality assets and can report some very positive developments. Our primary approach to financing our ongoing activities is focused on identifying and securing joint-venture partners to join us in our projects. Where applicable, we also are considering financing at the subsidiary company level for specific projects, which would establish a significant level of self-sufficiency within the subsidiaries for financing and to fund ongoing capital expenditures."

Notable gas exploration achievements in China's Zitong Block

Sunwing Energy, Ivanhoe Energy's 100%-owned Asia-focussed subsidiary, successfully completed two hydraulic-fracture stimulation programs on the Yixin-2 and Zitong-1 wells in China's Sichuan Province. The results of these treatments, and subsequent flow testing, have confirmed that stimulation of these high-pressure reservoirs can be achieved and that multi-stage stimulation technology, combined with horizontal drilling technology, can be applied in the Zitong Block.

The company's drilling and stimulation activities have resulted in positive achievements in the evaluation of the reservoirs in the Zitong Block. The company has successfully produced gas at measurable rates in both the Xu-4 and the Xu-5 formations. We have demonstrated our ability to successfully conduct a high-pressure hydraulic fracture in both reservoirs and place proppant in these fractures, providing valuable information for the design and execution of future fracture treatments in horizontal wellbores. The data recorded to date in the vertical wellbores provide sufficient information to model expected production performance in a horizontal wellbore. While permeabilities of the reservoirs result in rapidly declining flow rates and pressures in the pre-stimulation testing, these rates of decline are consistent with pre-stimulation flows in most tight sands. In fact, the actual recovery of gas in all of Sunwing's tests exceeded results of pre-stimulation testing in many tight-gas projects in North America. The company is confident that the results of the current testing will allow successful design and implementation of horizontal wellbores with subsequent stimulation using the latest technology for multi-stage fracture stimulations.

Sunwing is planning a 150-square-kilometer, 3-D seismic program to cover certain areas of the Guan Structure, the Guan East Structure and part of the Wen Structure to help plan and design a horizontal well-path for two horizontal wells - one each in the Guan and Wen structures. The company also will review the potential to drill a Guan East well with a horizontal leg as a first-stage test of the regional gas play, or re-enter the Zitong-1 wellbore to complete a horizontal section in the Xu-4 Zone. This program will be carried out over the next 24 months and will provide the groundwork for development of the Zitong Block.

Results of the work carried out to date have reinforced Sunwing's original resource estimates for the Zitong Block and the company is working toward implementing its onward program as soon as possible.

Gerald Moench, President of Sunwing, said the company believes that the Zitong Block contains between 0.3 (P90) and 1.7 (P10) trillion cubic feet of total gas initially-in-place, with a best estimate (P50) of 0.75 trillion cubic feet. "The successful development of this block will have a dramatic impact on the value attributable to Ivanhoe Energy and we are working towards implementing a development program as soon as possible."

Sunwing is the operator of the 659,840-acre (1,031-square-mile) Zitong exploration block in Sichuan and holds a 90% contractor interest in a Petroleum Contract with PetroChina Company Limited. Mitsubishi Gas Chemical Company, of Japan, holds the remaining 10% interest. Sunwing is currently conducting further evaluation to permit classification of the resource numbers quoted into more specific categories pursuant to National Instrument 51-101, to estimate the recoverable portion of these in-place volumes and to determine their commerciality. In the meantime, there is no certainty that it will be commercially viable to produce any portion of these resources

Yixin-2 well

On December 21, 2010, Sunwing announced a natural-gas discovery at its Yixin-2 well, which tested at initial pre-stimulation flow rates of up to 13,000 Mcf/d. The well was drilled to a vertical depth of 4,165 meters (13,660 feet) into the Xu-4 reservoir and was the first of two wells drilled in Phase II of the exploration period to satisfy certain contractual commitments on the block.

Following the post-perforation clean-up flow, and a short shut-in period, the Yixin-2 well was flow tested at a controlled rate of between 1,250 to 1,500 Mcf/d for a 48-hour period, then shut-in for a 21-day pressure build-up period to obtain critical pressure data and to organize high-pressure pumping equipment to carry out a fracture stimulation of the Xu-4. A 100-ton hydraulic-fracture stimulation utilizing high strength proppant was later successfully conducted on the Xu-4 formation.

The well was flow tested for a 30-day period through a test separator and currently is shut-in on a 60-day final pressure build up. During this flow period, 47% of the frac fluid used to stimulate the well was recovered. The initial gas flow rate after fracturing was approximately 800 Mcf/d at a flowing pressure of 7,100 psi. The final flow rate before shut-in was 73 Mcf/d at a flowing pressure of 86 psi. Following the post-frac flow test, down hole electronic recorders were run with the current shut-in period to extend to mid- to late-July. Results of the build-up, as well as the flow-test data, will provide critical reservoir information necessary for forward planning and in discussions with our partner, PetroChina.

The post-fracture stimulation results observed are not uncommon in tight-gas sand reservoirs; the rate declines the longer the well is flowed as more of the tighter formation matrix is tested. The key to unlocking the potential of tight-gas reservoirs is to generate induced fractures to provide sufficient surface flow area to maintain a constant commercial inflow of gas. The fracture operation on Yixin-2 was pumped as planned and, from initial indications, the well has an effective induced fracture system. Preliminary indications are that the permeability of the Xu-4 in this particular part of the Zitong Block may be lower than originally estimated. Initially, Ivanhoe had hoped the Xu-4 could be effectively stimulated in a vertical wellbore; however, these initial post-frac results suggest horizontal wells with multi-staged fracture stimulations are the preferred exploitation strategy to not only access sufficient natural fractures but also to create additional fractures to achieve the desired, stabilized inflow rate.

Zitong-1 well

The Zitong-1 well was drilled in the Guan Structure to a vertical depth of 4,294 metres (14,084 feet). It originally was designed to test the potential of the deeper Xu-2 through a horizontal wellbore. Sunwing perforated and evaluated the Xu-2 Zone. After a brief flow and build-up test, it was determined that this zone was very tight in this particular location. As a result, Sunwing chose to concentrate on other up-hole zones. Since the well intersected the Xu-5 reservoir section and also the Xu-4 at shallow depths, Sunwing proceeded to test both zones in the vertical wellbore. Early in 2011, Sunwing perforated the Xu-4 formation and allowed the well to flow at a final rate of 680 Mcf/d, with a flowing wellhead pressure of 2,196 psi. The flow and build-up test indicated low permeability away from the wellbore and Sunwing decided to isolate the Xu-4 and move up-hole to test the Xu-5 Zone.

The Xu5 Zone was perforated, acidized and flowed, with a final flow rate of 510 Mcf/d at a flowing tubing pressure of 1,214 psi. A post-perforation/acidization flow and build-up test on the Xu-5 Zone showed an effective permeability estimated at 0.0075 mD, well within the acceptable parameters for successful tight-gas plays in other regions, such as North America and the Middle East. The initial recorded reservoir pressure was 10,636 psi which would be considered to be over-pressured.

In May 2011, Sunwing stimulated the Xu-5 Zone with a 200-tonne fracture treatment using high-strength proppant. The zone has been on flow test since then. The well flowed to a test separator and recovered approximately 62% of the frac fluid before any measurable gas rates were recorded. Initial gas flow rates after fracturing measured up to 287 Mcf/d at pressures of up to 1,682 psi. The well was completed with 114.3-mm (4½-inch) tubing to conduct the high-rate fracture treatment; however, due to the larger tubing, the well encountered liquid unloading problems. Sunwing utilized coil tubing and nitrogen to clean the water from the wellbore to allow continued flow testing of the well. At present, the well may have a "water block" in the reservoir that has been preventing the in-flow of gas into the wellbore. Preparations are underway to inject a sufficient volume of nitrogen into the formation in an attempt to remove or reduce the effect of the apparent water block. Water blocks in low-permeability formations can occur following stimulation. Following the nitrogen injection and following blow down, the well will be flow tested and then shut-in for an extended pressure build up.

Preparations for first well on Mongolia's Nyalga Block

Sunwing has recently instructed its drilling contractor to mobilize the drilling rig and associated equipment to the first selected location in the Nyalga Basin in Mongolia. Mobilization activities will take approximately one month to complete. Sunwing will spud its first Mongolian oil well on a 15 sq km structure identified by 2D seismic in late July. The second drilling location will be centered on an adjacent structure with follow-on locations contingent on progressive drilling success. The current focus of exploration represents just a small portion of the total basin area. Detailed evaluation and testing, as required, will be conducted on our initial wells following drilling.

While existing seismic data has assisted in the selection of the first two locations, Sunwing intends to acquire additional 2D seismic on other portions of the block, and if necessary, acquire 3D seismic to better assess future drilling locations and trapping systems. The drilling rig has been contracted for two initial locations, with an option for three additional wells in 2011, weather permitting. Drilling on these two structures should provide a reasonable assessment on the overall potential of the Block which is over 12,000 sq. km in size with very little seismic detail. Given the main Mongolia to China railway and highway crosses through the eastern side of Block XVI, logistical activities can leverage off this proximity to existing infrastructure.

Tamarack heavy-oil project progressing through Alberta's regulatory approval process

The Tamarack Project is continuing to progress through the Province of Alberta's regulatory approval process. The application was submitted to the government in October 2010 for the development of an integrated in-situ heavy-oil project to be built in two phases, each of 20,000 barrels per day, with an ultimate production capacity of approximately 40,000 barrels per day (bitumen basis).

Regulators completed their initial reviews of the Tamarack submission and, as is customary, provided the company with an initial set of Supplemental Information Requests (SIRs) in May 2011. Ivanhoe Energy is preparing responses that it plans to submit to the regulators in Q3, 2011. The company is continuing to work with numerous local and aboriginal stakeholders and identify economic and employment opportunities for residents of area communities. Progress to date indicates that the Tamarack Project remains on track for approval expected in the second-half of 2012.

Tamarack is a 6,880-acre contiguous block located approximately 10 miles (16 kilometers) northeast of Fort McMurray. Ivanhoe Energy holds a 100% working interest in the project, subject only to a 20% back-in right held by Talisman Energy, which expires in July 2011. Ivanhoe recently completed a $50 million public offering, a portion of which will be used to repay
Talisman's convertible promissory note.

Tamarack engineering update

Tamarack project engineering and execution plans continue to progress smoothly in anticipation of regulatory approval. Design of the surface facilities is ongoing with AMEC-BDR, with completion of the Front-End Engineering and Design (FEED) anticipated in the fall of 2011. Detailed engineering will begin in the fourth quarter of 2011 once the FEED has been completed. The project execution plan is being developed and will use best-in-class construction methodologies.

Successful upgrading of Pungarayacu oil creates Ecuador JV interest

Ivanhoe's Pungarayacu Project is located on the eastern foothills of the Andes Mountains. It is easily accessible via a network of existing infrastructure. An oil pipeline with spare capacity runs through the lease block. Block 20 is one of only a few that has been classified as strategically important by the Ecuadorian government for full field development. The presence of hydrocarbons has been known since the 1980s; however, up until now, viable extraction and upgrading solutions that address environmental concerns have been elusive. Ivanhoe Energy's HTL process has the potential to address these sensitivities and, in doing so, provide economic development for the people of Ecuador.

The Pungarayacu field has been independently estimated to contain between 4 to 12 billion barrels of Original Oil in Place (OOIP), which according to the Canadian Oil and Gas Evaluation Handbook are classified as Undiscovered Resources. This potentially significant resource has attracted interest by multi-national corporate entities, as well as national energy companies. Interests of all key stakeholders are being respected as development work proceeds. In early development work, Ivanhoe Energy successfully recovered 9o API heavy oil during 2010 that was taken to the company's Feedstock Test Facility in San Antonio, Texas, for testing. Ivanhoe Energy successfully upgraded the Pungarayacu heavy crude to 17o, which meets local pipeline specifications. This represented a significant milestone for the project and created a renewed interest among potential joint-venture partners.

Ivanhoe Energy also plans to assess the southern border of the existing field. A geologic interpretation suggests the heavy-oil field may extend southward to a far greater extent than previously expected. Geologic evidence suggests that a deeper, lighter oil play exists on the block. The objective of Ivanhoe's currently 2-D seismic program is to determine the likelihood of geological trapping systems that would support these views.

Ivanhoe is continuing to make good progress on its previously disclosed 190-kilometer 2-D seismic program and expects the initial phase of shooting and processing will be completed in early July this year. The seismic data will assist in the selection of future appraisal drilling locations. The seismic program fully complies with all Ecuadorian regulatory requirements and has the approval of local stakeholders after extensive consultation.

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Virgin America To Buy $1.4 Billion In Engines

- Virgin America To Buy $1.4 Billion In Engines

Jun 15, 2011

Virgin America, the budget-airline, said Wednesday it ordered $1.4 billion in LEAP-X jet engines from CFM International. The new engines will power 30 Airbus A320neo aircrafts, which will be ready for use beginning in 2016.

LEAP-X promises better fuel economy, and Virgin has determined that the new engine will reduce its fuel bill by $1.9 million a year for each aircraft.

Virgin America has planned to triple its fleet since January, ordering 60 A320-family aircraft, including the re-engined version of the popular single-aisle jetliner

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Apache Shuts Van Gogh FPSO for Repairs

- Apache Shuts Van Gogh FPSO for Repairs

Wednesday, June 15, 2011
Rigzone Staff

Apache reported that scheduled maintenance of the Ningaloo Vision floating production, storage and offloading (FPSO) vessel commenced on June 11, 2011.

The Van Gogh oil field will be shut in during the maintenance activities. Since October, the FPSO has been shut several times for unplanned and planned repairs.

The Van Gogh field was producing approximately 40,000 barrels per day (bpd). With a 52.5 percent stake, Apache operates the Van Gogh field, while Inpex holds the remaining.

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CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months

- CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months

Jun 15, 2011

The Consumer Price Index (CPI) increased a seasonally adjusted 0.2% in May, the Bureau of Labor Statistics reported today, showing prices moderating somewhat from the 0.4% increase in April.

Economists had expected a 0.1% increase. The index has now increased 3.6% over the last twelve months.

The core CPI, which excludes food and fuel actually increased at a faster rate in the month, rising 0.3%. Economists had been expecting a 0.2% rise.

That's the largest increase in the core rate since July of 2008. Apparel, shelter, new vehicles, and recreation all contributed to the increase, more than offsetting declines in the prices for airline fares, tobacco, and personal care.

The food index rose as well, with the food at home index gaining 0.5% for the second month in a row.

The energy index declined 1.0%, with gasoline falling 2% alone. It's the first decline in the gas index since June of 2010.

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Kea to Spud Surat Basin Well End of June

- Kea to Spud Surat Basin Well End of June

Wednesday, June 15, 2011
Kea Petroleum plc

Kea announced that the Hoadleys-1 well in the recently acquired ATP837P license area of Australia's onshore Surat Basin is scheduled to spud by the end of June. On that basis, it is anticipated that the well will be drilled to a target depth of approximately 2200m by late July.

Hoadleys-1 Australia

Hoadleys-1 is a test of Lower Evergreen and Precipice Sands, which are established producer formations at the Moonie oil field, approximately 20km to the south of the ATP837P license area. It is situated on a discovery trend, with the Cabawin gas field approx. 20km to the north and the Bennett oil field and Leichhardt gas field approximately 20km further north again. Hoadleys-1 is the first well on this discovery trend outside of Moonie to be located on 3D seismic. Elsewhere in the basin, a number of discoveries in recent years have demonstrated that 3D seismic is essential to identification of the low relief structures which form the oil and gas traps. In the event of discovery, the company's internal estimated gross median resource potential is approximately one million barrels, with upside of several million barrels. In the event of discovery, it may be decided to drill deviated producers from the Hoadleys-1 site to fully develop the field. Kea is operator of ATP837P and holds 50% of the permit, with 25% of the permit each being held by Energetica and Rawson Resources respectively.

Wingrove-2 New Zealand

At the Wingrove-2 site, electrical certification of downhole heating equipment to conform with New Zealand Standards has delayed start-up. Commissioning of the plant and commencement of flow testing is now scheduled to take place at the end of the current week. Although first oil into tank is expected to follow quickly upon commencement of testing giving an indication of initial flow rates, it is likely to be several weeks before a reasonable understanding of the stable, long term production rate is likely to be achieved, due to the requirement to optimize flow from the several isolated pay zones in the production interval between 1150m and 1300m depth. In the event that long term flow in excess of 100 barrels per day is achieved, several more wells are planned to fully develop the field, which is mapped over an area of several square kilometres. This drilling program is expected to start later this year. Kea has also identified several other similar shallow oil targets which may be included in the proposed drilling program.

Commenting on the developments CEO Dave Bennett said, "Our onshore Australia drilling program is continuing on schedule. The commissioning of Wingrove-2 production equipment has involved several technologies new to New Zealand. While it has been frustrating that this commissioning has caused some delays ,we believe that these delays are now behind us."

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Texon Commences Drilling 2nd Eagle Ford Well

- Texon Commences Drilling 2nd Eagle Ford Well

Wednesday, June 15, 2011
Global Petroleum Ltd.

Texon has advised that Tyler Ranch EFS #2H commenced drilling on June 12, 2011. This is the second Eagle Ford well in which Global Petroleum Limited ("Global") has an interest.

Tyler Ranch EFS #2H is located immediately north of the first Eagle Ford well ("Tyler Ranch EFS #1H") which had an initial production rate of 1,200 bopd. The well will have a 4,500 feet horizontal section similar to Tyler Ranch EFS #1H, and it is expected that drilling and casing operations will take 35 days. Fracture stimulation and testing of the well are scheduled for August.

Global has a 7.939% working interest (5.95% NRI) in Tyler Ranch EFS #1H and Tyler Ranch EFS #2H.

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Analysis: Shale Boom, Independents Drive U.S. Reserves, Capital Spending

- Analysis: Shale Boom, Independents Drive U.S. Reserves, Capital Spending

Wednesday, June 15, 2011
Rigzone Staff
by Karen Boman

The U.S. shale oil and gas drilling boom boosted U.S. oil and gas reserve growth to a five-year high in 2010, while upstream spending more than doubled from 2009 to 2010 largely due to producers' acquisitions of shale properties, according to Ernst & Young's fourth annual U.S. E&P Benchmark Study.

The survey of the 50 largest oil and gas companies by end-of-year reserves found that end-of-year oil reserves grew 11 percent from 16.1 billion barrels in 2009 to 17.8 billion barrels in 2010, and natural gas reserve grew 12 percent from 156.2 Tcf in 2009 to 174.3 Tcf in 2010, the strongest combined annual growth posted from 2006 to 2010.

shale boom jun11 image 1
Shale Rock
The oil production replacement rate for U.S. oil reserves from all sources, including extensions and discoveries, improved recovery, revisions, purchases and sales of proved reserves, was 234 percent in 2010, compared with a 158 percent replacement rate in 2009. The U.S. natural gas production replacement rate from all sources was 252 percent last year, compared with 156 percent in 2009.

Production replacement rates for 2010 that excluded purchases and sales were 205 percent for oil, 249 percent for gas, and 232 percent on a combined BOE basis.

The study found that independent oil and gas producers led in terms of oil production replacement rates for 2010, with independents replacing 601 percent of oil production from all sources last year and, excluding purchases and sales, replacing 433 percent of oil production.

Large independents replaced 241 percent of production from all sources, and 290 percent of production from sources other than purchases and sales. Meanwhile, integrated oil and gas companies replaced 141 percent of oil production from all sources, and 111 percent of production from sources excluding purchases and sales.

Integrated companies had a gas production replacement rate of 436 percent from all sources; however, this replacement rate reflects ExxonMobil's acquisition of XTO Energy, which was completed in June 2010. When purchases and sales were excluded, integrated companies had a gas production replacement rate of 111 percent.

Independents replaced 408 percent of gas production from all sources in 2010, or 375 percent when purchases and sales were excluded. Large independents recorded a negative gas production replacement rate of 34 percent, largely due to the ExxonMobil/XTO transaction, as XTO is classified as a large independent. Excluding purchases and sales, large independents had a gas production replacement rate of 263 percent in 2010.

Reserve replacement costs on a total basis, including proved property acquisitions, were up once again, increasing to $15.26 per BOE in 2010 from $12.78 per BOE in 2009. Reserve replacement costs on a finding and development basis, excluding proved property acquisitions, increased to $17.84 per BOE, up from $13.01 per BOE in 2009.

Upstream spending more than doubled from $72.8 billion in 2009 to $177.9 billion in 2010. ExxonMobil's acquisition of XTO Energy accounted for 51 percent of proved property acquisition costs of $42.2 billion and 40 percent of unproved property acquisition costs of $59.3 billion in 2010. Apache Corp.'s acquisition of Mariner Energy and assets from Devon Energy and BP contributed significantly to proved and unproved property acquisition costs, as did acquisitions by Chesapeake Energy and Denbury Resources.

Exploration costs increased eight percent from $14.3 billion in 2009 to $15.5 billion in 2010, while development spending increased 36 percent from $44.8 billion in 2009 to $60.8 billion in 2010, primarily due to shale oil and gas development. The increase in exploration and development spending was primarily driven by ExxonMobil, Chesapeake Energy and EOG Resources. Of the 50 companies surveyed, only four decreased their exploration and development spending in 2010 – BP, ConocoPhillips, Loews and Plains Exploration & Production.

The companies' plowback percentage, or total upstream spending as a percentage of netback, increased to 170 percent in 2010, the highest of the five-year period from 2006 to 2010, as companies reinvest in shale activity. In 2006, the plowback percentage reached 121 percent as a result of an increase in investment activity driven by a relatively high priced commodity environment.

ExxonMobil's acquisition of XTO and similar deals are part of the trend of major oil and gas companies following the lead of independent oil and gas companies, who were first movers in North American shale plays. This trend is occurring as integrated majors are finding it difficult to replace reserves organically. The rise of national oil companies overseas has made it more difficult for the companies to access foreign reserves, as have restrictions placed U.S. offshore drilling. U.S. independents and oil service companies have been at leading edge of technology, including developments in horizontal drilling, which have changed the oil and gas industry.

shale boom jun11 image 2a
Horizontal drilling
Strong oil prices and weak, but stable, gas prices in 2010 encouraged investment in shale exploration efforts and production technology. The shift from gas to oil-focused drilling has created a drilling renaissance in the Permian Basin that has operators looking at plays nobody thought was possible.

However, consistency in commodity prices, as well as companies' abilities to find enough skilled employees and addressing issues surrounding hydraulic fracturing, are needed to allow companies to capitalize on shale properties. Despite controversy over hydraulic fracturing, the practice will likely continue, said Marcela Donadio, Americas Oil & Gas Leader for Ernst & Young, noting that companies are taking efforts to conduce fracing responsibly.

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Oilex Drills Ahead at Cambay Well

- Oilex Drills Ahead at Cambay Well

Wednesday, June 15, 2011
Oilex Ltd.

Oilex advised that at June 14, 2011 the Cambay-76H horizontal well was drilled to a depth of 601 meters and is preparing to drill ahead.
  • Report date: June 14, 2011
  • Status: Preparing to drill ahead
  • Operations:
    • Spudded well on June 8th
    • Drilled 17 ½" hole to 601 meters
    • Set 13 ⅜" casing to 599 meters
  • Objectives: Cambay Eocene "tight" reservoir Y Zone
  • Kick off point for deviation: Approximately 1,100 meters
  • Planned Total Depth (TD): Approximately 2,885 meters
  • Days to TD: Approximately 35 days on a trouble free basis

Cambay Eocene Tight Reservoirs

The Company is making progress in unlocking the potential of the Cambay "tight" Eocene reservoirs that extend across the 161 km2 Cambay Production Sharing Contract ("PSC") area in onshore Gujarat, India. The Company intends to evaluate and exploit these reservoirs using horizontal drilling and fracture stimulation technology that has been developed and proven in North America.

The Cambay-76H "proof of concept" horizontal well will evaluate the production potential of the Y Zone interval of these "tight" reservoirs. An 8 stage fracture stimulation program will be conducted and after well clean-up, it is anticipated that a long term production test will be performed to determine flow rates, quality of hydrocarbons and commercial viability.

The participating interests in the Cambay PSC are:
  • Oilex Ltd (Operator) 30%
  • Oilex NL Holdings (India) Limited 15%
  • Gujarat State Petroleum Corporation Ltd 55%

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