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Oil and Gas Energy News Update

Tuesday, July 12, 2011

Oil & Gas Post - All News Report for Tuesday, July 12, 2011

Tuesday, July 12, 2011

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Commodity Corner: Oil Rises on Weaker Dollar

- Commodity Corner: Oil Rises on Weaker Dollar

Tuesday, July 12, 2011
Rigzone Staff
by Saaniya Bangee

Crude futures ended a two-day losing streak Tuesday on a weaker dollar.

The Federal Reserve released its June 21-22 meeting minutes Tuesday, in which policy makers discussed whether an additional round of monetary stimulus will be needed. Some officials claim another round of quantitative easing will be necessary if economic growth remains weak.

The greenback weakened Tuesday on the pending stimulus and as fears over the European debt crisis eased. The dollar index, which measures the greenback against a basket of major foreign currencies, fell 0.2 percent.

After trading between $93.55 and $97.50, crude for August delivery rose $2.28 to settle at $97.43 a barrel.

Meanwhile, Brent futures settled at $117.75 a barrel, up 51 cents. Brent's gains were curbed on reports that Shell lifted a force majeure on its Nigerian Bonny Light crude oil loadings. The intraday range for ICE Brent crude was $114.95 to $117.83 a barrel.

The front-month Brent crude contract expires on Thursday.

Prices for natural gas continued to increase Tuesday on hot temperatures. According to weather forecasts, the scorching weather is expected to continue until the end of July. Higher temperatures increase the demand for natural gas.

The Energy Information Administration (EIA) forecasted an above-average increase in this year's production in its Short Term Energy Outlook. Also, it reported gas consumption is expected to increase by 21 percent in 2011.

Front-month natural gas gained 3.5 cents Tuesday to end the trading session at $4.312 per thousand cubic feet.

RBOB gasoline also ended the day's trading session higher, settling at $3.098 a gallon. Prices peaked at $3.0998 and bottomed out at $3.025 a gallon.

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Questus to Perform Restoration Ops at Eagle Oil Field

- Questus to Perform Restoration Ops at Eagle Oil Field

Tuesday, July 12, 2011
Eagle Oil Holding Co., Inc.

Eagle Oil provided the following update on the oil field restoration to be performed by Questus Energy.

Under the Farmout Agreement, Questus will perform all work and pay all costs associated with reconditioning an initial group of 15 existing oil wells in our East Texas oil field. As part of the work, which the Company expects to commence within the next two weeks, Questus will perform required fluid level and integrity tests on 33 wells located in the field as required by the Texas Railroad Commission. Once these tests are satisfactorily completed, Questus will be able to immediately restart pumping oil on five wells which are already fully equipped. Pumping will restart on the ten additional wells once they are re-equipped by Questus.

The Company expects pumping on the first five wells to commence within 45 days and all 15 wells to be in production within 60 days. The Company projects production to reach approximately 90 barrels per day once all 15 wells are reconditioned.

Additional groups of 10 wells will then be assigned to Questus, up to a total of 104 wells. The Company believes that pumping can resume at all 104 wells by November 2012.

The Company has also signed farmout agreements with two other entities for a total of up to 40 additional wells.

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Delta Petroleum Announced Ten-For-One Reverse Stock Split

- Delta Petroleum Announced Ten-For-One Reverse Stock Split

Jul 12, 2011

Delta Petroleum (NASDAQ:DPTR) announced that its shareholders have approved an amendment of the company's certificate of incorporation to affect a reverse stock split at an exchange ratio of one-for-ten, and to reduce the number of authorized shares of common stock from 600 million to 200 million.

The reverse stock split will be effective at the opening of trading on July 13. Upon effect of the reverse stock split, the stock will trade with a "D" next to the symbol "DPTR" for 30 calendar days to signify the reverse stock split has occurred. With the effect of the reverse stock split, the company expects to satisfy NASDAQ's continued listing requirements.

Delta Petroleum is currently below its 50-day moving average (MA) of $0.63 and below its 200-day MA of $0.77.

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General Motors Invests in $129 Million in Ohio, Indiana and Michigan Plants

- General Motors Invests in $129 Million in Ohio, Indiana and Michigan Plants

Jul 12, 2011

General Motors (NYSE:GM) announced Powertrain plants in Ohio and Indiana that make transmissions for Buick and Chevrolet car models with e-Assist fuel saving technology will get the bulk of a $129M investment.

Cathy Clegg, GM vice president of labor relations said, "GM continually assesses its product offerings and makes adjustments to meet consumer demand. GM is moving quickly to get more fuel-efficient technologies into our vehicles to benefit the consumer, and these investments are an example of the speed with which we are responding."

The money is part of $2B being invested in 17 facilities in eight states over the next 18 months and will generate or retain 4,000 jobs.

At the plans in Toledo, Ohio and Bedford, Indiana, it is a second helping of investment since last May, bringing the total investment of the plants to $287M and $81M respectively.

General Motors has a potential upside of 41.6% based on a current price of $30.76 and an average consensus analyst price target of $43.55.

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The Commerce Department Reported That US Trade Deficit Rose 15.1% In May

- The Commerce Department Reported That US Trade Deficit Rose 15.1% In May

Jul 12, 2011

The Commerce Department reported that the U.S. trade deficit rose 15.1% in May to the highest level in nearly three years, largely due to the increased cost of oil imports.

The trade gap widened to a seasonally adjusted $50.2 billion from $43.6 billion in April, which is the biggest monthly deficit since October 2008.

Economists had expected the trade deficit to rise to $44.5 billion.

Imports rose 2.6% to $225.1 billion, while exports fell less than 1% to $174.9 billion.

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Trina Solar Shares Fall After Audit Chairman Resigns

- Trina Solar Shares Fall After Audit Chairman Resigns

Jul 12, 2011

Trina Solar Limited (NYSE:TSL) shares dropped more than 15% so far today following the company's announcement that their independent director and chairman of the audit, Peter Mark resigned on July 10 to focus on additional personal and professional pursuits.

The company named Jerome Corcoran to replace Mark's role.

Trina Solar has a potential upside of 67% based on a current price of $17.23 and an average consensus analyst price target of $28.77.

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ReneSola Cut Its Q2 Revenue Estimate Due To Falling Wafer Prices, Challenging Market

- ReneSola Cut Its Q2 Revenue Estimate Due To Falling Wafer Prices, Challenging Market

Jul 12, 2011

ReneSola (NYSE:SOL) said that its Q2 revenue will be below its previous forecast due to falling wafer prices and a challenging solar module market. The company said it now expects revenues of $235 million to $245 million, down from $280 million to $300 million.

Total solar wafer and module shipment will be in the range of 290 megawatts to 300 megawatts, compared to the previous forecast of 330 megawatts to 350 megawatts.

Shares of the company are currently trading 7.69% lower at $4.32.

Renesola has a potential upside of 148.1% based on a current price of $4.32 and an average consensus analyst price target of $10.72.

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Chevron: Exploratory Oil Drilling in Liberia to Start in 4Q

- Chevron: Exploratory Oil Drilling in Liberia to Start in 4Q

Tuesday, July 12, 2011
Dow Jones Newswires
by Isabel Ordonez

Chevron said Tuesday that in the fourth quarter of this year it will start exploratory drilling off the coast of Liberia, a West African nation that doesn't yet produce crude, but holds promising acreage.

"We plan to drill in the fourth quarter of this year," said Mickey Driver, a company's spokesman, in an email.

Last year, Chevron signed a three-year deal with Liberia to explore for oil offshore. Chevron Chief Executive John Watson visited the country for the first time this week and said the company has a rig that will be entering Liberian waters shortly, according to a local news report.

Chevron's foray is the latest in an emerging oil region in West Africa, where giant fields such as Tullow Oil's Jubilee and Anadarko's Venus have been found.

Liberia is still healing from long years of strife. The discovery of oil would greatly boost the recovery of the agrarian nation, one of the world's poorest, and propel it into the ranks of budding African oil powers like Ghana and Uganda.

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

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Israel Seeking UN Opinion on Maritime Border Dispute with Lebanon

- Israel Seeking UN Opinion on Maritime Border Dispute with Lebanon

Tuesday, July 12, 2011
by Joao Peixe

According to Israeli Foreign Minister Avigdor Lieberman, Tel Aviv will shortly seek a UN opinion on its Mediterranean maritime borders with Lebanon.

The Israeli’s governmental request would be an extraordinary move, giving its constant complaining about UN arbitrariness over the past five decades.

At issue are recently discovered offshore gas fields, the frontiers of which Lebanon heatedly disputes.

Lieberman told the Israeli media, "We will soon be presenting the United Nations headquarters in New York with our position on our maritime borders. We have already concluded an agreement on this issue with Cyprus... Lebanon, under pressure from Hezbollah, is looking for friction, but we will not give up any part of what is rightfully ours."

Lebanon argues the offshore gas fields are inside its territorial waters as delineated by the 1982 United Nations conference on the Law of the Sea (UNCLOS convention) and, as Israel does not have officially demarcated maritime borders with Lebanon, the two countries technically remain at war, NOW Lebanon news agency reported.

The two biggest known offshore natural gas fields prospected so far, Tamar and Leviathan, lie off Israel's northern city of Haifa.

The fiscal implications of the dispute are immense, as the Tamar field is believed to hold at least 238 billion cubic meters of extractable natural gas reserves, while Leviathan site is believed to have reserves of 450 billion cubic meters.

Lebanon has warned Israel against taking "unilateral steps" on its maritime borders, with Lebanese President Michel Suleiman cautioning the Israeli government against taking unilateral actions of "the kind that Israel commonly makes in violation of international law."

(Joao Peixe is Deputy Editor with The original article appears here.)

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Saskatchewan Well Delivers for Petro One

- Saskatchewan Well Delivers for Petro One

Tuesday, July 12, 2011
Petro One Energy Corp.

Petro One reported that the first hole of its first summer drill program has led to the discovery of a previously unknown light oil pool on the Company's 100%-owned J5 property in Saskatchewan, Canada. This conventional vertical well demonstrated an excellent flow rate of 9.63 cubic metres (60.57 bbl) of light oil to surface in just 7.75 hours from the Viking sand at a depth of 736.5 m, without stimulation, swabbing or pumping. Flowing pressure in the tubing measured at surface was stable at 1,000 kPa throughout the flow period, indicating a reservoir of excellent quality. The well has been shut in pending installation of a separator and adequate tanks later this week, at which time it will be placed in full production. With oil flowing to surface on its own, and excellent reservoir pressures, a pump is not necessary. Once the well is on stream, the results of a 48-hour production test and fluid analyses will be announced.

A final core analysis completed by Core Labs has confirmed excellent porosity up to 23.5% and unusually high permeability up to 3,980 mD over the perforated interval. This new oil pool is contained within an extensive Viking sand corridor on the J5 property indicated by the high-resolution seismic program shot by Petro One last spring. The excellent productivity of the 10A-15 well is explained by a highly porous and permeable basal channel facies that cuts across the main thick Viking sand fairway. As a result of this significant discovery, an expanded exploration and development drilling program of up to 17 additional wells has been planned on J5 to exploit the full potential of this newly identified reservoir.

"The discovery of a new oil pool with our first drill hole has exceeded the Company's expectations, and establishes the ability of our technical team," said Petro One's President Peter Bryant. "We look forward to determining the full extent of this new reservoir and expanding our production. This will serve as a solid foundation to build on."

"Petro One is to be congratulated on discovering such an outstanding quality reservoir sand on their very first exploratory well," said Harold Ryan, P.Geol., Geoscience Manager at Chapman Petroleum Engineering. "It is very rare to find an untapped reservoir in the Viking that has such excellent porosity and permeability and can be exploited by conventional drilling."

Production facilities are being installed to bring the well on stream, and a reserve upgrade is planned to be released in the immediate future. Detailed core and fluid analyses and petrographic and reservoir engineering studies are in progress to optimize development and production of this newly discovered oil field.

Preparations are also under way for summer drill programs on other Petro One properties with strong light oil potential. Petro One holds 100% of the oil and gas rights to fourteen stand-along properties in Southeastern Saskatchewan and Southwestern Manitoba, including the J5 property, pursuant to leases issued by the Provincial Governments. Further results from this summer's drill programs will be announced as they become available.

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Eni CEO, Egyptian PM Confirm Commitment in Egypt

- Eni CEO, Egyptian PM Confirm Commitment in Egypt

Tuesday, July 12, 2011
Eni S.p.A.

The Egyptian Prime Minister HE Essam Sharaf and Eni CEO Paolo Scaroni met today in Cairo confirming the commitment of Eni to Egypt, following the recent agreements.

The new activities will take place in the Western Desert, in the Mediterranean and in the Sinai, and will cover both exploration and development, through the drilling of additional wells and the acceleration of production from new discoveries.

With these additional activities, Eni's investment in Egypt in the years 2011 and 2012 will amount to approximately US $3 billion. Eni will also sponsor a training plan for national staff working in the Petrobel and Agiba joint ventures with EGPC. Furthermore, in accordance with the Ministry of Petroleum, Eni will support the Sinai community with social activities.

Eni is the first international operator in Egypt with total operated production of round 500 thousand boe/day.

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EIA: Higher US Gas Production Expected for 2011

- EIA: Higher US Gas Production Expected for 2011

Tuesday, July 12, 2011
Dow Jones Newswires
by Amy D'Onofrio

The U.S. Energy Information Administration raised its forecast for natural-gas production for 2011, and said inventories are expected to come close to last year's record levels this fall.

The EIA also expects demand for gas to be slightly stronger than previously expected.

U.S. gas production is expected to average 65.4 billion cubic feet a day in 2011, up 5.8% from last year. The forecast was up from last month's prediction of 4.5% growth in output, according to the agency's monthly Short Term Energy Outlook released Tuesday.

"Growing domestic natural gas production has reduced reliance on natural gas imports and contributed to increased exports," the EIA said.

That increase in production is partly due to drilling to access gas in shale rock formations, where output has shot up in recent years.

Pipeline gross exports to Mexico and Canada are expected to average 4.2 Bcf/d in 2011, up from 3.1 Bcf/d in 2010, while liquefied natural gas imports are seen falling to 1 Bcf/d, from 1.2 Bcf/d in 2010, the agency said.

Production continues to grow faster than consumption. Total gas consumption is forecast to increase by 2% in 2011 to 67.4 billion cubic feet a day, on higher demand from industrial and electric power consumers.

Consumption is expected to drop slightly in 2012 to 67.3 billion cubic feet a day. The EIA expects residential and commercial consumption to decline because cooler weather is expected in the Midwest and West, the EIA said.

Natural-gas prices at the benchmark Henry Hub should average $4.26 per million British thermal units over the second half of 2011, "as the inventory deficit relative to last year narrows," the EIA said. In June, prices averaged $4.54, or 34 cents higher than the forecast last month.

Uncertainty over natural gas prices is still lower this year compared with the same time last year, the statistical arm of the Department of Energy said.

Gas prices will likely come under downward pressure as inventories rise during the summer months, but prices are expected to average $4.54 in 2012 as production growth slows.

This year, inventories should remain high, however.

Inventories are forecast to surpass 3.8 trillion cubic feet at the end of October "because of current high production rates and a milder summer relative to last year," according to the report.

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

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Premier Looks Ahead to Next Stage of Growth

- Premier Looks Ahead to Next Stage of Growth

Tuesday, July 12, 2011
Premier Oil plc

Premier provided a trading and operations update ahead of its 2011 Interim Results.

Simon Lockett, Chief Executive, commented, "With continuing good progress on our Asian development projects we expect to see a significant increase in production to around 60 kboepd by year end. Our development teams in the North Sea and Asia are already focused on delivering the next stage of Premier's growth. Our exploration program of around 20 wells over the next 12 months targets around 300 mmboe of unrisked prospective potential."

Production outlook

2011 to date has seen continuing good production performance from the Anoa field in Indonesia, while Pakistan's production has remained steady. This was offset by increased maintenance activity in the UK and a recent unplanned shutdown at Balmoral. As a result, estimated average group production for the first half of 2011 was 36.6 thousand barrels of oil equivalent (kboepd) (2010: 42.8 kboepd) and forecast full year production is now estimated at between 40 kboepd and 45 kboepd.

Near term developments in Asia (Chim Sao and Gajah Baru) are progressing well and 2011 year end run rate is expected to be around 60 kboepd as these projects ramp up. With the UK Huntington and Rochelle projects due on-stream next year, Premier is on target to reach a run rate of 75 kboepd in 2012. Our medium term target of 100 kboepd remains unchanged.

Singapore gas demand continues to grow for our gas exports from the Natuna Sea, with average gas sales under the West Natuna gas contract of 373 bbtud in the first half of 2011 compared to 357 bbtud in the second half of 2010. Block A's share of the contract amounted to 41 percent in the period (against a contractual share of 37 percent), though with a recovery in output from the other two PSC's participating in the contract, actual levels of production reduced from the prior period. Premier's production levels will rise in the second half of the year as the Gajah Baru development contributes from October.

In the UK, production was below expectations due to maintenance related downtime earlier in the year at the Balmoral and Wytch Farm facilities and a recent unplanned shutdown at Balmoral due to a subsea hydraulic leak. Production resumed at Balmoral on 4 July after a three week outage. Scott and Telford production has remained steady since April following earlier disruptions for gas compression maintenance.

As announced in June, Premier increased its stake in the Wytch Farm Assets by 17.715 percent. This is expected to add around 2.5 kboepd to Premier's UK production from year end 2011 when the transaction is targeted for completion. Following the shutdown in the first quarter, production at the Wytch Farm facilities has been rising in recent weeks to around 14 kboepd (gross).

Pakistan production is stable, with the natural decline in the fields offset by infill drilling and the completion of ongoing front-end compression projects. The successful K-18 sidetrack well on Kadanwari, which came on-stream in February 2011, continues to perform favorably. Delays in the front-end compression project at Zamzama are being resolved and increased production is anticipated imminently.

Current and future developments


In Vietnam, the Chim Sao project remains on schedule with first oil expected in August. On July 1, the FPSO moved from the Keppel yard to its offshore anchorage where deep water commissioning and trials were completed. The FPSO is now on tow to the Chim Sao field for the installation of the umbilicals that will connect it to the production wells.

The Gajah Baru project in Indonesia is progressing ahead of schedule. The Central Processing Platform topsides were installed on the jacket on July 6 and the bridge linking this to the wellhead platform was installed on July 7. Elsewhere on Block A, EPCI technical bids have been received and are under evaluation for the Anoa Phase 4 Development which will add additional compression capacity on the Anoa platform. In addition, the Front End Engineering and Design has been completed for the facilities and pipelines for the Pelikan and Naga fields. These projects are on target for sanction in the fourth quarter of 2011.

In North Sumatra, discussions with the shortlisted facilities EPCI bidders are under way. Technical bids are due in by September and final contract award is expected by year end. First gas on Block A Aceh remains on target for late 2013.

North Sea

The Huntington development in the UK is progressing, with work continuing on the Sevan Voyager FPSO upgrade project and sub-contracted modules. Timing for sail away (and therefore first oil) is likely to be impacted by the current financial situation of the FPSO supplier. Any material delay in the Huntington project will impact the average production for 2012 and the date at which a run-rate of 75 kboepd is achieved. In the meantime, key subsea equipment is on order and an installation contract has been signed. Development drilling commenced in April and is proceeding well.

An agreement for the Rochelle area has been executed with Premier acquiring a 15 percent equity in the unitised East and West Rochelle projects. First gas is anticipated for the fourth quarter of 2012. As previously announced, a Sale and Purchase Agreement for the Solan field was signed in May and Premier will become the development operator of the field at sanction with a 60 percent equity interest. Pre-sanction activities are progressing with final project approval targeted for later this year.

Development concept selection for Fyne is expected by year end, after the East Fyne appraisal well has been drilled. Discussions are ongoing with partners regarding potential development solutions for the Catcher Area. In Norway, development plans for the Froy field received Premier support for moving to the next phase. However, the operator has indicated that, due to limited resources and commitments elsewhere, they will not be proceeding with the project at this time. As a result, discussions with third party new entrants to the Froy project are underway. Dialogue also continues with the preferred contractor for the Bream field development regarding the timing of the FPSO availability.

Exploration and appraisal

Around 20 exploration and appraisal wells are planned during the next 12 months, with unrisked net prospective resource potential, on a P50 basis, of around 300 mmboe. Several of the planned wells for the first half of 2012 remain subject to partner approvals and government consents.

North Sea

As previously announced, the Grosbeak well in Norway was spudded in April 2011 and has now been sidetracked. The results of the sidetrack, which reached target depth on July 7, are anticipated later in July. Premier plans to drill its first operated well in Norway, the Gardrofa exploration well, in the third quarter of 2011.

Premier has signed a Heads of Agreement (HOA) with Antrim Energy to gain additional acreage in the Greater Fyne Area. Under the HOA, Premier will earn a 50 percent working interest in the acreage in return for funding a promoted share of the costs to drill a well on the Erne Prospect, which is planned for the third quarter. The Erne well will target an Eocene Tay Formation oil prospect located between the Fyne and Guillemot NW fields in the UK Central North Sea. A successful Erne exploration well will be taken into account for the Fyne development concept selection targeted for year end.

Separately the East Fyne appraisal well is now planned for the fourth quarter, using the Sedco 704 semi-submersible rig, the results of which - along with the results of the Erne exploration well - will feed into the Fyne development concept process. The Sedco 704 will then move to spud the Bluebell well, a prospect near to the Premier-operated Caledonia field and the Balmoral facility.

The Stingray well (Premier interest, 50 percent), which is scheduled for the first half of 2012, is targeting a Jurassic sandstone reservoir in UK Block 15/13b. In UK Block 28/9, the Joint Venture partners have decided to acquire 3D seismic data over the block in the second half of 2011. As a result, the Carnaby well will now be drilled in the first half of 2012.


In Indonesia, on the Tuna Block, Gajah Laut Utara was plugged and abandoned in June with oil and gas shows. The Ocean General Rig has now moved to Belut Laut, which spudded on 4 July. The Belut Laut prospect is in a separate sub-basin to that of Gajah Laut Utara and is an independent test of the petroleum system on the Tuna acreage. The results of Belut Laut are expected in August.

Elsewhere in Indonesia the Benteng-1 well on the Buton licence is expected to be drilled in the first quarter of 2012. The Matang-1 well on Block A Aceh is also scheduled to be drilled in the first quarter of 2012. The Antareja Resources land rig, Antareja-8, has been contracted for Matang-1.


As previously announced, the K-27 exploration well was successful and will be tied back to the production facility by the end of the third quarter, delivering around 30 MMscfd (gross). The K-29 and K-30 exploration wells, together with Badhra-6 Parh, are planned for late 2011.

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Crosstex Energy, Apache to Jointly Invest in Permian Basin Facility

- Crosstex Energy, Apache to Jointly Invest in Permian Basin Facility

Tuesday, July 12, 2011
The Crosstex Energy Cos

The Crosstex Energy companies announced a partnership with Apache to jointly invest $85 million in a new-build natural gas processing facility in the Permian Basin in West Texas. The initial phase of the project will provide interim and long-term processing solutions, compression and residue gas takeaway for Apache's Deadwood development in Glasscock County. Crosstex and Apache will fund the processing project equally and each hold a 50 percent working interest. Separately, Crosstex will buy and upgrade a nearby rail terminal to provide transportation of natural gas liquids (NGL) to its Eunice fractionation facility in southern Louisiana.

Initially, Crosstex and Apache will install a refrigeration plant with a capacity of 20 million cubic feet (MMcf) per day as an interim gas processing solution, compression and takeaway, all of which are expected to be operational by the fourth-quarter 2011. A cryogenic gas processing facility with a capacity of 50 MMcf per day is expected to be operational in the second-quarter 2012. Crosstex will manage construction and operate the facilities.

"Crosstex is excited to embark on this joint interest project with Apache, a premier independent energy company that has operated in the Permian Basin in West Texas for nearly 20 years and is one of the largest producers in the region with an active drilling program. We are extremely pleased Crosstex can provide Apache with creative midstream solutions for their gas and NGL products," said Barry E. Davis, Crosstex President and Chief Executive Officer. "We look forward to continuing our long-term working relationship with Apache.

"This transaction provides Crosstex with a significant footprint for future growth in the Permian Basin area where we will pursue additional business opportunities," Davis added.

Additionally, Crosstex will purchase and upgrade the abandoned Patriot Fractionator in Midland County. The facility will be upgraded and refurbished to initially serve as a rail terminal for Apache raw make NGL. Crosstex will transport NGL via rail to its Eunice fractionation facility in south central Louisiana for fractionation and sales. Product will be delivered to the Mesquite terminal via existing NGL pipelines or by trucks. Crosstex will invest $12 million in the project, which is scheduled to be completed and operational in the fourth-quarter 2011. This facility will provide NGL takeaway for the constrained Permian infrastructure until a long term pipeline solution becomes available.

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Faroe Notes Progress on Petoro Asset Swap

- Faroe Notes Progress on Petoro Asset Swap

Tuesday, July 12, 2011
Faroe Petroleum plc

Faroe provided an update on the Petoro asset swap deal as follows:

  • The transaction was passed by the Norwegian Parliament on June 17, 2011 and completion is expected in the Autumn
  • Average net production from the Petoro Assets in the six month period January 1 to June 30, 2011 was approximately 8,400 boed
  • 3.2 million boe of additional reserves net to Faroe's acquired interest in Njord since signing the Petoro Asset swap, expected to result from sanctioning of two new projects

On April 11, 2011, Faroe announced that it had signed an agreement with Petoro AS to swap its 30% interest in the significant Maria oil discovery for non‐operated interests in a number of good quality oil and gas production assets in Norway, namely in Brage, Njord, Ringhorne East and Jotun (the Petoro Assets).

Average net production from the Petoro Assets in the six month period January 1 to June 30, 2011 was approximately 8,400 boed. This high level of production has been achieved despite a technical problem with the riser system in Njord, which caused several production wells to be shut in for a period. Following the completed repairs, Njord is expected to be back on full production in 3Q 2011.

On May 12, 2011, a Field Development Plan (FDP) was submitted for the Hyme oil field, and this has already been approved by the Norwegian Ministry of Petroleum and Energy. Faroe will have a 7.5% net interest in the Hyme development (previously named Gygrid), located to the east of Njord. First oil from Hyme is expected in early 2013. The field will be developed with one dual‐lateral producer and a water injector sub‐sea tied back to the Njord field. In addition, the Njord partnership has sanctioned a project to allow continued production at lower pressure and extended field life. These two projects will add 3.2 million boe of 2P reserves and come as an addition to the 14 million boe of 2P reserves reported by the Company on April 11. Net Faroe capital expenditure on these projects is expected to be approximately £42 million, to be funded principally through a combination of cash flow from the Petoro Assets and bank debt.

The transaction was an asset for asset swap with no cash consideration from either party, and an effective date of January 1, 2011. Through this transaction, Faroe avoids the net capital investment of approximately £250 million required to appraise and develop Maria. Petoro retains the majority of decommissioning and abandonment liabilities in the Petoro Assets and have transferred a tax balance of NOK 400 million (approximately £46 million). The deal is conditional upon approval by the Norwegian authorities; the transaction was passed by the Norwegian Parliament on 17th June 2011 and completion is expected in the Autumn.

Graham Stewart, Chief Executive of Faroe Petroleum, commented, "We are very pleased with progress of the Petoro transaction. We are also encouraged by the higher than expected production rates of the fields we are acquiring during the first half of the year.

"We now look forward to a very exciting period of drilling ahead with four wells in the second half alone, starting with Fulla results, due in August 2011."

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Petrofac Secures Marathon Contract Renewal

- Petrofac Secures Marathon Contract Renewal

Tuesday, July 12, 2011
Petrofac Ltd.

Petrofac announced that its Offshore Engineering & Operations (OE&O) business has been awarded a contract renewal by Marathon. Petrofac has been working with Marathon on its North Sea Brae assets since 2005. Following the delivery of a number of critical projects, the contract has been extended by a further four years.

Starting in August 2011, Petrofac will deploy its engineering, construction, operations and maintenance services under the terms of the new contract. The base scope is valued at £36 million, although this does not include the value of any future projects which may get sanctioned.

Bill Dunnett, managing director, Petrofac OE&O commented, "The renewal of this important contract with Marathon is recognition of the strength of the working relationship our respective teams have developed in the past six years. As a group we are committed to the North Sea and this long-term contract extension, which enables us to continue to deploy our extensive services capability, is key to our continued growth and development in the region."

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Clean Energy Fuel Corp Is Receiving $150M Investment From Chesapeake Energy

- Clean Energy Fuel Corp Is Receiving $150M Investment From Chesapeake Energy

Jul 12, 2011

Clean Energy Fuel Corp. (NASDAQ:CLNE) is receiving a $150 million investment from Chesapeake Energy Corp. (NYSE:CHK) as part of the company's $1 billion fund to invest in companies that develop infrastructure or technology to increase the use of gas as a motor fuel, according to a Bloomberg report.

Clean Energy Fuels has a potential upside of 17% based on a current price of $14.82 and an average consensus analyst price target of $17.33.

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GL Noble Denton Bags Gig for Queensland Curtis LNG Proj.

- GL Noble Denton Bags Gig for Queensland Curtis LNG Proj.

Tuesday, July 12, 2011
GL Noble Denton

QGC has selected GL Noble Denton to provide verification services for the development of the Queensland Curtis Liquefied Natural Gas (LNG) project, which is expected to supply more than 8.5 million tonnes of LNG per annum through the development of two
LNG trains.

GL Noble Denton's experts will oversee the pipeline construction portion of the project over a two-year period. The company will supply
inspection services for the installation of the 540 kilometer underground line between natural gas fields in Australia's Surat Basin
and a natural gas liquefaction plant on Curtis Island near Gladstone on Queensland's coast.

The quality assurance and control contract was awarded to GL Noble Denton following the successful completion of an in-depth study into the production capacity of the LNG plant design that will be built on Curtis Island. GL Noble Denton used its in-house Monte Carlo simulation software, OPTAGON to provide a holistic assessment of the ability of the LNG plant to meet its intended use. The model also identifies equipment criticality and their contributions to unplanned downtime, and has provided results that have added significant strategic and operational value to the project.

Richard Bailey, GL Noble Denton's Executive Vice President for Asia Pacific said, "The Queensland Curtis LNG project is one of the
Australian oil and gas industry's most exciting developments to date. It will help define the country as a leading producer and exporter of
natural gas, and we are delighted to play a role its development.

"Demand for GL Noble Denton's services has increased considerably in Australia over the past year, as operators continue to unlock the
significant potential of the natural resources available on- and offshore the country."

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Breitling Kicks Off Drilling at Tx. Well

- Breitling Kicks Off Drilling at Tx. Well

Tuesday, July 12, 2011
Breitling O&G Corp.

Breitling O&G has spud the Breitling-Big Tex #2 on July 9, 2011 in Gaines County, Texas. The Breitling-Big Tex #2 is the second of three Big Tex prospect wells to be drilled. A completion rig is moving on location to complete the Big Tex #1 after it reached total vertical depth on July 6, 2011.

Just like the Big Tex #1, the Breitling-Big Tex #2 is a 9,000-foot vertical well within the established Tex-Pac Field and is targeting Lower Clearfork Dolomite beneath 8,500 feet. Secondary objectives include the San Andres, Yates, Glorieta and Abo formations.

Breitling's 3-Well Breitling-Big Tex Prospect was developed after a 75-square-mile 3D seismic shoot was reprocessed and interpreted in 2010. The quality of the new data set after it was re-imaged using Breitling's proprietary Geo3D technology identified features that were not noticeable when the shoot first occurred. In essence, the resultant seismic lines were much more detailed and refined, therefore capturing subsurface images not previously acknowledged.

Management anticipates the first well will reach total depth in about 20 days. Well completion and testing should begin during the first week of August.

Breitling Oil and Gas CEO Chris Faulkner stated, "We are excited to be drilling ahead of our original timelines." Faulkner added, "The Big Tex #1 looks promising and we expect the Big Tex #2 to be relatively the same as far as shows and the logs."

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Pacific Rubiales Receives Environmental Permit for Quifa Wells

- Pacific Rubiales Receives Environmental Permit for Quifa Wells

Tuesday, July 12, 2011
Pacific Rubiales Energy Corp.

Pacific Rubiales announced that Colombia's Ministry of the Environment recently granted the Company the requisite environmental permits for Quifa Southwest and Quifa North. The environmental permit for Quifa Southwest was granted on June 2, 2011, and the permit for Quifa North was granted on June 24, 2011 (collectively, the "Permits"). The Permits affirm that Pacific Rubiales can continue its development drilling campaign in Quifa Southwest and proceed with its exploration drilling campaign in Quifa North.

The exploration program is aimed at incorporating drilling results into an updated National Instrument 51-101 compliant reserves report. The Company's exploration program for the second half of 2011 in the Quifa North area includes 3 exploratory and 13 appraisal wells in prospects Q, F, P and Z, while in Quifa Southwest the drilling campaign includes a total of 52 wells (32 vertical and 20 horizontal).
With this drilling campaign, the Company expects to reach a gross production target of 60,000 bbl/d at Quifa Southwest and Quifa North, by the end of 2011. Details of the campaign will be provided to the market on a timely basis.

The Ministry of the Environment is currently conducting an administrative investigation in the Block. Such administrative investigations occur on a routine basis in the ordinary course of business with respect to the execution of the Company's various projects. In response to recent media reports in Colombia, the Company wishes to make clear that the current administrative investigations will not produce material consequences to the Company's current operations in the Block.

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Second Seismic Survey Commenced at Manas' Tajikistan Licenses

- Second Seismic Survey Commenced at Manas' Tajikistan Licenses

Tuesday, July 12, 2011
Manas Petroleum Corp.

Manas announced the commencement of the second seismic survey on CJSC Somon Oil Company's WEST and NORTH WEST licenses in the Republic of Tajikistan. This program includes up to 774 km of 2D seismic survey, which up to 115 km will be acquired over the WEST license and up to 659 km will be acquired over the NORTH WEST license. An additional 24 km will extend across the Kyrgyz-Tajik border into Manas' Tuzluk license in the Kyrgyz Republic.

Somon Oil, a 90% owned subsidiary of DWM Petroleum AG, signed the agreement for Seismic Services with the Tajikistan branch of the Kazakh company, DANK Scientific Industrial Firm ("DANK"), on June 29, 2011. DANK has extensive experience in the hydrocarbon exploration industry performing seismic work in the larger Caspian region. DANK also performed Somon's seismic survey in 2010. The seismic work will be conducted with vibrators, airguns (a significant volume of the data is to be acquired across the Karakum Reservoir, for the first time), with the remainder utilizing dynamite as a source.

This seismic survey is being carried out to improve the quality of the existing prospect data, and hence increase the chances of success of the exploratory wells to be drilled upon completion and interpretation of the new seismic data. The first well is anticipated to be spudded at the end of the first quarter of 2012.

Santos International Ventures Pty Ltd ("Santos International")., a wholly owned subsidiary of Santos Ltd., has an option to farm-in to Somon Oil pursuant to an option agreement signed between DWM Petroleum AG, Santos International (and others) on December 10, 2007. The Production Sharing Agreement has yet to be ratified and remains one of the hurdles for Santos exercising the option. Prior to exercise of that option, Santos International has agreed to provide preliminary discretionary funding towards the costs of the abovementioned seismic, although binding fully funded commitments are not intended to arise until exercise of the option. Once exercised, it is intended that (subject to further agreement on terms), Santos International will fully fund the seismic survey and that these costs will be credited to the total funding commitments to be agreed.

Somon has also commenced the process of obtaining all required permits to commence drilling operations in the Chkalovsk area (WEST license) as well as in the West Supetau area (NORTH WEST license).

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Aker Awarded FEED Study at Statoil's Mariner Field

- Aker Awarded FEED Study at Statoil's Mariner Field

Tuesday, July 12, 2011
Aker Solutions

Aker Solutions has won a contract to conduct the topside FEED (front-end engineering and design) study for Statoil on the Mariner field on the UK continental shelf in the North Sea. The contract value is approximately NOK125 million.

The study will be delivered in the summer of 2012, after which the customer may proceed with the final investment decision.

"We are pleased to have won another important topside FEED study from Statoil. The Mariner field presents an exciting opportunity on the UK shelf, which suits our strategy of boosting our presence in the UK further," said Valborg Lundegaard, executive vice president of Aker Solutions' engineering business.

The engineering and design work will be carried out from Aker Solutions' engineering hub in Oslo, together with engineers from the drilling technologies business in Kristiansand, Norway.

Aker Solutions is also strengthening its UK engineering capacity, hiring experienced engineering professionals to its London office, which could offer future support for the Mariner project.

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Beach Begins Gas Flow at AU's First Shale Well

- Beach Begins Gas Flow at AU's First Shale Well

Tuesday, July 12, 2011
Beach Energy Ltd.

A significant gas flow of up to 2 million standard cubic feet per day (MMscf/d) has been achieved from Beach's Holdfast-1 exploratory shale gas well in the Cooper Basin. Holdfast-1, the first well drilled to examine the shale gas potential of the thick Roseneath-Epsilon-Murteree shale sequence in the Cooper Basin, is a vertical data gathering well that was recently flow stimulated in seven stages.

Hot water, steam and low levels of gas started to flow from the well on 1 July upon the commencement of post-stimulation clean-up activities. Late on Friday 8 July the flow was diverted through on-site separation equipment to more reliably measure the gas and stimulation fluid rates. With separation of the gas from the returning stimulation fluid the gas flare was successfully ignited. The gas flow rates, now measured, have remained steady at around 1.8 MMscf/d.

Beach regards the flow rates as significant, given the potential for higher flow rates from future horizontal wells. Follow up wells are planned to be drilled to target the optimal producing zone identified by the extensive coring, stimulation and testing program which has been undertaken by Beach in the Nappamerri Trough.

Beach Managing Director, Reg Nelson, said, "We are delighted and excited by this initial flow rate from Holdfast-1. So far the results give us confidence that these shale target zones, which underlie the conventional oil and gas bearing formations in the Cooper Basin, will significantly increase the natural gas potential of this area. It is still early days but this flow rate looks to be very significant."

Mr. Nelson added, "While these results are preliminary at this stage, it does suggest that significantly larger flow rates may be achievable in an optimally designed, pilot horizontal well. Holdfast-1 was deliberately designed to allow us to experiment with different stimulation techniques and to test different zones within a thick sequence of shales and other lithologies to determine which approach could be applied for the best results when designing a pilot production well."

Beach previously reported the flow stimulation of the Holdfast-1 well had been completed successfully with the various selected target zones fracturing vertically, in line with expectations. The vertical nature of the induced fracturing augurs well for future horizontal production wells.

A variety of well perforation techniques, fluid viscosity and proppant sizes was used in the stimulation of Holdfast-1 to provide a range of information on the response and performance of the different shale and tight rock zones intersected in the Permian aged section of the well. This approach is intended to identify which techniques are best suited to the pilot production program set down for 2012. This program will consist of two horizontal wells, one at each location.

The flow stimulation of Holdfast-1 was undertaken in seven stages, targeting the primary target zones of the Roseneath Shale (two stages), the Epsilon Formation (three stages) and the Murteree Shale (one stage), as well as a deeper secondary zone, the Patchawarra Formation (one stage).

Mr. Nelson said, "While we are greatly excited by the results from the Holdfast-1 well to date, we are not surprised by them. Beach has applied an extremely thorough and detailed technical approach over the past few years to its shale gas research, which identified the Cooper Basin, and more particularly the Nappamerri Trough, as one of the most prospective shale gas provinces in Australia. Beach has been a pioneer of shale gas exploration in Australia and is now best placed to lead the development of the shale gas industry through its accumulated expertise, its acknowledged competence as an operator and the fact that the Cooper Basin has well established infrastructure in place to assist in commercialization of this opportunity."

Participants in PEL 218 (Permian JV) are:
  • Beach (Operator) 90%
  • Adelaide Energy Ltd 10%

The Cooper Basin is the most prolific onshore petroleum province in Australia, having produced approximately 6 Tcf of gas to date, and is ideally situated as it has the necessary infrastructure for the delivery of oil and gas to the Eastern Australian markets. Within the Cooper Basin, Beach currently holds interests of approximately 20% of the SACB JV (Santos operated), this includes infrastructure such as the Moomba production facility, approximately 23% of the SWQ JV (Santos operated) as well as various oil interests of between 40-75% on the Western Flank of the Cooper Basin.

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Petroceltic Discovers Gas in South Eastern Algeria

- Petroceltic Discovers Gas in South Eastern Algeria

Tuesday, July 12, 2011
Petroceltic International Inc.

Petroceltic, in association with its partner Sonatrach issued an operational update on its Isarene permit (Blocks 228 & 229a) in the Illizi Basin in South Eastern Algeria. Petroceltic operates the permit with a 56.625 % interest, Sonatrach holds a 25% interest, and Enel holds 18.375% interest, pending final Government of Algeria ratification, which is expected later this year.

  • AT-6 well encounters 45 meters of net pay
  • AT-5 testing underway
  • Second rig mobilized to accelerate appraisal activities
  • Drilling of AT-7 and AT-8 wells scheduled to commence this month

AT-6 appraisal well

Well AT-6, the third well in the current appraisal campaign on the Ain Tsila gas discovery was drilled to a total depth of 2085m and has successfully logged gas in the main Ordovician reservoir. The well is currently being suspended in preparation for testing with a rig-less testing unit following completion of the testing progra currently underway at AT-5.

The AT-6 well is a vertical well targeting a broad culmination in the South East of the Ain Tsila Field outside the 3D seismic survey area, approximately 17 km South East of the AT-4 well location. The principal objective of the well was to extend the proven gas in place and to test the reservoir quality towards the mapped south eastern limit of the field. The well commenced drilling on June 9, 2011 and reached a total depth of 2085m on July 5, ahead of schedule and within budget.

The Ordovician reservoir was encountered as expected with good gas shows and a full suite of logs was run. Initial log interpretations indicate a gross Ordovician reservoir interval of 168m, and a net pay interval of 45m.This confirms the extension of the field at this significant step-out from the previously drilled wells.

Following suspension of AT-6, the Dalma rig will move to drill a further vertical appraisal well in the far southwest of the field, AT-7, which is expected to commence drilling operations in late July.

AT-5 well test

Rig-less well testing operations have recently commenced at the AT-5 wellsite, following minor delays associated with the arrival of certain personnel and equipment to the site. AT-5 was drilled with a 376m of horizontal section through a fractured "pop-up" feature in the Ordovician reservoir. Depending on the results of initial testing, the program is likely to include hydraulic fracturing of some of the reservoir zones to enhance gas flow rates.

Second rig mobilized for extended appraisal program

A second rig, the KCA Deutag T-211 rig, has mobilized to the Isarene permit and is currently rigging up to drill well AT-8 at a location in the north of the field. The AT-8 well is expected to spud in mid-July and is a vertical well targeting a structural pop-up feature similar to AT-5. The well objective is to test for significant additional gas in place as well as potentially accessing fracture features identified on seismic.

With the addition of a second rig, the current six well delineation program is expected to be complete by year end in time for the preparation of the Final Discovery Report for submittal to the Algerian authorities.

Brian O'Cathain, Chief Executive of Petroceltic commented, "Initial results from the AT-6 well are very encouraging and increase the proven area of the Ain Tsila field considerably to the southeast with this large step-out. We are also extremely pleased that testing operations on AT-5 are underway. We are now entering a most exciting and busy period on our Isarene permit in Algeria with 2 rigs and a rig-less testing unit in operation. We look forward to announcing further well results by the end of July."

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Max Petroleum Starts Drilling at East Kyzylzhar Prospect

- Max Petroleum Starts Drilling at East Kyzylzhar Prospect

Tuesday, July 12, 2011
Max Petroleum plc

Max Petroleum has commenced drilling the KZIE-1 exploration well on the East Kyzylzhar I prospect in Block E. Total depth of the well will be approximately 1,500 meters, targeting potential Jurassic and Triassic reservoirs.

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Iraq Oil Minister, Shell Confirm Preliminary Gas Accord

- Iraq Oil Minister, Shell Confirm Preliminary Gas Accord

Tuesday, July 12, 2011
Dow Jones Newswires
by Hassan Hafidh

Iraq's Oil Minister Tuesday and oil giant Shell reached a preliminary accord on a long-stalled $12 billion gas deal to capture and exploit associated gas from southern Iraq oil fields.

The agreement still needs to be approved by the Iraqi Cabinet.

"The Iraqi Oil Minister Abdul Kareem Luaiby announced today that Iraq has signed an initial contract with Shell and Japan's Mitsubishi to develop gas production in southern Iraq," the Iraqi statement said.

A Shell statement said the Anglo-Dutch oil giant was "very pleased the Basrah Gas Company Joint Venture agreements have been initialized" and that the Anglo-Dutch giant will now "look forward" to Cabinet approval.

The long-delayed agreement is important to Iraq's goals of boosting long-term oil production, because of the need to produce "associated" natural gas produced concurrently with rising oil output.

The two sides signed an initial agreement in 2008 to begin negotiations, but the talks have been delayed mainly over the pricing of produced gas that the joint venture would sell to the Iraqi government for much-needed power generation in Iraq. It wasn't immediately clear Tuesday how the agreement resolved the long-standing impasse.

The deal concerns the huge volumes of gas from three giant southern oil fields: Rumaila, Zubair and West Qurna Phase 1.

Deputy Oil Minister Ahmed al-Shammaa, who was present at the signing ceremony, said that the deal would help to increase Iraq's gas production to more than 2.5 billion cubic feet a day.

Iraq, holder of the world's 11th gas reserves, produces some 1.5 billion cubic feet a day, with half of that amount is being flared daily, because of lack of infrastructure to produce and market the gas.

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

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Chevron Sees Increase in 2Q Earnings on Higher Oil Prices

- Chevron Sees Increase in 2Q Earnings on Higher Oil Prices

Tuesday, July 12, 2011
Chevron Corp.

Chevron reported in its interim update that earnings for the second quarter 2011 are expected to be higher than in the first quarter 2011. Upstream results are projected to improve between sequential quarters, benefiting from higher crude oil prices.

Basis for Comparison in Interim Update

The interim update contains certain industry and company operating data for the second quarter 2011. The production volumes, realizations, margins and certain other items in the report are based on a portion of the quarter and are not necessarily indicative of Chevron's full quarterly results to be reported on July 29, 2011.

Unless noted otherwise, all commentary is based on two months of the second quarter 2011 versus full first quarter 2011 results.


U.S. net oil-equivalent production during the first two months of the second quarter was in line with the first quarter 2011. International net oil-equivalent production declined 76,000 barrels per day, largely reflecting maintenance activity in Kazakhstan.

U.S. crude-oil realizations for the first two months of the second quarter increased about $18 per barrel to $111.11, and International liquids realizations improved approximately $13 to $108.46 per barrel. U.S. natural gas realizations increased $0.28 to $4.32 per thousand cubic feet, and international natural gas realizations increased $0.41 to $5.44 per thousand cubic feet.

International Upstream earnings in the second quarter are expected to reflect higher exploration expenses.

The company's general guidance for the quarterly net after-tax charges related to corporate and other activities is between $250 million and $350 million. Due to foreign currency effects and the potential for irregularly occurring accruals related to income taxes and other matters, actual results may significantly differ from the guidance range.

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Lundin Tastes Sweet Success Offshore Malaysia

- Lundin Tastes Sweet Success Offshore Malaysia

Tuesday, July 12, 2011
Lundin Petroleum AB

Lundin has discovered gas in the Tarap-1 well that was drilled in Block SB303, offshore Sabah, East Malaysia.

Tarap-1 was drilled with the Offshore Courageous rig in a water depth of approximately 70 meters. The well was directionally drilled to a measured depth of 2,675 meters.

The Tarap discovery is a stratigrahic trap and the well encountered gas in each of the 5 independently sealed stacked Miocene sands targeted. Gross total vertical pay thickness for the sands encountered is approximately 150 meters. An extensive data acquisition program was completed including pressure measurements, sampling and a mini flow test in selected zones.

The data recovered from the well will be analyzed further in order to determine a range of resource estimates.

Ashley Heppenstall, President and CEO of Lundin Petroleum commented, "This is an encouraging start to the drilling campaign in Malaysia and provides strong support for our strategy in South East Asia of pursuing organic growth and value creation in focused core areas. With a large number of prospects and leads already identified within SB303, I'm confident that we can continue grow our resource base in this area in the coming years.

"Sabah currently has two gas demand centres located in Kota Kinabalu and Labuan Island that are supplied from existing offshore infrastructure. The addition of a third demand center with the construction of the Sabah Oil and Gas Terminal at Kimanis and the Sabah-Sarawak gas pipeline gives us a broad range of options to explore for gas monetization in the area."

The rig will now move to drill the Cempulut prospect, also in SB303, the second well in Lundin Petroleum's five well drilling campaign in Malaysia in 2011.

Lundin Petroleum holds a 75 percent interest in SB303 through its subsidiary Lundin Malaysia BV. Lundin Malaysia BV's partner is PETRONAS Carigali Sdn Bhd with a 25 percent interest.

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