Crude Oil Price by

Oil and Gas Energy News Update

Friday, July 15, 2011

Oil & Gas Post - All News Report for Friday, July 15, 2011

Friday, July 15, 2011

Oil & Gas Post

Promote Your Page Too

Commodity Corner: QE3 Expectations Boost Oil

- Commodity Corner: QE3 Expectations Boost Oil

Friday, July 15, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for August delivery rallied Friday on expectations that a third attempt by the Federal Reserve to stimulate the economy would be bullish for commodities.

After reaching $97.74 and bottoming out at $95.21, the WTI gained $1.55 for the day to settle at $97.24 a barrel. The September Brent contract traded within a range from $115.25 to $117.65 before ending the day at $117.26, representing a $1.00 gain from Thursday. The August Brent contract, which expired Thursday, had settled at $118.32.

Testifying before a congressional panel this week, Fed Chairman Ben Bernanke roused markets Wednesday by suggesting that the Federal Reserve may launch a third round of quantitative easing. The "QE3" strategy would aim to improve liquidity in the U.S. economy by printing more money to buy Treasury bonds, encouraging banks to pursue riskier investments by boosting lending to businesses and consumers. Because more money would be available to banks, the value of the U.S. dollar against other currencies would diminish. Hence crude oil would be a better buy for investors using currencies other than the greenback.

On Thursday, the dollar gained strength and oil futures plunged after Bernanke stressed that the Fed had no immediate plans to set QE3 in motion. Investors on Friday, however, appeared to assume that such a policy decision would eventually be implemented.

With temperatures expected to approach or perhaps exceed the triple digits from the Upper Midwest to the East Coast, demand for electricity to power air conditioners and fans is set to be high well into next week. As a result, August natural gas surged well over four percent before ending the day at $4.55 per thousand cubic feet.

The front-month contract price for gas traded from $4.38 to $4.56 Friday.

Gasoline for August delivery edged upward by one cent to settle at $3.13 a gallon. The intraday high and low prices for gasoline were $3.15 and $3.10, respectively.

Oil & Gas Post

Promote Your Page Too

Utilization Rebounding In GOM

- Utilization Rebounding In GOM

Friday, July 15, 2011
Rigzone Staff
by Trey Cowan

While on the mend, Gulf of Mexico offshore drilling activities, are below levels experienced prior to last year's blowout. Specifically, combined utilization for drillships, semisubs, and jackups is approximately 300 basis points off pace, averaging 57% in 2Q11 versus 60% for the region during 1Q10.

Of the three types of rigs, semisubs are faring the worst on a comparative basis to results prior to Macondo. We note that during the first quarter of 2010 semisub utilization was nearly 93%. Today, the average utilization for semisubs in the Gulf of Mexico is 71%.

In the most recent update by the BOEMRE, 12 of the 18 rigs currently active in the GOM deepwaters were semisubs. However, there are 25 semisubs in total in the region including five that are cold stacked and two ready stacked. Given the costs involved in bringing stacked rigs back to marketable conditions, the overall semisub utilization rates may continue to languish for a while.

Both drillships and jackups utilization rates are now better than pre-Macondo levels. Drillships averaged 91% during 2Q10, up 300 basis points from 88% in 1Q10. And while jackup utilization rates are higher, there are actually ten fewer rigs now working in the region compared to 2010 levels. So the jackup utilization rate of 48% in 2Q10, given its smaller base, is not an apples-to-apples comparison versus its 1Q10 rate of 46%.

Recent News from the Region
  • Shell was approved by BOEMRE for a supplemental exploration plan to drill four appraisal wells at its Appomattox discovery at Mississippi Canyon 348. The Deepwater Nautilus is slated to drill the wells.
  • Marine Well Containment Company (MWCC) recently selected Aker Solutions to provide design, procurement, and fabrication of the subsea containment and diverter assembly, needed to further expand its existing containment system.
  • Cobalt expects permits for its Ligurian #2 and North Platte prospects in the US Gulf of Mexico. The ENSCO 8503 will drill both wells upon its return from French Guiana in the third quarter of 2011, assuming it passes a routine Coast Guard inspection upon returning to US waters.
  • NEXEN recently sublet the Ocean Saratoga from Taylor Energy for a plug & abandonment project at its Green Canyon 50 #1 well. Also, NEXEN received a permit for its Kakuna prospect and will use the ENSCO 8502 to drill.
  • BHP Billiton recently began drilling with the GSF Development Driller I at its Mad Dog North prospect in Green Canyon 738. This is the third recent permit approval that BHP has received that was not for a water injection well. The other two approvals were for development wells at Shenzi.

Oil & Gas Post

Promote Your Page Too

Bristow to Bid for SAR Contract

- Bristow to Bid for SAR Contract

Friday, July 15, 2011
Bristow Helicopters Ltd.

Bristow Helicopters announced its intent to offer the British Government a confident and assured solution for the new UK interim Search and Rescue (SAR) contract which is due to be launched following the collapse of the £6 billion SAR-H program.

Secretary of State for Transport, Philip Hammond, announced in the House of Commons on Monday, July 11, that a tender will be issued for the interim period. The contract is expected to run for up to six years until the long-term future provision of such services are fully considered.

Bristow originally held the UK SAR service contract for over three decades until 2007; during this period Bristow aircrews amassed over 11,500 SAR missions. With full desire to regain this contract, Bristow hopes to inject confidence into the Government and local communities through solid partnerships and a value for money solution which allows this vital public service to continue uninterrupted.

Richard Burman, Bristow Helicopters' Managing Director, said, "Bristow has a long and distinguished record in SAR with the Maritime Coastguard Agency and we would be delighted to service the contract again."

Oil & Gas Post

Promote Your Page Too

Desire Names New Non-Exec. Director

- Desire Names New Non-Exec. Director

Friday, July 15, 2011
Desire Petroleum plc

Desire announced that Graeme Thomson, FCA, will join the Board as an Independent Non-Executive Director and Chairman of the Audit Committee with effect from today.

Graeme has over 30 years public company experience and has held a number of senior positions in the oil and gas industry. He was Finance Director & Company Secretary for seven years at Dragon Oil plc and its predecessor companies. He was also a co-founder of Sterling Energy plc and spent nine years as its Finance Director, Company Secretary and was its Chief Executive Officer for his last two years with the Company until he left in December 2009. Since then, Graeme has been advising a number of oil and gas companies on their corporate finance, accounting, commercial and strategic affairs.

Commenting on the appointment, Chairman of Desire Petroleum, Stephen Phipps, said, "I am delighted to welcome Graeme to our Board and we look forward to working alongside him. He has significant experience of both the oil and gas industry and the capital markets and will further strengthen our Board which now contains an impressive combination of different industry disciplines."

In accordance with the AIM Rules, the following information required to be disclosed is set out below. Other than this information, there is no further information required to be disclosed under paragraph (g) of Schedule 2 of the AIM Rules.

Oil & Gas Post

Promote Your Page Too

ConocoPhillips' CEO Is Abandoning Decade Long Effort To Compete With Refiners

- ConocoPhillips' CEO Is Abandoning Decade Long Effort To Compete With Refiners

Jul 15, 2011

ConocoPhillips' (NYSE:COP) CEO Jim Mulva is abandoning a decade-long effort to compete with the world's biggest refiners, according to a Bloomberg report, amid a growing glut of plants that are crude-processing.

The company plans to spin off its refining business to focus on upstream projects such as drilling for crude and natural gas in Texas, Norway, China and the U.K.

Mulva plans to retire when the spinoff is complete.

ConocoPhillips has a potential upside of 10.5% based on a current price of $76.37 and an average consensus analyst price target of $84.38.

Oil & Gas Post

Promote Your Page Too

Chim Sao Set to Premier

- Chim Sao Set to Premier

Friday, July 15, 2011
Rigzone Staff
by Jaime Kammerzell

Premier Oil Vietnam BV is set to bring the Chim Sao field online in September 2011.

Premier Oil drilled the Blackbird 2E-CS-1X discovery well (now known as Chim Sao) in 115 m of water in November 2006. Premier found more than 70 m of net pay in four oil-bearing intervals in the Middle Dua target, 4,058 m below sea level. The well is in a tilted fault block in the Nam Con Son Basin, 21 km southwest of Premier Oil's Dua field.

In May 2008, the partners drilled the (renamed) Chim Sao North appraisal well. They performed a drill stem test and the well flowed oil at 1,650 b/d and 1.4 MMcf/d on a 40/64-in. choke. The second zone test showed a rate of 2,680 b/d and 2.1 MMscf/d on a 48/64th in. choke. The well was sidetracked down-dip to delineate the oil/water contact and the extent of the hydrocorabon-bearing reservoir.

Premier's partners in the field currently include Santos with 31.857% interest and PVEP with 15% interest. Santos estimates the field contains 48 MMboe of proved and probable reserves and expects 25,000 b/d plateau production from the field.

Santos became a partner in Block 12E in April 2006 when Premier split its 75% share in the block along with partner Delek Energy, which held 25% interest at the time. Premier became operator of Blocks 12E and 12W in September 2004 when it purchased 75% of the block from Delek Energy.

Premier Oil then acquired additional equity in Block 12 in July 2009 when it purchased Delek's 25% interest for $72 million in cash. Separately PetroVietnam Exploration and Production exercised its back-in right to acquire a 15% interest in the PSC.

Shortly after becoming operator, Premier launched a 2D and 3D seismic acquisition, processing and interpretation program, which identified the Dua and Blackbird prospects. The operator then drilled the Blackbird well using Diamond Offshore's Ocean General semisubmersible in May 2006.

Chim Sao Set to Premier
Diamond Offshore's Ocean General semisubmersible

Chim Sao Set to Premier

Field Development

The Vietnamese authorities approved Premier Oil's Draft Reserves Assessment Report and Field Development Plan in April 2008.

The partners then contracted the Wilboss jackup for a three- to four-well exploration campaign in the first half of 2009 to further appraise the area and to see if there are additional oil discoveries that could be tied-back to the Chim Sao development.

Chim Sao Set to Premier
The WilBoss is an independent leg cantilever jackup rig. Keppel Fels built the Awilco rig in Singapore in 2007. It can drill in up to 400 ft of water and down to 30,000 ft.

The first phase of development planned to produce oil and associated gas through two unmanned, minimum facility wellhead platforms tied back to the Nexus 1 FPSO. The FPSO was built to process 25,000-30,000 b/d and offload to shuttle tankers. Gas would be exported via spur and then through PetroVietnam's Nam Con gas pipeline.

BW Offshore submitted a bid to provide both the FPSO and the EPCI contract for the surface facilities. On March 28, 2009, BW Offshore reported it was working on a private placement for the Nexus 1 FPSO. The lease agreement and the EPCI contract were dependent on BW securing funding for the vessel.

In late 2009, however, FPSO lease arrangements were made with a joint venture of Ezra Holdings, EOC, PetroVietnam, PV Keez, and KSI Production. This JV was the first oversees company to secure an offshore Vietnam loan to finance an FPSOs conversion.

The field partners agreed to contract the Lewek EMAS, a 168,000 deadweight ton Suemax oil tanker from EOC Ltd. in late 2009. The FPSO Lewek EMAS is one of Vietnam's largest FPSOs. Keppel Shipyard converted the tanker on behalf of owner PV Keez Pte. Ltd. EMAS Production will manage and operate the FPSO, which Premier Oil charted for the development of the Chim Sáo field off southern Vietnam for six years, with a further option to extend the charter by another six years. The FPSO charter contract is worth approximately $1 billion.

In January 2010, PetroVietnam Transportation (PVTrans) and EOCP then agreed to form a JV to provide operations and maintenance services for the FPSO for 12 years. And in February 2010, EOCP, Ezra Holdings, Keppel and PVTrans agreed to co-own the FPSO.

The FPSO was christened at Singapore's Keppel shipyard on April 15, 2011. EOC said the FPSO can produce up to 50,000 b/d, store up to 680,000 bbl of oil and process around 89 MMsfc/d of gas. EOC and Petrovietnam Transportation Corp. will operate and maintain the vessel under a 50/50 joint venture.

Other contracts the Chim Sao partners awarded include the engineering, procurement, construction and installation (EPCI) contract for the wellhead platform, infield flowlines, and gas export pipelines to PetroVietnam Technical Services (PTSC) in 2008. The platform jacket was installed in March 2010.

In December 2009, the partners awarded a contract to Saipem to install the wellhead platform. Saipem also provided engineering for infield pipelines and the installation of subsea pipelines, umbilicals, and PLEMs. Also in December 2009, EOCP awarded a contract to DPS Bristol to provide detailed design engineering services for CSU, water injection, and flare knock-out drum modules for the FPSO.

Viet Nam Rigs

Premier currently has the ENSCO 107 jackup contracted to drill wells on the Chim Sao field through May 15, 2012, at $110,000/day.

Chim Sao Set to Premier

Of the 14 other rigs off Vietnam, one is under construction, two are ready stacked, and 11 are drilling.

PV Drilling, Seadrill, and VietSovPetro each have three jackups, Vantage Energy has two rigs, and ENSCO (previously mentioned), Maersk, Petrovietnam, and Transocean each have one rig contracted off Vietnam.

Operator VietSovPetro has six rigs drilling. Aside from Premier, other operators present off Vietnam include Hoang Long, BHP Billiton, Cuu Long JOC, Salamander Energy, and Phu Quy.

Vantage Energy's Aquamarine Driller jackup is currently the highest contracted rig off Vietnam. The jackup is contracted to Salamander Energy to drill block 101/100-04 CB-1X on the Cat Ba field through Aug. 15, 2011 at a rate of $135,000/day.

Chim Sao Set to Premier
Vantage Energy's Aquamarine Driller

Oil & Gas Post

Promote Your Page Too

Misbehaving Drillers May Undergo New Scrutiny

- Misbehaving Drillers May Undergo New Scrutiny

Friday, July 15, 2011
Houston Chronicle
by Jennifer A. Dlouhy

The nation's top offshore drilling regulator said Wednesday he is examining whether the government can do more to keep oil and gas companies with checkered histories from exploring offshore.

Michael Bromwich, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said he is studying how to treat "operators who may have behaved badly in the past and whether they should be allowed to continue operating in the future."

The government already can bar offshore oil and gas operators in some cases, and the government can suspend operations or impose civil penalties in response to some violations. But historically, it has not wielded the authority aggressively, raising questions about whether it does enough to keep some of the worst performing companies away from the outer continental shelf.

Other countries, including the United Kingdom, take a hard-line approach that may be a model for the U.S., Bromwich told reporters on a conference call Wednesday.

"They have a much tougher re-qualification system than we do," Bromwich said. "Part of what I have been trying to do recently is gather additional knowledge about what other countries who deal with similar kinds of issues have done in similar circumstances."

Some in Congress have pitched such proposals, including measures aimed to block BP from offshore drilling because of last year's deadly blowout at its Macondo well.

Bromwich said he is conducting a broad review of agency policies as part of a reorganization of the former Minerals Management Service that is on track to meet an Oct. 1 deadline.

The ocean energy bureau is also readying two new rules that aim to boost the safety of offshore drilling, including a measure that would set new mandates for the blowout preventers used as a last line of defense against unexpected surges of oil and gas at wells.

Designs, safety

The agency will kick off a long process of creating the new regulations by publishing an advanced notice of proposed rule-making that sets a slower timetable for completing the mandates. Bromwich said the lengthier review will allow more people to weigh in on the measure's content.

It could include mandates governing the design of offshore wells and new standards for cement barriers. The rule also is likely to continue making adjustments to a drilling safety rule that was imposed last October. Companies have complained that it sets confusing and conflicting standards.

"It may well be that there are specific items that we've already issued rules on that we may want to change, modify, enlarge," Bromwich said.

He said that while the process will focus on drilling safety, nothing prohibits the agency from looking into other safety issues.

Bromwich said the agency will be closely looking at the recommendations of a new 15-member Offshore Drilling Advisory Committee, which was meeting in New Orleans on Wednesday.

Interior Secretary Ken Salazar tasked that panel with developing recommendations for bolstering safety rules and drilling standards to better prevent spills and contain them when they happen.

The group also is studying how to improve the broad safety and management systems oil and gas companies use to identify and respond to risks.

'Very broad view'

Tom Hunter, the former director of Sandia National Laboratories who is heading the advisory group, said it is examining a range of subsea equipment and how workers interface with it, including instrumentation, fluid injection systems and well control equipment.

"We are going to take a very broad view and see if we can ferret out some very clear recommendations," Hunter said.

Copyright (c) 2011, Houston Chronicle

Oil & Gas Post

Promote Your Page Too

Corbett's Shale Panel Recommends Drilling Impact Fee

- Corbett's Shale Panel Recommends Drilling Impact Fee

Friday, July 15, 2011
The Philadelphia Inquirer
by Angela Couloumbis

Gov. Corbett's Marcellus Shale advisory commission has recommend that Pennsylvania impose an impact fee, rather than a tax, on the extraction of natural gas.

The 30-member commission this morning also approved a long list of other recommendations for how to deal with the burgeoning drilling industry, including providing financial incentives for encouraging the use of natural gas.

But its decision on whether to have any sort of extraction levy was one the most eagerly anticipated.

Corbett has said he does not support a tax but would consider a local impact fee on drillers, as long as the money raised goes directly to those communities most heavily impacted by drilling.

The commission, in its recommendation, appeared to stick closely to those parameters, although it did not get into details, including how much that fee should be. It will leave that question to the legislature, which has signaled it will tackle the issue in the fall.

Senate President Pro Tempore Joe Scarnati (R., Jefferson) has an impact fee bill he is pushing.

Corbett assembled the commission four months ago to study the industry, find ways to facilitate its growth and determine how it affects drilling communities. Its recommendations are not binding.

Copyright (c) 2011, The Philadelphia Inquirer

Oil & Gas Post

Promote Your Page Too

N.J. Pressures River Panel to Adopt Gas Rules

- N.J. Pressures River Panel to Adopt Gas Rules

Friday, July 15, 2011
The Philadelphia Inquirer
by Sandy Bauers

New Jersey is playing hardball with an interstate commission considering rules on natural gas drilling affecting the Delaware River.

At two recent meetings of the Delaware River Basin Commission (DRBC) -- one of them Wednesday -- the New Jersey representative, John Plonski, said the state might withhold payments to the financially strapped commission if it failed to vote on the rules at its next meeting, in September.

Critics said the state was improperly engaging in strong-arm tactics.

"It's shocking that a state would pull this kind of bullying tactic that amounts to extortion," said Tracy Carluccio of the Delaware Riverkeeper Network, an environmental-advocacy group.

A spokesman for the New Jersey Department of Environmental Protection, where Plonski is the assistant commissioner for water resources management, said Plonski merely wanted the commission to act.

"All we're doing is putting a little pressure on the DRBC, saying let's make sure that you don't sit on this issue, that you assess it properly and come to a decision," said Larry Ragonese.

"The No. 1 complaint about government is that it does not act," he said. "We're trying to have government be responsive in a timely fashion."

The industry has consistently urged the commission to act so that drilling can proceed.

The DEP comments struck Jeff Tittel of the New Jersey Sierra Club as disingenuous. "Then how come they don't act" on other environmental measures, Tittel said. "Want me to go down the list of things they're holding up?"

When it comes to environmental protection, the DEP waits, he said, "and when it comes to what polluters want, they think, we've got to hurry up and do it."

The commission, an interstate agency formed by a federal compact, regulates water quality and quantity in the area drained by the Delaware River and its tributaries, which collectively provide drinking water to Philadelphia and New York City.

Its five members are states with land in the basin -- Pennsylvania, New Jersey, New York, and Delaware -- plus a representative from the Army Corps of Engineers.

Most of the upper basin is atop the Marcellus Shale formation, rich in natural gas. Thousands of drilling leases have been filed in northeastern Pennsylvania within the watershed.

The commission has enacted what amounts to a moratorium on gas drilling in the basin until regulations are in place, and that has led to a tug-of-war not only about the regulations but also how fast the commission should adopt them.

In December, the commission proposed a set of regulations that environmental groups said were weak and the industry said were onerous and unnecessary.

A public comment period that would have ended March 15 was extended to April 15.

By then, the commission had received nearly 70,000 submissions. Now, the staff is categorizing them and preparing a document to respond to them, DRBC spokesman Clarke Rupert said.

Next, revisions might have to be made to the proposed rules.

Rupert said that he could not speculate how long this would take, but that for months the commission staffers have been saying that the earliest they could have something ready for the commission to vote on would be its September meeting.

Whenever the staff work is completed, the commission has a number of options. It could vote on what is presented. Or, if significant revisions are proposed, it could vote to seek more comment.

"Shouldn't the timing of the release of the natural gas rules be based on a careful review and scientific analysis of the comments that were received by the commission?" Carluccio said. "Not when one state arbitrarily sets a deadline."

Ragonese said that New Jersey also wants the regulations to be based on science and fact, and that DEP Commissioner Bob Martin has always said he wants to protect the river.

"We think a lot has been brought to them," Ragonese said. "They have had good time to consider it. We would really like to get something moving."

Pennsylvania and New York officials declined to comment. A spokesman for the Army Corps said its representative would be prepared to vote at the September meeting; he did not say what the vote would be.

The Delaware representative on the commission, Kathy Stiller, water director for the Department of Natural Resources and Environmental Control, said: "We are still looking at the deadline issue and haven't taken a position on it yet. Delaware's goal is to make sure we get the regulations technically correct. We do recognize that some guidance needs to be in place sooner rather than later."

If New Jersey were to withhold funds, the commission could be in a tight spot.

Under the compact, each of the five members pays a "fair share" of the annual budget. For the fiscal year that began July 1, the amounts were $893,000 each for Pennsylvania and New Jersey (25 percent of the total each), $626,000 for New York (17.5 percent), $447,000 for Delaware (12.5 percent), and $715,000 for the federal government (20 percent).

But although the commissioners commit to these amounts, they may never be funded.

With the exception of one year since 1996, the federal government's amount has never been appropriated. The U.S. government is more than $9 million in arrears.

New York's fiscal year began April 1, and it appropriated $355,000, slightly more than half its share.

Pennsylvania, Delaware, and New Jersey have budgeted their full amounts.

Even with that, the commission had to make up a shortfall of more than $400,000 this year, Rupert said, from "undesignated reserves."

Meanwhile, even as the Christie administration is pushing for the DRBC to act, state legislators want to put the brakes on the industry.

On June 29, the Assembly and Senate overwhelmingly passed legislation to prohibit a gas-extraction method known as hydraulic fracturing -- or "fracking" -- in the state. In effect, it would ban most drilling in the state.

Gov. Christie has a 45-day window to act on the legislation.

Copyright (c) 2011, The Philadelphia Inquirer

Oil & Gas Post

Promote Your Page Too

Southwestern Energy Applauds Fracking Disclosure Law

- Southwestern Energy Applauds Fracking Disclosure Law

Friday, July 15, 2011
Southwestern Energy Co.

Steve Mueller, President and Chief Executive Officer of Southwestern Energy issued a statement congratulating Texas Governor Rick Perry's decision to sign a hydraulic fracturing disclosure bill into law and expressing appreciation to Representative Jim Keffer and Senator Jane Nelson for their efforts to get this landmark legislation passed.

"Southwestern Energy Company strongly supports Governor Perry's decision to require the public disclosure of all the chemicals contained in hydraulic fracturing fluids. Developing America's shale gas resources is important for meeting our country's growing energy needs, but so is transparency in how we access these resources. It is essential that we do everything reasonably possible to ensure public trust and acceptance of hydraulic fracturing operations. Without the tireless leadership of Representative Keffer and the strong support of Senator Nelson, this historic legislation would not have become law," stated Mueller.

Oil & Gas Post

Promote Your Page Too

Novatek Tanker Sets Sail on Northern Sea Route

- Novatek Tanker Sets Sail on Northern Sea Route

Friday, July 15, 2011
OAO Novatek

Novatek has announced the inaugural voyage of a high-tonnage Panamax class tanker, which has navigated a new route north of the New Siberian Islands. On June 29, 2011, the tanker Perseverance set sail from the Russian port of Murmansk carrying a cargo of 60 thousand tons of Novatek's stable gas condensate destined for consumers in China. Icebreaking support for this voyage was provided by Russia's Atomflot, a government-owned shipping entity, and the tanker is now on course to its final destination.

Novatek is the first company to utilize the Northern Sea Route in the 2011 summer navigational period. Between June and October 2011, the Company plans to ship six or seven cargoes of stable gas condensate, produced by the Purovsky Gas Condensate Processing Plant, to markets in the Asian-Pacific region via the Northern Sea Route.

Transporting hydrocarbons through the Northern Sea Route is expected to reduce the costs and delivery time for shipments from Russia's northern ports to consumers in the Asian-Pacific region. The use of the Northern Sea Route provides new technical information and navigational experience for hydrocarbon transportation under Arctic conditions and is an integral part of Novatek's logistical strategy to develop prospective fields in the Yamal peninsula.

Oil & Gas Post

Promote Your Page Too

Beach, Icon Enter Farmin Agreement for ATP 855P

- Beach, Icon Enter Farmin Agreement for ATP 855P

Friday, July 15, 2011
Beach Energy Ltd.

Beach and Icon have resolved their dispute in relation to the prospective ATP 855P tenement, and have agreed to work together under a Farmin Agreement executed today.

Under the terms of their agreement:
  • The Federal Court proceedings will be discontinued;
  • Icon has now transferred a 40% interest in ATP 855P to Beach (subject to Ministerial approval);
  • Beach will drill a horizontal pilot unconventional well into one of the strata comprising the Roseneath, Epsilon & Murteree sequence, then case and suspend the well, suitable for fracture stimulation, which is expected to occur within 30 days of rig release from the well;
  • Beach will fund Icon's share of the farmin operations at an estimated cost of $16 million (gross), with the exception of a $1.75 million contribution to be made by Icon;
  • the cost of fracture stimulation, completing and flow testing the well will be paid by the Joint Venture parties in proportion to their Participating lnterest shares;
  • Beach will be recommended by Icon to be the operator of the ATP 855 permit;
  • Icon will be recommended by Beach to undertake the management of coal seam gas operations in both ATP 855P and PEL 218 Post Permian Joint Ventures; and
  • Beach will effect the assignment of Icon's Phase 2 Post Permian PEL 218 interest upon Ministerial consent to the transfer of a 40% interest to Beach in ATP 855P, giving Icon a 33.333% interest in the PEL 218 Post Permian Joint Venture.

The interests of the parties in ATP 855P following this agreement are:
  • Beach Energy Limited (40%)
  • Icon Energy Limited (40%)
  • Deka Resources Pty Ltd (10%)
  • Well Traced Pty Ltd (10%)

Both Beach and Icon are pleased with this agreement, and look forward to working closely together with each other and the other ATP 855P participants to develop the exciting prospects offered in the emerging shale gas play in the Nappamerri Trough in southwest Queensland.

Oil & Gas Post

Promote Your Page Too

Devon Drills Well in Tx. Panhandle

- Devon Drills Well in Tx. Panhandle

Friday, July 15, 2011
Breitling O&G Corp.

Breitling O&G has spud the Breitling-Buffalo Run #1H on July 10, 2011 in Hemphill County, Texas.

The Breitling-Buffalo Run #1H is a 15,900-foot TMD well located in the prolific Buffalo Wallow field in the Texas Panhandle. The Breitling-Buffalo Run #1H is targeting the Granite Wash sections A through G.

Management anticipates the well will reach total depth in about 37 days. Well completion and testing should begin during the first week of September. The well is being operated by Devon Energy Corporation.

The company declined to disclose reserve potential or any further details regarding the prospect to the public.

Breitling Oil and Gas CEO Chris Faulkner stated, "We are excited to be participating with Devon Energy on the Buffalo Run well." Faulkner added, "The vertical wells in the Buffalo Wallow field have been great producers and we are excited to step out and drill a horizontal."

Oil & Gas Post

Promote Your Page Too

Magnum Hunter Buys New Rigs

- Magnum Hunter Buys New Rigs

Friday, July 15, 2011
Magnum Hunter Resources Corp.

Magnum Hunter announced that the Company's Appalachian Basin Division has acquired two new 2011 Schramm T200XD trailer mounted hydraulic drilling rigs ("Schramm Rigs") with a rated vertical working depth capacity of 9,000 feet. The two new Schramm Rigs will join the existing Alpha Hunter Drilling LLC ("Alpha Hunter") drilling rig fleet comprised of three Schramm T130 rigs.

All five of Alpha Hunter's drilling rigs are under term contracts with third parties who are operators active in the Pennsylvania and northwestern West Virginia Marcellus Shale region. When Magnum Hunter acquired Triad Energy early last year out of bankruptcy, the three existing Schramm Rigs were part of the overall acquisition. Alpha Hunter has been successful in contracting its rig fleet out on an improving day rate basis since last year. The existing drilling rig fleet have been primarily used to drill the vertical top hole sections for Marcellus Shale wells for third parties and for Triad Hunter LLC. These two Schramm Rigs can not only drill the surface holes, but they can also perform the directional drilling operations in unconventional resource shales in this region. They are equipped with automatic pipe handling systems, have unparalleled mobility and utilize the smallest footprint available in the market today. Due to the mountainous terrain in Appalachia, utilizing pad drilling and minimizing surface locations significantly reduce the location cost of each well.

The two new drilling rigs (including drill pipe) are being purchased for approximately $5.8 million and are being financed under a secured commercial bank term loan.

Management Comments

Mr. Kirk Trosclair, Senior Vice President of Equipment Services for Triad Hunter LLC, commented, "The addition of the two new Schramm Rigs recently acquired will expand Alpha Hunter Drilling's ability to provide top of the line, safety oriented, and cost effective contract drilling services for our Appalachian exploration and production customers. Additionally, Triad Hunter will receive the benefit of having an internal source for oilfield service equipment, supplies and drilling rigs available to draw upon and utilize as we expect the markets for this specialized equipment to continue to be extremely tight over the next several years. We believe adding these two high quality drilling rigs to our existing three rig fleet will allow Triad Hunter the greatest amount of operational flexibility in providing for our Company's internal needs as well as third parties."

Oil & Gas Post

Promote Your Page Too

Williams Responds to Southern Union's Decision to Engage in Discussions

-  Williams Responds to Southern Union's Decision to Engage in Discussions

Jul 15, 2011

Williams (NYSE:WMB) commented on the announcement by Southern Union Co. (NYSE:SUG) that the Special Committee of its Board of Directors has authorized Southern Union to engage in discussions with Williams regarding Williams' $44.00 per share all-cash proposal to acquire all the outstanding shares of Southern Union. The Special Committee of Southern Union made the determination to engage in discussions and to provide information to Williams pursuant to Section 5.4 of Southern Union's merger agreement with Energy Transfer Equity, L.P. (NYSE:ETE).

Alan Armstrong, Williams' President and CEO said, "We are confident that our all-cash, premium proposal is in the best interests of both companies' shareholders, and we are pleased that Southern Union will engage in discussions with Williams. We look forward to working together with Southern Union and to quickly executing a definitive merger agreement."

Williams has a potential upside of 23.7% based on a current price of $29.74 and an average consensus analyst price target of $36.8.

Oil & Gas Post

Promote Your Page Too

IEA Reports on State of Oil Markets since Emergency Stockpile Release

- IEA Reports on State of Oil Markets since Emergency Stockpile Release

Friday, July 15, 2011
Rigzone Staff
by Barbara Saunders

In an unusually strongly worded statement, the International Energy Agency (IEA) – the official energy watchdog for major consuming nations – said that its critics "can't have their cake and eat it too."

IEA made the statement in releasing its monthly oil market report on July 13, commenting on the status of oil markets since its call on June 23 for the release of 60 million barrels of oil and refined products from the emergency stockpiles of member nations, including the U.S. and Japan.

The move was made to help compensate for "a string of supply-side outage over and above" the loss of 1.5 million barrels per day (mbpd) of light sweet [i.e., easy to refine] Libyan crude oil, due to internal conflict in that nation, IEA said.

". . . [T]he market ledger this month looks slightly tighter than a month ago. Our balances for first-half 2011 [1H2011] show demand continuing to run ahead of supply, if a little less rapidly than in 2H10," IEA said.

"Major producers have recognized that demand for their oil is rising, with the seasonal uptick in 3Q11 refinery runs, and more generally as economic growth and short-term fuel substitution keep global and emerging market demand growth robust," IEA continued. “We welcome rising OPEC volumes seen in June (30.03 mbpd output), but the market needs still more oil for 3Q."

IEA continued, "This backdrop is simply a more vivid version of the one underpinning the IEA action, which commenced on 23 June. Member governments agreed to release 60 mb of strategic stocks for an initial 30 days, amid an ongoing disruption to light-sweet Libyan oil supplies, the anticipated rise in 3Q11 refiner and end-user demand and a likely hiatus before incremental OPEC barrels reach the market. Much ink has been spilt subsequently suggesting that the IEA action comes three months too late, depletes emergency stockpiles and has failed to reduce rampant crude and motor fuel prices. However, we feel compelled to point out that critics cannot have their cake and eat it too."

"Market intervention in late-February, when the Libyan crisis broke and prices surged by at least $10/bbl, would have been tempting, were price control really the prime motivation," IEA said. "But the presence of a supply disruption, and sharply higher prices is not, by itself, justification for a collective action. Market context is also important. Refiner crude demand was falling seasonally in March and April, but rising sharply in June and moving higher still in July and August, despite modest refining margins. Early-year industry stocks looked comfortable back in March, and there was a presumption then that other OPEC producers would immediately step in to boost supply to replace Libyan outages. In contrast, the absence up until June of major OPEC increases implied a real possibility that commercial stocks could fall to the bottom of their seasonal range, risking a renewed, damaging and sustained surge in international prices in 3Q11. The IEA therefore decided to act to address this supply-side issue, even though prices were then trending lower."

Marker crude prices fell by $5 per bbl immediately after the action was announced, IEA noted, adding, "Since then Brent futures have oscillated between $105-$119/bbl, and WTI between $91-$99/bbl. At writing, flat prices of $116/bbl (Brent) and $95/bbl (WTI) are close to those seen immediately prior to the action, but will doubtless fluctuate further in the weeks ahead. However, it is blinkered to focus on specific price levels, which were never the rationale for the action. Narrower sweet-sour spreads, modestly stronger refining margins and an easing of the steep backwardation evident before the release on the other hand all suggest a more benevolent market reaction. We acknowledge that the impact of the collective action will only be truly evident in hindsight. However, recognizing the flexibility and market liquidity it has already provided, we take a resolutely positive view so far."

IEA's move came in the wake of the last OPEC meeting on June 22, when three Middle Eastern nations – Saudi Arabia, Kuwait and the United Arab Emirates (UAE) – broke ranks from the other major producing member nations in wanting to increase production quotas to keep the world amply supplied. The three nations have since pledged to increase production in the absence of an all-OPEC accord, but there's a hiatus in the additional supply reaching the market.

Veteran OPEC-watcher Bhushan Bahree, senior director of global oil for IHS CERA, told Rigzone in a telephone interview: "Oil supplies are ramping up." Bahree added, "There was very little incentive for the other OPEC nations to agree to increase production. They have little or no spare capacity."

Oil & Gas Post

Promote Your Page Too

Eni Picks Up Tab for PDVSA's Junin 5 Development

- Eni Picks Up Tab for PDVSA's Junin 5 Development

Friday, July 15, 2011
Eni S.p.A.

The Minister of Energy and Petroleum of Venezuela and President of PDVSA, Rafael Ramírez and Eni's CEO Paolo Scaroni, met yesterday in Caracas to discuss the significant joint projects between PDVSA and Eni in Venezuela.

In particular, the primary topic of discussion was the development of the Junín 5 heavy oil block, located in the Faja of Orinoco, which holds 35 billion barrels of certified oil in place and is operated by two mixed enterprises (PetroJun í n for the upstream and PetroBicentenario for the downstream) owned 60% PDVSA, 40% Eni.

The development plan calls for an early production phase of 75,000 barrels of oil per day starting in late 2013, and a full phase of 240,000 barrels of oil per day in 2018, along with the construction of a new refinery on the coast, in Jose.

In yesterday's meeting PDVSA and Eni also discussed options to anticipate the early production start up in late 2012 using synergies with existing PDVSA facilities to transport an initial gross production of 7 to 10 kbopd. PetroJun í n expects to award the main engineering contracts for the EP phase (processing facilities and pipelines) and the drilling contracts in 3Q 2011. It is anticipated that approximately 10 wells will be drilled this year. In addition, by year end the award of the engineering contract for the downstream (refinery) is also planned.

Eni agreed to finance PDVSA's share of development costs for Junín 5's early production phase up to a total of $1.5 billion USD.
As a social project to help the country, Eni will dedicate a tranche of the Junín 5 bonus and make additional financing to PDVSA for a combined total of $500 million USD, dedicated to fund a power station to be built in the Güiria peninsula.

In Venezuela, Eni is co-operator with a 50% stake, in the Cardon IV Operating Company which manages the offshore block where the super-giant Perla gas field is located. Perla has over 16 Tcf of estimated gas in place (2.9 billion barrels of oil equivalent). Cardon IV completed the FEED for the early production phase (300 MMscf/d) and is discussing a gas sales agreement with PDVSA.

Eni is also present in Venezuela through its participation in Petrosucre (PDVSA 74%, Eni 26%), the company which operates the Corocoro oil field.

Oil & Gas Post

Promote Your Page Too

Oil Cos Could Adopt BP's New Safety Standards - US Official

- Oil Cos Could Adopt BP's New Safety Standards - US Official

Friday, July 15, 2011
Dow Jones Newswires
by Tennille Tracy

The nation's top offshore drilling regulator welcomed a plan by BP Friday to voluntarily beef up safety standards and said ExxonMobil, Shell and other major oil companies are equipped to follow suit.

Speaking at a congressional hearing, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement said BP knows it has to prove it can operate safely following last year's Deepwater Horizon oil spill in the Gulf of Mexico.

"BP has clearly been through a lot," said bureau Director Michael Bromwich. The company is going to have to "win back not only regulators' confidence, but the public's confidence as well."

BP disclosed Friday it was adopting drilling standards that go beyond existing federal requirements. Specifically, BP said it will require drillers to use more robust equipment, mandating subsea blowout preventers to be equipped with at least two blind shear rams.

BP also said it will use third parties to verify maintenance procedures and oversee testing, and enhance certain measures for responding to an oil spill.

Bromwich said he suspected that Exxon Mobil, Shell and other major oil operators could adopt similar measures, adding that the standards were technologically and economically viable for large companies.

Bromwich also said the measures that BP was undertaking could be folded into a set of new drilling regulations on which his agency is working. He said those new rules would be "broad" and "far-reaching," but he acknowledged the oil and natural-gas industry is wary of the agency adopting new requirements too often and too quickly.

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

Oil & Gas Post

Promote Your Page Too

Oilsands Quest Receives 15-Year Leases for Axe Lake

- Oilsands Quest Receives 15-Year Leases for Axe Lake

Friday, July 15, 2011
Oilsands Quest Inc.

Oilsands Quest has received approval from the Government of Saskatchewan to convert portions of the Axe Lake permits to 15-year leases. These leases, the first oil sands leases in Saskatchewan, are one of the key elements the Company needs in place to proceed to development of a commercial oil sands production facility.

"These leases mark a key milestone in our path forward," said Garth Wong, Chief Executive Officer of Oilsands Quest. "In the past, some potential investors have expressed concern about the short term permits under which the Axe Lake lands were held. The 15-year leases will give us the certainty of land tenure we need to underpin commercial development at Axe Lake. The Government of Saskatchewan has demonstrated its commitment to oil sands exploration and development, and we appreciate its confidence that Oilsands Quest will be able to deliver on the value of these assets both for our investors and for the people of Saskatchewan."

The two leases, OSA00001 and 0SA00002 will be governed under the terms of the Petroleum and Natural Gas Regulations, 1969 and will expire on March 31, 2027.

Oil & Gas Post

Promote Your Page Too

Alange Spuds Well in Llanos Basin

- Alange Spuds Well in Llanos Basin

Friday, July 15, 2011
Alange Energy Corp.

Alange announced the spudding of the Petirojo-1 exploration well, located in Polygon B of the Cubiro Block in the Llanos Basin. Alange Energy has a 70% working interest in Polygon B of Cubiro and is operator of this block.

The spudding of the well on July 14, 2011 follows the interpretation of a 49 km2 3D seismic survey shot in 2010. This interpretation revealed a prospect on trend with the Palmarito field, 5 km to the north, which had an OOIP of 19 MMBbls of 37o API. The Petirojo prospect is of the same nature as the typical exploration play in the Llanos Basin, an upthrown block of an antithetic fault. The well is aimed at the Carbonera Formation, specifically the C7, C5 and C3 intervals, with an anticipated depth of 6,808 feet (measured depth).

Luciano Biondi, the Company's Chief Executive Officer, commented, "I am pleased to start our 2011 drilling program, which is aimed at drilling 4 wells in Cubiro, a block we are very familiar with, and we expect that this exploration drilling will add incremental production to our portfolio. We look forward to sharing updates on Petirojo in the near future."

Oil & Gas Post

Promote Your Page Too

Cooper to Abandon Wheatons-1 Well

- Cooper to Abandon Wheatons-1 Well

Friday, July 15, 2011
Cooper Energy Ltd.

The Wheatons-1 exploration well has been drilled to a total depth of 1882 mRT and wireline logs have been run and interpreted, according to Cooper Energy.

During drilling there were no hydrocarbon shows observed in the primary objective (Namur Sandstone) or secondary objectives (Birkhead, Hutton and Poolowanna Formations) and the evaluation of the wireline logs has confirmed the absence of hydrocarbons in all objective horizons.

The Wheatons-1 well will be plugged and abandoned as a dry hole. Preparations are in place to move the rig to the Rincon-1 drill site.

Oil & Gas Post

Promote Your Page Too

PetroLatina Farms-Out Colombia Block to Shell

- PetroLatina Farms-Out Colombia Block to Shell

Friday, July 15, 2011
PetroLatina Energy plc

PetroLatina has entered into a farm-out agreement with Shell E&P Colombia, effective July 12, 2011. Under the terms of the agreement, Shell E&P Colombia will acquire an 85% participating interest in the Company's VMM-28 Exploration and Production contract, subject to the approval of the ANH. The VMM-28 block is currently wholly owned and operated by Petroleos del Norte (PDN), PetroLatina's Colombian operating subsidiary.

PDN and the ANH signed the formal E&P Contract in March 2011, for the exploration, development and production of hydrocarbons in the area known as the VMM-28 block. The block covers an area of 54,552 hectares (approximately 136,390 acres) and lies to the west of, and immediately adjacent to, the Company's existing La Paloma block containing the Company's producing Colon field. Preliminary analysis of the available historic 2D seismic data suggests that the type of structure which has proven to be oil productive on the La Paloma block may also potentially hold commercial oil reserves on the VMM-28 block. The current carrying value of the Company's interest in the VMM-28 block is approximately US $4.64 million.

In accordance with the terms of the farm-out agreement, which remains subject to regulatory approval from the ANH, Shell E&P Colombia has agreed to pay a fee of US $15 million in cash to PetroLatina, of which US $3 million is payable on execution of the agreement and the balance of US $12 million is payable on receipt of the requisite ANH approval. Shell E&P Colombia will be appointed as operator of the contract and will take responsibility for the work program. In the event that ANH approval is not forthcoming by 30 September 2011, Shell E&P Colombia has the right to terminate the agreement and require any payments made by it to PetroLatina to be repaid.

The VMM-28 E&P Contract comprises two 3 year exploration periods ("Phase 1" and "Phase 2") followed by a 24 year production phase. In accordance with the E&P Contract in place with the ANH, work obligations for the VMM-28 block include the acquisition of 2D seismic and one exploratory well during Phase 1 (the first 3 year exploration phase), and either two wells without relinquishment of any acreage or one well with 50% relinquishment during Phase 2 (the second 3 year exploration phase). Under the terms of the farm-out agreement, PetroLatina has granted Shell E&P Colombia a six year period of operational exclusivity. During this Exclusivity Period, Shell E&P Colombia will pay for 100% of the costs, expenses and liabilities associated with the work program and shall be entitled to all rights in relation to the block.

Shell E&P Colombia will make available to PetroLatina all data acquired by it in relation to the contract area and ensure that the license area remains in good standing and will comply with all applicable laws, regulations and orders of Colombia.

Under the agreement, Shell E&P Colombia will obtain an 85% participating interest in the block. PDN will retain a 15% legal interest with an option to participate in the block upon expiration of the Exclusivity Period. Under the terms of the farm-out agreement, PetroLatina shall pay its share of the costs, expenses and liabilities associated with the block and shall pay Shell E&P Colombia for its share of Shell E&P Colombia's total sunk costs incurred to such date, out of PetroLatina's share of production within the block. Operations on the VMM-28 block would thereafter be governed by a joint operating agreement.

In the event that Shell E&P Colombia decides to withdraw from the farm-out agreement, the Company has the option to request that Shell E&P Colombia transfers its prevailing interest in the block back to PetroLatina.

Following the receipt of ANH approval, the Company intends to use the proceeds from the farm-out agreement to assist with the part funding of its planned ongoing drilling program and development commitments in respect of the remainder of its Colombian asset portfolio and for general working capital purposes.

Luc Gerard, Executive Chairman of PetroLatina, commented, "I am extremely pleased to welcome Shell E&P Colombia as our partner in respect of the VMM-28 contract, who's deep and complex drilling capability and experience in conventional and non-conventional reservoirs will be invaluable. The farm-out agreement provides us with exposure to exploration activity on the VMM-28 block, including the technology and expertise of Shell, whilst enabling us to focus our resources on the development of the other promising assets in our Colombian portfolio, including the Putumayo-4 E&P block.

The funds received, following the receipt of ANH approval, will assist with the financing of our ongoing Colombian work program whilst we maintain the flexibility of exercising an option to participate in the promising VMM-28 block in the future. This agreement serves to demonstrate the level of industry interest in VMM-28 and more generally in Colombia. We continue to believe in the potential of both our asset portfolio and Colombia and look forward to demonstrating and realizing such potential as our work program progresses."

Oil & Gas Post

Promote Your Page Too

Salmander Primes Bit for Cat Ba Prospect

- Salmander Primes Bit for Cat Ba Prospect

Friday, July 15, 2011
Salamander Energy plc

Salamander announced the completion of drilling operations on the Dao Ruang structure, Block L15/50, onshore Northeast Thailand.

The Dao Ruang-3 appraisal well ("DR-3") has been drilled to a total depth of 1,800 meters true vertical depth sub-sea in order to test the pre-Tertiary carbonate section on the northern flank of the Dao Ruang structure. The well intersected a number of zones of interest with associated gas shows and a full suite of wire-line logs have been acquired. Analysis of all available well data suggests that DR-3 would have limited potential as a producer from the current wellbore. Due to this, and wellbore stability reasons, a decision has been made not to flow test the well. The DR-3 well is currently in the process of being plugged and abandoned.

Meanwhile, in Vietnam, the Aquamarine Driller jack up rig that will be used to drill the Cat Ba-1X prospect in Block 101/100-04, Offshore Northern Vietnam, is due to imminently commence mobilization to the well site. The Cat Ba-1X well is expected to spud before the end of July 2011.

James Menzies, Chief Executive Officer of Salamander Energy, said, "Dao Ruang is clearly a very large, gas-bearing structure, though we have not been able to find effective reservoir. We will now use this recent well data, together with the new 3D seismic data acquired over the Sinphuhorm field, to further develop our understanding of the play and review our wider position in the Khorat basin.

Focus of the drilling program now moves to offshore Vietnam with Cat Ba, a 100 MMbbl oil prospect, expected to spud later this month."

Oil & Gas Post

Promote Your Page Too

OGX Finishes Drilling First Campos HZ Well

- OGX Finishes Drilling First Campos HZ Well

Friday, July 15, 2011

OGX announced the conclusion of drilling at the horizontal well 9-OGX-39HP-RJS (Pipeline Horizontal) and as expected identified very good reservoir conditions through a drill-stem test (DST). The well is located in block BM-C-41 in the Campos Basin.

"This was the third horizontal well test that yielded important results, confirming the quality of the accumulations discovered thus far and that are being appraised. We are continuing to move rapidly towards production," said Paulo Mendonça, General Executive Officer and Exploration Officer for OGX.

The OGX-39 well was horizontally drilled for more than 1,000 meters into the carbonate reservoirs of the Albian section of the Pipeline accumulation, which was originally discovered by the 1-OGX-2A-RJS well in November 2009, and uncovered new material information regarding the development of this area. The results from the drilling of the OGX-39 well demonstrated a high correlation with other wells in the Albian section, including calcarenites with excellent porosity with dolomitized and naturally fractured sections, and confirmed the extension of the Pipeline accumulation.

Following the conclusion of the drilling process, a DST was performed which indicated a production capacity of around 10,000 barrels of oil per day with an API gravity of approximately 19°. The process of selective acidification was used in six well intervals, which enabled better stimulation of the 1,000 meter horizontal well extension, thereby maximizing the oil flow.

Oil & Gas Post

Promote Your Page Too

Kosmos' Makore-1 Well All Wet

- Kosmos' Makore-1 Well All Wet

Friday, July 15, 2011
Tullow Oil plc

Kosmos' Makore-1 exploration well on the West Cape Three Points Block offshore the Republic of Ghana encountered 37 meters (121 feet) of good-quality Campanian-age water-bearing sandstone reservoirs and 46 meters (151 feet) of good-quality Turonian-age water-bearing sandstone reservoirs. The Makore-1 well was Kosmos' first well in the southeastern portion of the block. The well explored a stratigraphic trap in a Turonian-age fan system.

The Makore-1 well is located 25 km (15 miles) southeast of the company's Mahogany-1 exploration well that discovered the Jubilee Field. The Atwood Hunter semisubmersible rig drilled the Makore-1 well in a water depth of 1,409 meters (4,623 feet) to a total depth of 3,876 meters (12,716 feet). The Atwood Hunter will remain on the block to drill the Akasa-1 exploration well, formerly known as the Dahoma Up-dip prospect. The Akasa-1 well is expected to be spudded shortly.

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

Oil & Gas Post

Promote Your Page Too

BHP Billiton Bids High to Extend US Shale Footprint

- BHP Billiton Bids High to Extend US Shale Footprint

Friday, July 15, 2011
BHP Billiton plc

BHP Billiton and Petrohawk have entered into a definitive agreement for BHP Billiton to acquire Petrohawk for US $38.75 per share by means of an all-cash tender offer for all of the issued and outstanding shares of Petrohawk, representing a total equity value of approximately US $12.1 billion and a total enterprise value of approximately US $15.1 billion, including the assumption of net debt. The Petrohawk board of directors has unanimously recommended to Petrohawk shareholders that they accept the offer.

The transaction would provide BHP Billiton with operated positions in the three world class resource plays of the Eagle Ford and Haynesville shales, and the Permian Basin. Petrohawk's assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet equivalent per day (MMcfe/d), or 158 thousand barrels of oil equivalent per day (Mboe/d). At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent (Tcfe). The company has a current non-proved resources base of 32 Tcfe for a total risked resource base of 35 Tcfe. Petrohawk reported gross assets of US $8.2 billion as at 31 March 2011 and US $390 million of profit before tax for the year ended 31 December 2010.

BHP Billiton CEO, Marius Kloppers, said the acquisition was a natural fit with BHP Billiton's strategy.

"The proposed acquisition of Petrohawk is consistent with our well defined, upstream, Tier 1 strategy and provides us with even greater exposure to the world's largest energy market, while also broadening our geographic and customer spread. Importantly, our offer and the associated substantial premium represent a unique opportunity for Petrohawk shareholders and recognize the growth opportunities embedded in its portfolio immediately.”

BHP Billiton Petroleum Chief Executive, J. Michael Yeager, said the Petrohawk acquisition would add high quality growth to the company.

"Petrohawk has a focused portfolio of three world class onshore natural gas and liquids rich shale assets. With over a decade of significant investment and volume growth ahead, this transaction would build on our recent acquisition of the Fayetteville shale in Arkansas and provides the potential to more than double our existing resource base. Following completion of the Petrohawk transaction, BHP Billiton Petroleum will be on track to deliver a compound annual production growth rate of more than 10 per cent for the remainder of the decade as we accelerate our shale development program and leverage our strategic capability in the deep water.

"Importantly, BHP Billiton would retain Petrohawk's sizable U.S. based workforce, which has been at the forefront of the technological innovation that brought about the economic viability of U.S. shales. We look forward to extending our dedication to safeguarding the environment and the communities where we operate and continuing our commitment to safe and responsible operating practices across all of our shale gas plays, including the world-class assets that Petrohawk would bring to our portfolio."

Petrohawk CEO, Floyd Wilson, stated, "We believe these premium oil and natural gas assets would benefit significantly by residing within a larger entity that can employ more capital intensity to accelerate their realized value. We are excited to see this transaction completed and to be part of the BHP Billiton organization."

The tender offer is expected to commence by July 25, 2011. The acquisition is subject to the terms and conditions set forth in the merger agreement, including a condition that at least a majority of the outstanding Petrohawk shares are tendered, that the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired or been terminated and that clearance is obtained from the Committee on Foreign Investment in the United States, and other customary conditions. If the tender offer is completed, un-tendered shares of Petrohawk will be converted into the right to receive the same US $38.75 per share price paid in the tender offer. The transaction is to be financed from existing cash resources and a new credit facility and is not subject to any financing contingency. The transaction is expected to close in the third quarter of 2011.

BHP Billiton has engaged Barclays Capital and Scotia Waterous as financial advisors in connection with this Offer. Its legal advisors are Sullivan & Cromwell LLP and Morgan, Lewis & Bockius LLP in the United States. Barclays Capital will act as Dealer Manager for the offer. Petrohawk has engaged Goldman Sachs as its financial advisor in connection to this Offer. Its legal advisor is Simpson Thacher & Bartlett LLP.

Oil & Gas Post

Promote Your Page Too