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Oil and Gas Energy News Update

Monday, July 18, 2011

Oil & Gas Post - All News Report for Monday, July 18, 2011

Monday, July 18, 2011

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Commodity Corner: Oil Falls as Dollar Strengthens

- Commodity Corner: Oil Falls as Dollar Strengthens

Monday, July 18, 2011
Rigzone Staff
by Matthew V. Veazey

The price of light sweet crude oil declined $1.31 Monday to settle at $95.93 a barrel. The Brent benchmark also ended the day lower at $116.05 a barrel, or down $1.21 from Friday's settlement.

A stronger dollar against the euro prompted Monday's selloff as investors focused on Europe's ongoing debt woes and concerns about slackening oil demand. A stronger greenback makes dollar-denominated crude oil a less attractive buy for investors using other currencies.

The euro lost value after the European Banking Authority on Friday issued the results of its latest stress test of banks in the Eurozone. Nearly 27 percent of the 90 banks examined fared poorly in the exercise, which predicted how well they could withstand deteriorating economic conditions. Eight of the institutions examined failed the stress test outright while another 16 barely passed.

The WTI benchmark fluctuated from $94.69 to $97.69 during Monday's session while the Brent contract traded within a range from $114.76 to $116.95.

Despite a heat wave that has boosted natural gas futures recently, the front-month contract price remained unchanged at $4.55 per thousand cubic feet Monday. Natural gas peaked at $4.61 and bottomed out at $4.48.

The price of a gallon of gasoline ended the day at $3.10, a three-cent decline from Friday. The intraday range for gasoline spanned from $3.05 to $3.15.

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ADX Wins Offshore Italty License

- ADX Wins Offshore Italty License

Monday, July 18, 2011
ADX Energy Ltd.

ADX Energy Ltd is pleased to announce that the award process for the offshore exploration permit d 364 C.R-.AX in Italian waters has been completed. The adjacent permit d 363 C.R-.AX is under application by ADX.

The awarded permit is contiguous to ADX’s offshore Tunisian Kerkouane permit which contains the Dougga gas condensate discovery and the Lambouka gas discovery. ADX is the operator of the permit and holds a 100% interest.

Previous exploration work within the Pantelleria and Kerkouane permits has identified a number of prospects and leads as well as prospective hydrocarbon fairways which have previously remained undetected. Recently acquired geophysical data has confirmed this interpretation.

These highly prospective fairways trend into the offshore areas covered by the new permit. The permit has not seen modern seismic techniques but success in the area has attracted the recent interest of majors such as Shell and Repsol.

High prospectivity combined with the excellent fiscal terms in Italy represents ADX’s ongoing strategy of focusing its resources on core areas which offer proven prospectivity, materiality and potential for quick commercialization.

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ION Expands AfricaSPAN Seismic Program

- ION Expands AfricaSPAN Seismic Program

Monday, July 18, 2011
ION Geophysical Corporation

ION Geophysical Corporation has successfully acquired 8,700 km of regional seismic data offshore Tanzania, Mozambique, and Comoros, adding to the 14,000 km of data the company previously acquired in the region in the first two phases of its East AfricaSPAN program.

Several recent large discoveries offshore Mozambique and southern Tanzania have created tremendous interest in the East Africa margin for oil exploration. This third phase of ION's East AfricaSPAN program provides the basis for an improved understanding of the hydrocarbon potential in this highly prospective region.

Ken Williamson, Senior Vice President of ION's Integrated Seismic Solutions group, commented, "Recent development activities in East Africa, particularly in Kenya and Tanzania, were initiated as a result of geologic insights provided by the first two phases of our East AfricaSPAN program. This additional dataset will provide important ties to the Southern petroleum provinces of East Africa in Mozambique and southern Tanzania, and help shape ideas for exploration in the rest of the margin."

East AfricaSPAN III was acquired using long offsets and a specially designed source optimized for deep penetration and imaging. The data will be processed using ION's GX Technology group's latest proprietary processing and imaging technologies. Pre-stack time migration (PSTM) results will be available in November 2011, with pre-stack depth migration (PSDM) results available December 2011.

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Rocksource Hits Dry Well at Breiflabb Prospect

- Rocksource Hits Dry Well at Breiflabb Prospect

Monday, July 18, 2011

Rocksource ASA announced today that the drilling rig Borgland Dolphin is in the process of completing drilling operations on the "Breiflabb" prospect, in licence PL 416 in the Norwegian part of the North Sea. The well did not encounter hydrocarbons. The well will be further reviewed in the upcoming quarterly presentation on August 17th.

The PL 416 partnership consists of E.ON Ruhrgas (Operator and 50 per cent working interest), Det norske oljeselskap (15 per cent) and Rocksource (35 per cent).

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Nautical Updates Kraken Discovery Size

- Nautical Updates Kraken Discovery Size

Monday, July 18, 2011
Nautical Petroleum

Nautical Petroleum plc is pleased to announce the results of an Independent Resource Opinion conducted by Gaffney, Cline & Associates (GCA) on the Kraken discovery located in North Sea Blocks 9/2b (Nautical 50%) and 9/1a (Nautical 100%).

GCA have reviewed data and the Company's reservoir simulation studies on the Main Sand Unit of the Heimdal III reservoir in order to provide an independent opinion on the Contingent Resources. The Heimdal III reservoir is the focus of the proposed first phase of development of Kraken and has been penetrated by the 9/02-1A, 9/02b-2, 9/02b-4 and 9/02b-4z wells.

GCA have also provided comment on the Contingent and Prospective Resources in the lower Heimdal I reservoir, which was penetrated by the 9/02b-2 well and extends westward into Block 9/1a. For the Heimdal I reservoir, GCA estimates a gross 1C, 2C and 3C Contingent Resources of 9MMstb, 11MMstb and 13MMstb respectively (Net to Nautical*: 4.5MMstb, 5.5MMstb, and 6.5MMstb). Additionally, GCA estimates gross Low (P90), Best (P50) and High (P10) unrisked Prospective Resources of 14MMstb, 48MMstb and 110MMstb respectively (Net to Nautical*: 9MMstb, 34MMstb and 88MMstb).

Commenting on this announcement Steve Jenkins, Chief Executive Officer of Nautical said:

"The independent review endorses Nautical's resource estimate for the main sand, the Heimdal III reservoir, and confirms Kraken as a material asset, with significant upside. The Heimdal I sand prospective resources represent further upside, and shall be evaluated by the 3D seismic data currently being acquired, to better define the areal extent of the reservoir.

"We now look forward to the results of the key 9/02b-5 appraisal well (spudded on 6 July 2011), which will gather further information about the Heimdall III reservoir and seeks to confirm a commercial flowrate in the core area of the field."

* Net to Nautical resource figures are as per the Company's calculation, based on the gross resources estimated by GCA.

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Wintershall Successfully Delineates Grosbeak Discovery

- Wintershall Successfully Delineates Grosbeak Discovery

Monday, July 18, 2011
Norwegian Petroleum Directorate

Wintershall Norge ASA, operator of production licence 378, has concluded the drilling of appraisal wells 35/12-4 S and 35/12-4 A in the 35/12-2 Grosbeak oil and gas discovery.

The Grosbeak discovery was proven in 2009 in the Sognefjord formation and in the Brent Group in Upper and Middle Jurassic reservoir rock.

The appraisal wells were drilled approximately 2.5 kilometres northeast of the 35/12-2 Grosbeak discovery well and approximately 10 kilometres northeast of the Fram field.

The purpose of the 35/12-4 S and 35/12-4 A wells was to delineate the 35/12-2 Grosbeak discovery.

Well 35/12-4 S was drilled in the south-eastern part of the structure and encountered an oil column of 40 metres in the Brent Group (Ness formation) in Middle Jurassic reservoir rock. The reservoir quality was better than expected. A successful formation test has been conducted in the well. The production rate was 800 standard cubic metres (Sm3) of oil with associated gas per flow day through a 44/64 inch nozzle opening. Maximum production rate was estimated at 1250 Sm3/ per flow day.

Well 35/12-4 A was drilled at the top Brent Group to study the north-eastern part of the Grosbeak structure. The upper part of the Ness formation consisted of thin alternating layers of sandstone and carbon, but no hydrocarbons.

The results from the wells will be included in the ongoing assessment of Grosbeak and the licensees will assess whether the discovery should be developed together with other discoveries in the area.

Comprehensive data acquisition and sampling have been carried out. Evaluations and analyses will be conducted to establish the size and extent of the discovery. Further delineation is likely to be necessary.

Wells 35/12-4 S and 35/12-4 A are the third and fourth exploration wells in production licence 378. The production licence was awarded in APA 2005.

Appraisal wells 35/12-4 S and 35/12-4 A were drilled to a vertical depth of 3585 and 3413 metres below sea level. Well 35/12-4 S was terminated in the Statfjord formation in Lower Jurassic rock and well 35/12-4 A was terminated in the Rannoch formation in Middle Jurassic rock. Both wells have been plugged and abandoned. The water depth is 359 metres.

The wells were drilled by the drilling facility Songa Delta, which will now be used in the Norwegian Sea to drill wildcat well 6607/12-2 S in production licence 127, where Total E&P Norge AS is the operator.

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Keppel On Track To Complete FPSO Aseng

- Keppel On Track To Complete FPSO Aseng

Monday, July 18, 2011
Keppel Shipyard

Keppel Shipyard Ltd's (Keppel Shipyard) conversion of the FPSO Aseng is on track to complete. The FPSO will be operated by Aseng Production Company Ltd, a joint venture by SBM Offshore and Compania Nacional de Petroleo de Guinea Ecuatorial (GEPetrol), the national oil company of Equatorial Guinea.

Chartered by Noble Energy for the development of the Aseng field in offshore Equatorial Guinea, FPSO Aseng is capable of processing 80,000 barrels of oil per day and storing approximately 1.7 million barrels of oil.

HE Marcelino Owono Edu, Minister of Mines, Industry and Energy of Equatorial Guinea, witnessed the naming of the FPSO by his daughter, Señorita Doña Ayingono Owono Nchama, at Keppel Shipyard today.

Mr Tony Mace, Managing Director and CEO of SBM Offshore, commented, "We are honoured to be able to contribute to the growth of Equatorial Guinea's oil and gas industry. Through the strong teamwork between SBM and Keppel Shipyard, we add yet another quality vessel to our fleet of FPSOs."

Mr Tong Chong Heong, CEO of Keppel Offshore & Marine added, "Keppel is committed to provide value-added solutions and reliable services to our customers. With safety as our top priority, we have exercised a focused approach to ensure that the needs and expectations of FPSO Aseng's stakeholders are met. Working closely with our partners on this project, we are taking strides towards a quality delivery."

Keppel's work scope on FPSO Aseng includes refurbishment and life extension works, upgrading the accommodation facilities, installing and integrating the topsides as well as fabricating and integrating the internal turret.

Since 2000, Keppel and SBM have completed 13 FPSO/FSO conversion projects together. FPSO Aseng is the second FPSO project which Keppel Shipyard and SBM are delivering for Equatorial Guinea.

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Triple Diamond Places Murray Well on Production

- Triple Diamond Places Murray Well on Production

Monday, July 18, 2011
Triple Diamond Energy

Triple Diamond Energy put the new Murray #14-3 well into production on Thursday, June 30. Located in Garvin County, Oklahoma, the well represents the company’s first success using a technique called Seismic Geophysical Survey Testing.

Seismic methods are the most widely employed of all geophysical methods used in petroleum exploration, as they provide highly accurate renditions of the geometry of subsurface layers. However, the costs associated with seismic methods are much higher than other types of geophysical surveys, requiring a substantial investment for companies interested in using the technology.

“This was a large seismic project, but the results back up our geophysicists’ theories on the area, and really validate what we’re doing,” explains President Chris Jent of Triple Diamond Energy.

The company finished strong in 2010 and has continued the trend throughout the first half of 2011. Thanks to impressive numbers and streamlined operations, TDE is zeroing in on achieving impressive goals of growth for this year. In keeping with this success, the company projects Murray #14-3 well will have a twenty-four month payback.

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Production at Block S-1 in Yemen Back Online

- Production at Block S-1 in Yemen Back Online

Monday, July 18, 2011
TransGlobe Energy Corporation

TransGlobe Energy Corporation announced the repair of the Yemen export pipeline to the Red Sea and resumption of production at Block S-1.

Block S-1, Yemen (25% non-operated working interest)

TransGlobe was advised on July 16th that the export pipeline from Marib to the Ras Issa facility on the Red Sea was repaired on July 15th. The operator of Block S-1 began shipping sales crude oil on July 16th and commenced production from the An Nagyah field. The operator is currently ramping up production from the field and is producing approximately 8,300 Bopd Gross (2,075 Bopd to TransGlobe) this morning. Block S-1 produces a high quality (43 API) sweet crude oil and typically receives Brent pricing.

Block S-1 production (approximately 2,300 Bopd to TransGlobe) was shut in since March 17th, 2011 due to damage to the export pipeline.

The Company will provide updated Guidance for 2011 with the second Quarter financial results which are scheduled for release on Monday, August 8th.

TransGlobe Energy Corporation is a Calgary-based, growth-oriented oil and gas exploration and development company focused on the Middle East/North Africa region with production operations in the Arab Republic of Egypt and the Republic of Yemen. TransGlobe's common shares trade on the Toronto Stock Exchange under the symbol TGL and on the NASDAQ Exchange under the symbol TGA.

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Farstad Strengthens Brazil Position with Acquisition

- Farstad Strengthens Brazil Position with Acquisition

Monday, July 18, 2011
Farstad Shipping

Farstad Shipping ASA has reached an agreement with Petroserv S.A. in Brazil, on certain conditions, to buy Petroserv's 50% share in BOS Navegação S.A. Farstad Shipping will after the purchase have 100% ownership of BOS. The net purchase price for the 50% share is USD 56.5 million. The acquisition is expected to be consolidated in Farstad Shipping's accounts as from 1 July 2011.

BOS was established in June 1999 as a joint venture between Farstad Shipping and Petroserv. Today the company owns 3 AHTS on contracts with Petrobras. In addition BOS operates 10 Farstad vessels in Brazil. BOS' offices in Rio de Janeiro and Macaé employ 35 people onshore and 325 people offshore.

To Farstad Shipping this agreement represents a strengthening of our position in Brazil, a market of considerable growth.

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Atikwa Expands Roncott Development Potential

- Atikwa Expands Roncott Development Potential

Monday, July 18, 2011
Atikwa Resources Inc.

Atikwa Resources Inc. has significantly expanded the development potential of its Roncott property through a rolling option farm-in on 22 sections of land contiguous to its producing 7-27 well and the existing Roncott Field. Atikwa will pay 100% of the costs associated with the drilling of one vertical well to earn the right to participate in a rolling option on a 50/50 basis. The rolling option is designed to earn two sections of land for every additional well drilled.

The Company's 7-27 well is currently the best producing vertical well in the pool with stabilized production of approximately 20 barrels per day over the last year. Based on industry data, management believes that a horizontal well drilled into a similar quality Bakken reservoir could produce from five to seven times that of a vertical well. President Sean Kehoe stated: "We are very excited about finally being able to move forward with this play. We have been working for over a year with a number of entities in an effort to build a larger position in and around our successful 7-27 test well and the main pool. We now have enough running room in a Bakken pool that has a history of producing oil economically from vertical wells, due to that fact, this should be an exciting horizontal candidate."

The Roncott field in Saskatchewan was discovered in 1956 as a Bakken formation field that was capable of producing economic, 40 degree API oil, from conventional vertical wells. Government data estimates that there is 10 million barrels of oil in place, however over the life of the pool industry has only extracted about 8% of that or 800,000 barrels of oil from essentially four vertical wells. It is that remaining 9.2 million barrels that the Company plans to target and potentially expand with a horizontal drilling program.

Vertical wells in this pool will qualify for a 50,000 bbl royalty incentive volume with horizontal wells qualifying for 100,000 bbl under the same incentive; consequently the Company will only pay a 2.5% Crown royalty, during this period. The low royalties and the lighter quality crude oil, combine to give favorable cash netbacks for production.

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Saratoga to Be Listed on NYSE Amex Exchange

- Saratoga to Be Listed on NYSE Amex Exchange

Monday, July 18, 2011
Saratoga Resources

Saratoga Resources, Inc. today announced that it has received notification that its common stock has been approved for listing on the NYSE Amex stock exchange and has chosen J. Streicher & Co., L.L.C. as its designated market maker. Saratoga expects its common stock to begin trading on the NYSE Amex under the trading symbol ‘SARA’ on July 20, 2011. Saratoga’s common stock will continue to trade on the OTCQB under its current symbol, “SROE.PK,” until such date.

“Our listing on the NYSE Amex marks a significant milestone in the transformation of our company,” said Thomas F. Cooke, Chairman and Chief Executive Officer. “Over the past several years we have weathered an unprecedented decline in commodity prices and exited bankruptcy, preserving our equity holders’ interests intact and paying our creditors one hundred cents on the dollar. We have since refinanced our debt and strengthened our balance sheet with the infusion of additional equity while improving our bottom line through increasing production, a rebound in commodity prices and a sharp focus on controlling costs through operating efficiencies. We believe that our recently announced successful equity raises, including the participation of funds managed by Blackstone Group (NYSE:BX - News) affiliate GSO Capital Partners as lead investor, together with our move to the NYSE Amex is a reflection on the great strides we have made as a company. We expect our listing on the NYSE Amex to result in increased visibility within the investment community and additional liquidity in the capital markets for our common stock.”

“We welcome Saratoga Resources to the NYSE Euronext family of listed companies and to NYSE Amex,” said Scott Cutler, Executive Vice President, NYSE Euronext. “Saratoga and its shareholders will benefit from superior market quality and technology, a broad array of issuer and investor services, and a global brand association. We look forward to building a strong and lasting partnership with the Company and its shareholders.” For more information, please visit:

About Saratoga Resources

Saratoga is an independent exploration and production company with offices in Houston, Texas and Covington, Louisiana. Principal holdings cover 33,869 gross (31,125 net) acres, mostly held-by-production, located in the transitional coastline and protected in-bay environment on parish and state leases of south Louisiana. Saratoga's stock currently trades on the OTC Market under the symbol "SROE.PK".

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Sky Names Agron Xhavo as VP - Albania and Co-Head Geologist

- Sky Names Agron Xhavo as VP - Albania and Co-Head Geologist

Monday, July 18, 2011
Sky Petroleum Inc.

Sky Petroleum, Inc., an oil and gas company with activities in Albania and the United Arab Emirates, is pleased to announce the appointment of Agron Xhavo as Vice President – Albania and Co-Head Geologist, effective August 1, 2011.

Mr. Xhavo has over 28 years of petroleum geology experience, and is currently with the National Agency of Natural Resources (“AKBN”) as its Head of Procedures, Petroleum Directory. Prior to AKBN Mr. Xhavo held several positions including: Chief of Administration of Opportunity Albania; Executive Director of the Albanian Commercial Mediation and Arbitration Centre, and Executive Director at the National Petroleum Agency (predecessor to AKBN). Agron holds a Bachelor Degree in Petroleum Geology from the University of Tirana.

"We are very pleased to have Agron join Sky Petroleum Inc. He is as an experienced petroleum geologist with significant knowledge of all aspects of the Albanian oil and gas industry as well as specific understanding of Blocks 4, 5 and Dumre,” said Karim Jobanputra, Sky Petroleum’s chief executive officer.

About Sky Petroleum

Sky Petroleum (OTCBB:SKPI.ob - News) is an oil and gas exploration company. Sky Petroleum's primary focus is to seek opportunities where discoveries can be appraised rapidly, and developments can be advanced either by accessing existing infrastructure, or by applying the extensive experience of established joint-venture partners. In addition, the company also plans some higher risk, higher reward exploration prospects. For additional information please visit

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Halliburton CEO: Demand for Services Outpacing Capacity Growth

- Halliburton CEO: Demand for Services Outpacing Capacity Growth

Monday, July 18, 2011
Dow Jones Newswires
by Ryan Dezember

Halliburton Co. (HAL) Chief Executive Dave Lesar said Monday that demand for oil field services in North America, such as hydraulic fracturing, continues to grow faster than companies like his can add equipment as producers rush to drill unconventional oil basins.

"Overall, growth in the demand for our service has outpaced capacity additions and we expect this imbalance to continue going forward," Lesar said on a conference call to discuss second-quarter results.

Halliburton reported a profit of $739 million, or 80 cents a share, up from $480 million, or 53 cents a share, a year earlier. The latest period included a penny in restructuring-related costs. Revenue climbed 35% to $5.94 billion, which set a new company record.

Analysts polled by Thomson Reuters most recently forecast earnings of 74 cents a share on revenue of $5.71 billion.

Much of the quarter's success is attributed to activity in North America, where high crude prices, producers' healthy balance sheets and easy capital have fueled a rush to unlock unconventional onshore oil reserves, including shale formations.

Natural gas drilling in North America, though down 2% in the quarter, remained "relatively resilient, spurred by the increase demand for power generation due to the substitution of natural gas for coal and harsh summer temperatures in various regions," Lesar said. Though Halliburton remains "a bit cautious" on natural gas drilling, the company's move to reduce prices in order to keep customers drilling has been fruitful, he said.

Halliburton also cited an uptick in work in the U.S. Gulf, winning service contracts for eight of the 18 deepwater wells that have been permitted since U.S. regulators lifted a ban on such drilling in February. The ban was enacted in response to last year's Deepwater Horizon explosion, which killed 11 workers and touched off the worst offshore oil spill in U.S. history. Halliburton provided cementing services for the well the Deepwater Horizon was drilling for BP PLC (BP, BP.LN).

Lesar cautioned, however, that the pace of new drilling permits has slowed and once the current backlog of work is complete, the Gulf of Mexico recovery could stall in the second half of the year.

Internationally, where recovery from recession has come more slowly for service companies than in North America, margins improved slightly.

"We are now seeing evidence that the international pricing is stabilizing," Lesar said. "We believe that steady volume increases should be a precursor for overall international pricing to improve toward the end of the year."

Delays in Iraq weighed on results, though Lesar said he expects profitability in the Middle Eastern country by the fourth quarter.

"We believe that Iraq will be one of the fastest-growing countries internationally in the coming years and that we will benefit significantly as a result of a first-mover strategy," he said.

Lesar also said that while Halliburton is spending heavily in sub-Saharan Africa to establish operations in countries including Mozambique, Tanzania and Uganda, the efforts should "position us for many years of profitable operations going forward," Lesar said.

(Tess Stynes contributed to this article.)
Copyright (c) 2011 Dow Jones & Company, Inc.

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Venezuela Oil Reserves Surpassed Saudis In 2010 - OPEC

- Venezuela Oil Reserves Surpassed Saudis In 2010 - OPEC

Monday, July 18, 2011
Dow Jones Newswires
by Benoit Faucon

Venezuela's crude proven reserves surpassed those of Saudi Arabia in 2010, making it the world's largest oil reserves holder, the Organization of Petroleum Exporting Countries said in its annual statistical bulletin.

Venezuela's proven crude oil reserves reached 296.5 billion barrels in 2010, up 40.4% on the year and higher than Saudi Arabia's 264.5 billion barrels, OPEC said.

In the long run the boost in reserves, which comes alongside increases from Iran and Iraq, may empower members of OPEC who favor a defense of high prices. However, there are doubts over whether all of Venezuela's heavy oil discoveries are economically viable.

The data broadly confirm Venezuela's statements that it had reached this level of reserves in January. OPEC normally relies on its members' assessments for statistical data.

Iraq's and Iran's proven reserves were also respectively upgraded by 24.4% to 143.1 billion barrels and by 10.3% to 151.2 billion barrels respectively, roughly in line with the countries' earlier disclosures.

Venezuela, Iran and Iraq were part of a group that refused to endorse a Saudi-led push to hike output at an acrimonious OPEC meeting June 8.

Analysts have questioned how economic Venezuelan reserves additions could be, as most come from the heavy and extra-heavy oil in the Orinoco Belt, which is difficult and expensive to extract.

Venezuela's statistics have long been a controversial topic in oil circles, though disagreements on the matter have recently eased. The International Energy Agency last month said it revised the method used to calculate the country's oil-production figures, bringing its estimates closer to those of Caracas.

The set of statistics may also vindicate Iran's claims that sanctions aren't crippling the development of its oil and gas industry. For instance, crude oil exports from the Islamic Republic to Europe in 2010 rose 34.5% to 764,000 barrels a day on average.

Overall, Iranian oil exports rose by 0.7% as exports to Asia and the Pacific fell by 11%. Iranian natural gas reserves and exports rose by 11.8% and 48.7% respectively.

Last year, the European Union implemented stringent sanctions on Iran which, without banning crude purchases, complicate them by putting restrictions on insurance, financial services and energy sectors.

The numbers also underscore the recovery of the Nigerian oil industry with 17 more rigs active in the West African nation and 437 additional producing wells, following a successful amnesty for militants in 2009.

Overall, the numbers show OPEC members strongly benefited from higher oil prices in 2010, with the total value of their petroleum exports up 27.2% at $745.1 billion and their overall gross domestic product rising 11.2% to $2,325 billion.

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

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Lundin Finds Success with Avaldsnes Sidetrack

- Lundin Finds Success with Avaldsnes Sidetrack

Monday, July 18, 2011
Lundin Petroleum

Lundin Norway AS (Lundin Norway) a wholly owned subsidiary of Lundin Petroleum AB (Lundin Petroleum) has completed the sidetrack well 16/3-4A of the first appraisal well 16/3-4 on the Avaldsnes discovery in PL501 on the Norwegian Continental Shelf (NCS). A comprehensive data acquisition and sampling program has been acquired from the sidetrack well.

The objective of the sidetrack well 16/3-4A was to confirm lateral reservoir continuity and sand quality to the west of the first appraisal well. The results from the sidetrack well shows good lateral continuity of the reservoir with a proved oil column in excess of 4 meters with excellent quality sands.

The well 16/3-4A was drilled to a vertical depth of 1,934 meters below sea level using the drilling rig Bredford Dolphin. The rig will now move on to drill the second appraisal well, 16/2-7 over the Avaldsnes discovery.

Ashley Heppenstall, President and CEO of Lundin Petroleum comments ' The results of the first Avalsdnes appraisal well and subsequent sidetrack are very positive having proven the lateral continuity of the Upper Jurassic Draupne reservoir with high porosity and permeability. Whilst the reservoir thickness across the Avalsdnes structure will be variable we now have a higher degree of confidence that the part of the structure previously assumed to be non hydrocarbon bearing will in fact be covered by Upper Jurassic hydrocarbon bearing reservoir. '

Lundin Norway is the operator with 40 percent interest. Partners are Statoil Petroleum AS with 40 percent interest and Mærsk Oil Norway with 20 percent.

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Crimson Updates Production Activity, Ups 2011 Capital Plans

- Crimson Updates Production Activity, Ups 2011 Capital Plans

Monday, July 18, 2011
Crimson Exploration Inc.

Crimson Exploration Inc. on Monday provided an operational update and announced an increase in its 2011 capital program.

In Liberty County, TX, the Catherine Henderson #B-4 (64.0% WI) commenced production at a gross daily rate of 1,379 Boepd, or 721 barrels of condensate, 208 barrels of natural gas liquids and 3.2 Mmcf of natural gas on a 13/64th choke and 7,000 psi of flowing tubing pressure. This well was drilled to a total measured depth of 15,338 feet in the Lower Cook Mountain formation. Approximately one mile to the northwest, Crimson has drilled the Catherine Henderson A-10 (66.0% WI), targeting the Cook Mountain formation, to a total measured depth of 13,742 feet. Completion operations are scheduled to begin by the end of July with first production in early August.

In Zavala County, TX, Crimson completed the KM Ranch #1H (50.0% WI), targeting the Eagle Ford Shale, and has commenced flow-back operations with results expected in mid-August. The well was drilled to a total measured depth of 12,627 feet, including a 5,800 foot lateral and 20 stages of fracture stimulation. The KM Ranch #1H represents Crimson’s first well in Zavala County where Crimson has an estimated 147 drilling locations and approximately 2,300 net acres held by production. Crimson anticipates spudding the KM Ranch #2H (50.0% WI) in the beginning of November subsequent to spudding its first well in the Booth-Tortuga Area, approximately 13 miles to the southwest of the KM #1H, in the beginning of October.

In Karnes County, Texas, Crimson spud the Littlepage McBride #2H (53.0% WI), targeting the Eagle Ford Shale formation, which is drilling at 8,480 feet toward an estimated total measured depth of 15,850 feet. Completion operations are expected to begin mid-third quarter with initial production to follow in September. The Littlepage McBride #2H is located approximately 0.6 miles to the east of the Littlepage McBride #1H well (53.0% WI) which is currently producing 525 Boepd and has produced a cumulative 53,000 Boe since coming online in early April. Due to the success experienced in Karnes County, we have planned a continuous drilling program for the remainder of the year, commencing a well per month beginning in August.

Updated 2011 Capital Program

Crimson’s Board of Directors recently approved increasing its 2011 capital budget to $78 million, a 30% increase, to accelerate oil weighted drilling activities in Zavala, Dimmit and Karnes Counties. This decision was made based on Crimson’s extensive portfolio of drill ready oil opportunities and recent success. The increase in capital expenditures marks the beginning of an Eagle Ford development program that represents a strategic shift to oil and liquids rich projects in proven areas. As a result, preliminary internal forecasts indicate Crimson’s production mix will be over 40% crude oil and natural gas liquids by January 2012 and over 50% crude oil and natural gas liquids by the second quarter of 2012.

Second Quarter 2011 Production

Crimson produced approximately 4.4 Bcfe of natural gas equivalents, or an estimated 48,740 Mcfe per day, during the second quarter 2011, compared with 2.7 Bcfe, or 30,084 Mcfe per day, produced during the second quarter of 2010, a 62% increase period over period. The second quarter production results were in line with management’s guidance.

Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, approximately 12,000 net acres in the Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas, approximately 6,700 net acres in the Eagle Ford play in South Texas and approximately 11,000 net acres in the Denver Julesburg Basin of Colorado.

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Pacific Rubiales Encouraged By Arauca Drilling Results

- Pacific Rubiales Encouraged By Arauca Drilling Results

Monday, July 18, 2011
Pacific Rubiales Energy Corp.

Pacific Rubiales Energy Corp. announced today an operational update for the TORODOI-1X exploration well, the first of two exploratory wells planned for 2011 in the Arauca Block.

The TORODOI-1X well spudded on July 3, 2011 with exploration targets in Tertiary and Cretaceous sands. The well was drilled vertically and found the Tertiary Carbonera Formation at 4,534 feet Measured Depth ("MD") or 4,121 feet True Vertical Depth Sub Sea ("TVDSS"), Tertiary Mirador at 5,549 feet MD (5,136 feet TVDSS), Cretaceous Guadalupe at 5,822 feet MD (5,325 feet TVDSS) and Basement at 7,119 feet MD (6,706 feet TVDSS), reaching Total Depth ("TD") at 7,327 feet MD on July 12, 2011.

Ronald Pantin, Chief Executive Officer of Pacific Rubiales, commented: "We are very encouraged by this first success in the Arauca Block as this represents an auspicious start of the activity in this brand new oil region, setting the path for new discoveries that will enlarge our resource base and ensure the long term growth of the block."

During drilling, oil shows were detected in ditch samples located in sands correlated as Carbonera C-5 at 5,185 feet MD (4,772 feet TVDSS). Weaker oil and gas shows were also described in the Mirador and Guadalupe formations.

After running open hole wire-line logs, the petrophysical evaluation showed an oil-bearing sand interval in the Carbonera C-5 with a net pay thickness of 13 feet, 24% porosity and water saturation of 45% without an oil-water contact interpreted. On that sand, two wire-line pressure points showed a 0.357 psi / ft formation gradient, indicative of a fluid density similar to that of light to medium oil. The Mirador and Guadalupe showed water on the petrophysical evaluation, and four pressure points showed a water gradient of 0.43 psi / ft.

At C-5 level, the TORODOI-1X well is located within a four-way structural closure with an approximate area of 5,300 acres.

Management believes the geological information obtained in the TORODOI-1X well will be invaluable for the design of the planned exploration wells with Paleozoic targets. The Company is making arrangements to conduct production tests after the running of a 7" casing down to TD.

The Arauca Block is an E&P Contract executed between Pacific Stratus Energy Colombia Corp. (a wholly-owned subsidiary of the Company) and the Agencia Nacional de Hidrocarburos of Colombia ("ANH") with a sliding scale royalty, where the Company holds 100% working interest, and Free Traders Group Inc. is entitled to a 5% working interest once repayment of 5% of the exploration expenditures is made by Free Traders Group Inc. to the Company, if commercial production is obtained and subject to the ANH's approval of said transfer of interest.

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Treaty to Move Forward with Belize Drilling Program

- Treaty to Move Forward with Belize Drilling Program

Monday, July 18, 2011
Treaty Energy Corp.

Treaty Energy Corp. on Monday reported on developments in Belize leading up to the implementation of its initial eight well drilling program.

Andrew V. Reid, Chairman and CEO of Treaty Energy Corporation, stated, "We are pleased to confirm that all things requested of Treaty by both the Belize Department of Environment and Department of Petroleum have now been completed and provided to the proper Belizean agencies and approved. In addition, we are elated that the Director of the Ministry of the Environment has signed off on our environmental checklist and now confirmed that Treaty may move forward and drill the initial eight wells identified by location in our drilling program."

Mr. Reid stated, "The Belize Minister of the Environment indicated that we should deliver the EIA report forthwith and prepare to immediately produce oil from the first well once drilling is completed. To accelerate this process we have retained an attorney from BNE to assist Treaty in finalizing the surface rental agreement for planned drill sites and communicate directly with Sir Manuel Esquivel and Board of Directors of the land owner. Furthermore, a local surveyor under contract with Treaty will complete the survey for our initial drill site this week."

Mr. Reid went on to say, "Our stakeholders are reminded that we established Treaty Belize Energy, Ltd. in May 2011 and located our corporate office in Belize City. In addition, we also equipped a field operations office in Placencia, Stann Creek District, Belize, close to the drilling sites to be developed, which are a three-hour drive south of Belize City."

Treaty Energy has had meetings with a number of community leaders in areas where the Company intends to drill and is pleased to report that these community leaders are uplifted and energized with our intent and in particular that Treaty will be providing employment opportunities for numerous local Belizeans.

In conclusion, Mr. Reid stated, "Ongoing developments and significant preparation in Belize are proving advantageous to a successful drilling program. Upon arrival of the drilling rig and support equipment by sea on or about July 24/25, our Company will move ahead with an oil program that holds the potential to be a magnificent life changer for all Treaty stakeholders and the people of Belize."

Treaty is engaged in the acquisition, development and production of oil and natural gas. Treaty acquires and develops oil and gas leases which have "proven but undeveloped reserves" at the time of acquisition. These properties are not strategic to large exploration-oriented oil and gas companies. This strategy allows Treaty to develop and produce oil and natural gas with tremendously decreased risk, cost and time involved in traditional exploration.

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Rockhopper Spuds Sea Lion Appraisal Well

- Rockhopper Spuds Sea Lion Appraisal Well

Monday, July 18, 2011
Rockhopper Exploration

Rockhopper Exploration plc, the North Falkland Basin oil and gas exploration company, announced that the 14/10-6 appraisal well was spudded at 2125 hrs BST on 15 July 2011. The Well is situated on Licence PL032, which is 100% owned and operated by Rockhopper, and is the third appraisal well to be drilled on the Sea Lion feature since Rockhopper’s oil discovery in May 2010.

The Well is located some 4.1km to the west of the 14/10-2 discovery well, on the western side of the structural low at top reservoir, and 2.3km to the south-west and 14m updip from the 14/10-4 appraisal well. The Well is designed to investigate reservoir and hydrocarbon presence outside what the Company considers the minimum case area. Both Sea Lion Main and Lower fan intervals are targets, with all the Sea Lion Main fan expected to be above the Oil-Water Contact established by the 14/10-4 appraisal well, and with reservoir expected to be thinner than encountered in previous wells on the Sea Lion feature.

Drilling operations are expected to take approximately 38 days and a further announcement will be made once drilling is completed.

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Kodiak to Offer Shares to Fund Bakken Activity

- Kodiak to Offer Shares to Fund Bakken Activity

Monday, July 18, 2011
Kodiak Oil & Gas Corp.

Kodiak Oil & Gas Corp. today announced that it is commencing an offering of 20,000,000 shares of its common stock in an underwritten public offering. Kodiak expects to grant the underwriters a 30-day over allotment option to purchase up to an additional 3,000,000 shares of Kodiak's common stock.

Kodiak intends to use the net proceeds of the offering to repay debt outstanding under its revolving credit facility, to fund capital expenditures related to drilling, development and infrastructure, principally in the Bakken play located in North Dakota, and for general corporate purposes, including financing the potential acquisition of oil and gas properties in certain core areas, such as the Bakken play.

In connection with the offering, Credit Suisse Securities (USA) LLC, KeyBanc Capital Markets Inc. and Wells Fargo Securities, LLC are acting as joint book-running managers. Copies of the preliminary prospectus supplement and the accompanying prospectus may be obtained by contacting: Credit Suisse Securities (USA) LLC, Prospectus Department, One Madison Avenue, New York, NY 10010, 1-800-221-1037.

The offering is being made pursuant to an effective shelf registration statement filed with the U.S. Securities & Exchange Commission (SEC). A prospectus supplement and accompanying prospectus describing the terms of the offering will be filed with the SEC and available on its website at

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Chevron Awards Gorgon Subsea Umbilicals Contract

- Chevron Awards Gorgon Subsea Umbilicals Contract

Monday, July 18, 2011
Subsea 7

Subsea 7 S.A. announced today the award of a contract valued at approximately $80 million from Chevron Australia Pty Ltd for the Chevron operated Gorgon Project, offshore Western Australia.

The work involves the transportation and installation of subsea umbilicals and structures from Barrow Island – 56km off the north-west coast of Western Australia, to the Gorgon and Jansz Fields. The Gorgon and Jansz umbilicals are 59km and 135km in length respectively. These will be transported from Europe to Australia onboard the Seven Seas, and then installed from the vessel in water depths of up to 1,350m using the onboard advanced deepwater flex-lay system. A major trenching scope of work, of up to 70km, will also be undertaken from the Rockwater 2, to stabilise and protect the main umbilicals.

Project management and engineering will commence immediately from Subsea 7’s office in Perth, Australia, with offshore operations scheduled to commence in early 2013.

Darren Cormell, Subsea 7's Vice President, Australia & New Zealand said: “We are pleased to have been awarded this deepwater contract from Chevron. The Gorgon Project represents an important development for the Subsea Umbilicals market in Australia. This award provides an excellent opportunity for Subsea 7 to build upon our strong local presence and long standing track record of working on significant subsea projects in Australia.”

The Gorgon Project is one of the world's largest natural gas projects and the largest single-resource project in Australia's history. It is operated by Chevron and is a joint venture of the Australian subsidiaries of Chevron (approximately 47%), ExxonMobil (25%) and Shell (25%), Osaka Gas(1.25%), Tokyo Gas (1%) and Chubu Electric Power (0.417%).

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Magellan, Vaalco Sign LOI for Bakken Development in Montana

- Magellan, Vaalco Sign LOI for Bakken Development in Montana

Monday, July 18, 2011
Magellan Petroleum Corporation

Magellan Petroleum Corporation signed a letter of intent (LOI) with Vaalco Energy Inc. to begin work on developing the Bakken formation and deeper horizons within the East Poplar Unit and Northwest Poplar Field in Roosevelt County, Montana (Poplar).

The LOI terms remain subject to closing on a definitive Purchase and Sale Agreement ("PSA"). The LOI contemplates a farm-out to VAALCO of an operating working interest in all of the approximately 23,000 net acres of oil, gas and mineral leases covering the Bakken and deeper formations at Poplar.

VAALCO has agreed to acquire 65% in return for cash consideration and for bearing 100% of the cost to drill three wells by the end of 2012. Parties would then move forward together as 65% / 35% owners respectively to further develop the prospects.

Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations where all Poplar proved and probable reserves are located.

William Hastings, President and CEO commented, "After conducting evaluation drilling, coring, and petrography work, we remain very encouraged about a number of prospective horizons at Poplar. Our new partnership with VAALCO is another step, with a strong and experienced partner, toward monetizing this asset and accelerating near-term development and production, not only from the Bakken but also from the Three Forks, Red River and associated deeper formations there in Montana. Given existing oil and gas infrastructure, our summer recompletion/infill program, our shallow gas plans, and, now, our Bakken partnership, we will continue efforts to add value, and perhaps extend, our position in Montana.

Magellan is a US-based energy company principally engaged in the acquisition, exploration, development and production of crude oil and "stranded" natural gas. Magellan's strategy involves the exploitation of already discovered oil and natural gas properties worldwide into non-traditional, growing markets. The company's properties and exploration acreage are located primarily in Australia, the United Kingdom, and the United States.

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Mid-year Well Permitting Set to Surpass 2010 Numbers in N. Colo. County

- Mid-year Well Permitting Set to Surpass 2010 Numbers in N. Colo. County

Monday, July 18, 2011
Greely Tribune, Colorado
by Sharon Dunn, Greeley Tribune, Colo.

Weld County oil and gas drilling permits are already taking over last year's pace, but that's just part of the picture.

Oil and gas drilling activity is at one of the highest levels in years, not only when it comes to drilling permits, which are good for two years, but actual activity.

Though evidence is apparent in the many oil and gas trucks burning a path along U.S. 85, it's also just as busy in the county recording office as it was last year.

Gaye Florio, the manager of the recording department at the Weld Clerk and Recorder's Office in north Greeley, said landmen still line up daily to research land titles on the office's computer systems. It's been the same story since early 2010, shortly after a well named "Jake" in northern Weld County spewed its riches, and subsequently touched off the fury to get the most out of the Niobrara shale formation.

"It hasn't changed. We've got people waiting now," Florio said Thursday morning. "We get new people all the time anymore. There for a while, we had the same (people) over and over, and now it's different all the time."

As of July 12, halfway through the year, the number of drilling permits issued in Weld County hit 1,195 -- a 32 percent increase in the last month -- easily topping the number of drilling permits throughout the state. The permit numbers are on track to surpass last year's 2,152 permits issued in Weld.

Though permitting is not the whole story, when it comes to activity, it is a good measure, said Thom Kerr, permitting manager with the Colorado Oil and Gas Conservation Commission, which evaluates permit requests and issues them.

"It is a good barometer, because it shows (oil companies') interest. If they're not interested, they're not going to file permits. At any time, we could have a huge flurry of permits, which we have," Kerr said. "We've been receiving over 100 permits a week for the last month."

The more interesting item for Kerr halfway through this year is the number of active drilling permits that have yet to do be acted upon. Permits are good for two years. As of June 16, the number of active permits was at roughly 5,000.

"That's 5,000 that have not been consummated or haven't expired, or haven't been drilled," Kerr said. "Those will keep them busy for a little while."

By the first week of July, Weld County had 33 rigs operating, almost half the state's 75 active total active rigs.

"You're seeing a lot of that," Kerr said. "That's why the permit activity probably isn't really reflective of the current level of drilling activity."

Since "Jake" spewed in late 2009, oil companies have flocked to the area to buy up leases and try their luck at the tight shale 7,000 feet below the surface.

The well also heralded a new wave of horizontal drilling activity, which is already setting records, and now sits at 26 percent of all drilling activity in the state, with the majority of horizontal wells in Weld.

Of the 378 horizontal drilling projects permitted so far this year, 309 are in Weld County. Last year, there were 462 horizontal wells permitted, 321 of which were in Weld. But only 151 of those wells were completed, meaning more is to come.

"Clearly it will be a record year for horizontal drilling," Kerr said. "No doubt, it's very high activity. If you look, 26.1 percent of all permits are horizontal. That's just so impressive. It had not been envisioned until the Niobrara touched that off. To get that resource, you need to drill it horizontal. It's the way to do it."

And because of the renewed interest in the Niobrara, Weld County numbers surpassed Garfield County for the second year after consistently coming in No. 2 in the state for years.

The activity has even prompted the Weld Clerk and Recorder to seek a part-time employee to make copies for the flocking land researchers.

"We have 10 machines, and we have nine to 10 where we've let them bring in their own computers," Florio said. "They're here all the time."

Copyright (c) 2011, Greeley Tribune, Colo. Distributed by McClatchy-Tribune Information Services.

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Kulczyk Finds Potential Gas Reservoirs in Olgovskoye Well

- Kulczyk Finds Potential Gas Reservoirs in Olgovskoye Well

Monday, July 18, 2011
Kulczyk Oil Ventures Inc.

Kulczyk Oil Ventures Inc. announced the O-14 well in the Olgovskoye Field, in north-eastern Ukraine, has been cased to total depth ("TD") after encountering eight potential gas bearing reservoirs.

O-14 Exploration Well

The O-14 exploratory well was drilled to a TD of 2,800 metres. The eight potential gas-bearing zones where encountered in the Middle and Lower Bashkirian portions of the well. The well was drilled to further increase the gas production capability of the Olgovskoye Field and was drilled into a separate fault block which had not previously produced gas. Production testing of the O-14 well is expected to commence in late August / early September.

Next Well

The drilling rig will now be moved to a new location at O-12 which lies at the north end of the Olgovskoye license area. The new well is located 500 metres northeast of the O-7 well and 7,000 metres northeast of the recently drilled O-14 location. The O-12 well is designed to test gas-bearing reservoirs in the Muscovian and Middle Bashkirian and to further develop the gas production capability of the Olgovskoye Field. The O-12 well is expected to commence drilling in late July.

Olgovskoye Field

The O-14 well is the third new well drilled on the Olgovskoye license since the Company acquired its 70% interest in KUB-Gas in June 2010 and is part of a larger development program on the KUB-Gas assets through 2011 and 2012.

Kulczyk Oil completed drilling of the Olgovskoye-8 well in early January 2011. This well is expected to be tested and completed later in the third quarter of 2011. The O-8 well was drilled to a TD of 2,780 metres and wireline logging of the open hole identified several potential hydrocarbon-bearing zones. Another well on the Olgovskoye license, the O-9 well, reached its TD of 2,638 metres in mid-April and was cased to total depth as a potential multi-zone gas well. Completion and testing of the O-9 well indicated a gas discovery in a new zone known as the R37 unit.

The Olgovskoye Field currently produces from 4 wells (O-3, O-4, O-5 and O-7) with each well producing from a separate horizon.

Through its interest in KUB-Gas, one of the largest private gas producers in the Ukraine, KOV has an effective 70% interest in the Olgovskoye Field.

Assets of Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration company with a diversified portfolio of projects in Brunei, Syria and Ukraine and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine.

In Brunei, KOV owns working interests in two production sharing agreements which gives the Company the right to explore for and produce oil and natural gas from Block L and Block M. KOV owns a 40% working interest in Block L, a 2,220 square kilometre (550,000 acre) area covering onshore and offshore areas in northern Brunei and a 36% working interest in Block M, a 3,011 square kilometre (744,000 acre) area onshore in southern Brunei.

In Ukraine, KOV owns an effective 70% interest in KUB-Gas LLC. The assets of KUB-Gas consist of 100% interests in five licenses near the City of Lugansk in the northeast part of Ukraine. Four of the licenses are gas producing.

In Syria, KOV holds a participating interest of 70% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon fulfillment of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre (2.48 million acre) area in northwest Syria. The Company has agreements to assign an aggregate of 25% in ownership interests to third parties which are subject to the approval of Syrian authorities and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9.

The main shareholder of the Company, Kulczyk Investments S.A. owns almost 50% of the issued common shares. Kulczyk Investments S.A. is an international investment house founded by Polish businessman Dr. Jan Kulczyk.

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Chesapeake's Buffalo Creek Well Hits Production Milestone

- Chesapeake's Buffalo Creek Well Hits Production Milestone

Monday, July 18, 2011
Chesapeake Energy

Chesapeake Energy Corporation today announced its Buffalo Creek 1-17 well located in Beckham County, Oklahoma, recently surpassed cumulative gross production of more than 60 billion cubic feet of natural gas (bcf). Chesapeake operates the well with an 82.6% working interest and a 65.8% net revenue interest.

Chesapeake originally spud the well in May 2002 and reached a total depth of approximately 21,000 feet in the Cunningham Sand of the Deep Springer formation with first sales commencing in December 2002. The well averaged approximately 41 million cubic feet of natural gas (mmcf) per day for the first two years of production and is still producing approximately 8 mmcf per day.

Total gross capital expenditures to drill and complete the well were $8.5 million and subsequent operating expenses have been $1.4 million, or $0.024 per thousand cubic feet of natural gas equivalent (mcfe). Total gross revenue has been approximately $320 million, which includes approximately $65 million paid to royalty owners and approximately $15 million paid in severance tax to the state of Oklahoma. Total net cash flow from the well to the working interest owners has been approximately $230 million, or a multiple of 27 times the original cost of drilling and completing the well, and the realized price per mcfe has averaged $5.35.

Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, commented, “The Buffalo Creek 1-17 has certainly been a special well in the history of Chesapeake. As early pioneers drilling deep conventional wells using 3-D seismic in the Anadarko Basin, the success of the Buffalo Creek 1-17 well initiated a process almost 10 years ago that has now led to Chesapeake owning the largest leasehold position in the Anadarko Basin. This industry-leading leasehold position has proved to be exceedingly valuable as unconventional plays such as the Granite Wash, Cleveland and Tonkawa plays have emerged in areas in and around our traditional strongholds of conventional Anadarko Basin production. We believe that this is only the sixth well in Oklahoma history to reach this remarkable milestone of 60 bcf of cumulative production and Chesapeake now operates four of the six most prolific natural gas wells ever drilled in Oklahoma. I offer my congratulations to the entire Chesapeake Anadarko Basin team for being part of this historic well.”

McClendon added, “As a result of this well’s success and the many other successful Deep Springer wells we have drilled in the Anadarko Basin over the years that followed the drilling of the Buffalo Creek 1-17, we continue to pursue ultra-deep 3-D based Deep Springer drilling in the Anadarko Basin and we are currently operating three rigs in the play, where we believe at least another 185 wells can be drilled in the years ahead on our approximate 75,000 net acres of Deep Springer leasehold.”

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North America Delivers Strong Revenue Growth for Halliburton

- North America Delivers Strong Revenue Growth for Halliburton

Monday, July 18, 2011

Halliburton announced today that net income for the second quarter of 2011 was $747 million, or $0.81 per diluted share, excluding employee separation costs of $8 million, after-tax, or $0.01 per diluted share. Reported net income for the second quarter of 2011 was $739 million, or $0.80 per diluted share. This compares to net income for the first quarter of 2011 of $511 million, or $0.56 per diluted share. The first quarter of 2011 results were negatively impacted by $46 million, after-tax, or $0.05 per diluted share, related primarily to reserving certain assets as a result of political sanctions in Libya. Net income for the second quarter of 2010 was $480 million, or $0.53 per diluted share.

Halliburton’s consolidated revenue in the second quarter of 2011 was $5.9 billion, compared to $5.3 billion in the first quarter of 2011. Consolidated operating income was $1.2 billion in the second quarter of 2011, compared to $814 million in the first quarter of 2011. These increases were primarily attributed to improved pricing and equipment utilization in United States land, where nearly all product service lines have benefited from the shift to unconventional oil and liquids-rich basins. Consolidated revenue and operating income were $4.4 billion and $762 million, respectively, in the second quarter of 2010.

“I am extremely pleased with our second quarter results as total revenue set yet another company record. North America continues to deliver very strong growth in revenue and profitability, while international profit recovered modestly. As a whole, our level of operating margin was the highest it has been since 2008,” said Dave Lesar, chairman, president, and chief executive officer.

“North America revenue grew by 16% sequentially compared to United States rig activity growth of 6%, with incremental operating margins of greater than 50% for both divisions. This was driven by the execution of our North America growth strategy in liquids-rich basins, and our customers’ continued adoption of our integrated solutions.

“We have for some time expressed confidence in the strength of the North America cycle, and our results this quarter validate our positive view on the market. Strong crude prices, operators’ improved cash flows combined with their ability to access capital, and the increasingly liquids-rich nature of the United States land market, give us continued confidence in the strength of North America through 2012.

“International revenue grew 8% from the prior quarter, with 18% operating income growth, excluding the impact of Libya and employee separation costs. Strong sequential operating income improvement was driven by seasonal recovery in the North Sea and Russia as well as improved activity in Latin America and Asia. However, the shutdown in Libya, project delays in Iraq, mobilization costs in Sub-Saharan Africa, and the sluggish market in the United Kingdom and Algeria have impacted the pace of recovery for our international results. In Europe, despite the employee separation costs in the second quarter, increasing interest in shale development gives us confidence in business prospects longer term. We are now seeing some evidence that international pricing is stabilizing and we believe that volume increases will result in pricing improvements toward the end of the year.

“Robust growth in global energy demand supports the continuing need to develop new hydrocarbon resources and provides us with strong growth opportunities. We anticipate that the execution of our strategy and our focus on the high growth segments of deepwater, unconventional resources, and mature fields will result in margin expansion in both our North America and international business, and will support continued delivery of strong shareholder returns,” concluded Lesar.

2011 Second Quarter Results

Completion and Production

Completion and Production (C&P) revenue in the second quarter of 2011 was $3.6 billion, an increase of $446 million, or 14%, from the first quarter of 2011. Continued demand for production enhancement services in the United States accounted for the majority of this increase.

C&P operating income in the second quarter of 2011 was $918 million, an increase of $258 million, or 39%, over the first quarter of 2011. Excluding the second quarter impact of employee separation costs in the Eastern Hemisphere and the first quarter impact of the charge for Libya, C&P operating income improved $228 million, or 33%, from the first quarter of 2011. North America C&P operating income increased $213 million compared to the first quarter of 2011, primarily due to higher demand for production enhancement services in the United States land market. Latin America C&P operating income decreased $7 million, as higher costs across South America offset higher activity levels in Mexico and Brazil. Europe/Africa/CIS C&P operating income improved due to seasonal recovery in the North Sea. Middle East/Asia C&P operating income rose as higher activity across all product service lines in Saudi Arabia and Australia offset lower completion tools sales in Malaysia.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the second quarter of 2011 was $2.3 billion, an increase of $207 million, or 10%, from the first quarter of 2011, with all regions experiencing revenue growth.

D&E operating income in the second quarter of 2011 was $324 million, an increase of $94 million, or 41%, from the first quarter of 2011. Excluding the second quarter impact of employee separation costs in the Eastern Hemisphere and the first quarter impact of the charge for Libya, D&E operating income increased $76 million, or 30%, from the first quarter of 2011. North America D&E operating income increased $52 million compared to the first quarter of 2011, with higher United States drilling activity both onshore and in the Gulf of Mexico. Latin America D&E operating income increased $12 million, primarily due to higher activity in Brazil. Europe/Africa/CIS D&E operating income improved due to higher seasonal demand for drilling services in the North Sea and Russia which offset lower activity in Angola. Middle East/Asia D&E operating income was flat, as higher direct sales in China and Kuwait offset contract delays in Iraq.

Corporate and Other

During the second quarter of 2011, Halliburton invested an additional $12 million in strategic projects aimed at improving Halliburton’s operations and creating the opportunity for competitive advantage for the company. These include a lower cost service delivery model in North America and repositioning technology, supply chain, and manufacturing infrastructure to support projected international growth. Halliburton expects to continue funding this effort throughout 2011.

Significant Recent Events and Achievements

Halliburton was awarded a three-year contract by Chevron to provide integrated services for shale natural gas exploration in Poland. Under this contract, Halliburton will provide directional drilling, mud logging, cementing, coiled tubing, slickline, well testing, hydraulic fracturing, and completion equipment and services. Halliburton’s Consulting and Project Management team will support the project. Drilling is scheduled to begin in the fourth quarter of 2011.

Halliburton invests considerable time, energy, and resources in engineering solutions that set new standards for environmental safety – all while helping our customers do more by using less. The CleanSuite™ services are the latest in a long line of developments designed to reduce the environmental footprint of hydraulic fracturing operations. Recent achievements for CleanSuite™ technologies include the following:
Halliburton and El Paso Corporation announced that an El Paso-operated well in North Louisiana is the first natural gas producing well to be completed using all three Halliburton proprietary CleanSuite™ production enhancement technologies for both hydraulic fracturing and water treatment. More than four million gallons of CleanStim® hydraulic fracturing fluid, comprised of ingredients sourced from the food industry, were utilized to enhance the well and resulted in faster production of natural gas. Nearly 4.8 million gallons of water were treated through Halliburton’s CleanStream® process, which uses UV light instead of additives to control bacteria in water. Another one million gallons of produced water was recycled for use in the well through the CleanWave™ system, significantly reducing the need for freshwater.

Halliburton's CleanWave™ water treatment technology was recognized with the Spotlight on New Technology Award at the 2011 Offshore Technology Conference. The awards program is designed to showcase the latest and most advanced technologies that are leading the industry into the future. Year to date, we have treated over 47 million gallons of fracture flowback water or produced water with this technology.

Deepwater is the most challenging and expensive environment in which our customers operate. Recent technological developments by Halliburton that help improve our customers’ economics by providing more effective reservoir performance information include:
DynaLink® – Halliburton’s proven, two-way wireless acoustic telemetry system – now has the added capability to control downhole test tools from the surface during drillstem testing operations while transmitting real-time bottomhole pressure and temperature data.

This data, along with acoustic actuation of test tools, provides operators the benefit of changing the pre-defined well testing program based on reservoir response while testing. This technology was recently deployed successfully in deepwater wells in Mexico and Brazil.

The 4 Phase Vertical Test Separator is another step change improvement in deepwater well testing. First, the system eliminates the need for traditionally bulky and costly sand-handling equipment and the inherent operational difficulties associated with it. Second, it streamlines rig operations by eliminating costly rig time associated with the removal of produced solids. The Halliburton 4 Phase Vertical Test Separator recently demonstrated noteworthy time and cost savings for an operator in Brazil.

Realm Energy International Corporation has contracted Halliburton’s Consulting and Project Management team to work with Realm Energy to significantly expand the technical evaluation and ranking of the highest-potential shale deposits found in emerging prospective basins globally. Realm Energy and Halliburton’s Consulting and Project Management team began their collaboration in 2009 with an emphasis on European basins. During this initial effort 10 discrete sedimentary basins in four European countries were targeted for evaluation. The collaboration identified key prospect trends, and Realm has now successfully acquired 650,000 gross acres and has filed government applications for 4.4 million acres of contiguous tracts over significant shale resources.

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