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Oil and Gas Energy News Update

Monday, August 1, 2011

Oil & Gas Post - All News Report for Monday, August 01, 2011

Monday, August 01, 2011

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Commodity Corner: Mfg. Data Stoke Oil Demand Fears

- Commodity Corner: Mfg. Data Stoke Oil Demand Fears

Monday, August 01, 2011
Rigzone Staff
by Matthew V. Veazey

The September contract price for light sweet crude oil settled at $94.89 a barrel Monday. The WTI traded within a range from $93.42 to $98.60.

The 81-cent day-on-day loss followed the release of disappointing July manufacturing figures by the Institute of Supply Management (ISM). ISM, which bases its findings on surveys of manufacturing supply managers, reported that the U.S. manufacturing sector expanded at a slower rate in July. The organization's closely monitored Purchasing Manager's Index (PMI) fell from 55.3 to 50.9 from June to July; a value above 50 generally means that the manufacturing sector is expanding.

"Production and employment also showed continued growth in July, but at slower rates than in June," ISM Manufacturing Business Survey Committee Chair Bradley J. Holcomb said in written statement. "The New Orders Index registered 49.2 percent, indicating contraction for the first time since June of 2009, when it registered 48.9 percent." Holcomb also pointed out that export sales were very strong and domestic sales were sluggish last month.

Brent futures edged upward Monday, gaining seven cents to settle at $116.81 a barrel. The Brent contract price peaked at $119.95 and bottomed out at $114.86.

Weather forecast models are projecting above-normal temperatures throughout the eastern half of the U.S. through the middle of next week, and cooling demand is expected to increase as a result. September natural gas gained 4.3 cents to end the day at $4.19 per thousand cubic feet.

A new weather system in the Caribbean could also have an effect on natural gas prices over the next several days. The National Hurricane Center in Miami reported Monday afternoon that a "vigorous" tropical wave has formed near the Lesser Antilles and will likely to develop into a tropical cyclone by the middle of the week. The system, which was moving west-northwestward at 15 to 20 miles per hour at 2 p.m. EDT Monday, would be named Emily if it strengthens into a tropical storm.

September natural gas traded within a range from $4.13 to $4.20 Monday.

Gasoline for September delivery lost a penny Monday to settle at $3.05 a gallon after fluctuating from just under $3.01 to $3.145. The August contract, which expired Friday, settled at $3.11.

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Ford To Recall 1.1 Million Trucks

- Ford To Recall 1.1 Million Trucks

Aug 1, 2011

Ford Motor Co.(NYSE:F) announced that it is recalling 1.1 million pickup trucks because the gas tanks can fall off and start a fire.

The company is recalling specific Ford F-150, F-250 and Lincoln Blackwood pickups. The recall affects certain models from the 1997 model year through the 2004 model year. They were sold in cold-weather states that use salt to clear roads. That salt can decay the straps holding the tanks in place.

The National Highway Traffic Safety Administration reported Monday on its website that the straps holding up the tanks can rust, causing them to fall to the ground. The tanks can then rupture and start a fire.

Ford reported eight separate incidents, resulting in three injuries.

Ford's F-Series pickup is traditionally the top selling vehicle in the U.S.

Ford Motor has a potential upside of 61.1% based on a current price of $12.36 and an average consensus analyst price target of $19.91.

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Slumping Output Raises Tough Questions for European Oil Giants

- Slumping Output Raises Tough Questions for European Oil Giants

Monday, August 01, 2011
Dow Jones Newswires
by Alexis Flynn

When Europe's major oil companies reported quarterly earnings last week, headlines across national capitals once again excoriated the petroleum giants for soaring profits in the face of consumers anger at high fuel prices.

Yet the profits couldn't mask a trend that continues to trouble Wall Street and corporate boardrooms: Nearly every major oil company reported year-on-year oil and gas output declines, often in the double-digits.

Big Oil is throwing huge resources at the problem with more open embrace of unconventional petroleum developments, high-risk exploration in frontier areas and corporate restructuring. But even if these strategies work in some cases, there is little doubt that anemic petroleum output signals a long-term challenge confronting the sector.

The particulars varied across the sector. BP's 11% output drop was fueled in part by the continued hit from its reduced activity in the U.S. Gulf of Mexico after last year's disastrous spill. Italian giant Eni's production fell 15% due to its disproportionate exposure to war-ravaged Libya. Spain's Repsol, whose output fell 17%, was affected by both Libya and the U.S. Gulf, as well as by labor unrest in Argentina. Norway's Statoil saw a16% output decline largely on production outages and maintenance in its home market in the North Sea.

Oil giants are more vulnerable to operational problems in part because of their declining dominance over key resources. Whereas in 1973, independent oil firms controlled three-quarters of the world's reserves, they hold as little as10% today, according to some estimates. That has forced oil majors to rely to a greater extent on costly unconventional plays such as shale gas, deepwater exploration, and Arctic exploration.

Investment in conventional assets accounted for 63% of the majors' total capital expenditure between 2001 and 2005, research by Wood Mackenzie showed, with this proportion set to fall to 40% between 2011 and 2015.

Last week's reports showed that the two biggest oil giants, Shell and ExxonMobil, were somewhat better positioned than their smaller peers, in light of their capacity to progress capital-intensive projects. Another standout, Wall Street darling BG Group, the only European oil major to report higher year-on-year output, has prospered from recent discoveries in the hot Brazil offshore region.

Yet there are problems even with these templates. Though demand for natural gas remains solid, natural gas prices could see further weakness in light of surging North American shale gas output and economic weakness in Europe and the U.S.

The push for more exploration has ignited interest in Africa following new seismic results and recent discoveries in Ghana and Uganda. But it's a risky and capital-intensive game and one requiring a fleetness of foot to grasp opportunities and adapt quickly to contrary political circumstances. Industry anecdotes abound of how some of the most lucrative recent discoveries on the continent were once passed up by reluctant majors.

Consolidation offers another way forward, yet few expect large corporate mergers between integrated oil giants in light of antitrust concerns and today's high oil prices. More likely is a deal akin to Exxon's purchase of U.S. unconventional gas specialist XTO, a major factor in Exxon's standout 10% rise in production in the quarter. Wood Mackenzie's Simon Flowers predicts more such "infill acquisitions," but says "large-scale acquisition is not likely in the near term."

Another possibility is the flowering of deals between private oil giants and emerging state-controlled firms like Brazil's Petrobras, Russia's Rosneft and China's CNPC. BP's failed share swap and Arctic exploration deal with Rosneft was an example and illustrates the lengths to which companies are prepared to go to gain access to their potentially lucrative reserves.

Wall Street will likely push harder for some sort of tangible action from Big Oil in the coming months. The sector trades at a significant discount to the oil price itself, a factor that could sharpen calls for share buybacks and more special dividends. The recent move by ConocoPhillips to hive off its downstream business lifted the Texas company's share price and spawned questions for the rest of the sector. But so far, most of Conoco's peers have dismissed the idea as impractical in light of the advantages of the conventional integrated model.

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

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Jupiter Spuds Kazakh Well

- Jupiter Spuds Kazakh Well

Monday, August 01, 2011
Jupiter Energy Ltd.

Jupiter Energy reported that the J-51 Exploration Well, located in the Mangistau basin in south-west Kazakhstan, spudded on July 30, 2011.

The surface location for J-51 is 2 km South West from J-50 and 1.7 km North West from J-52. J-51 is scheduled to take ~60 days to reach target depth of approximately 3200 meters and has been designed to evaluate the prospectivity of the primary Triassic and secondary Jurassic targets within the structure known as Akkar East.

The casing design is configured to allow the well to be used as a future production well.

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BOEMRE Reports Final Update on Tropical Storm Don

- BOEMRE Reports Final Update on Tropical Storm Don

Monday, August 01, 2011

The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Hurricane Response Team is concluding its activities related to Tropical Storm Don.

This is the final update of evacuation and shut-in production statistics for Tropical Storm Don.

Based on data from offshore operator reports submitted as of 11:30 a.m. CDT today, none of the 617 manned production platforms in the Gulf of Mexico remain evacuated. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project’s duration.

None of the 62 rigs currently operating in the Gulf remain evacuated. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During the recent hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 2.3 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 0.9 percent of the natural gas production in the Gulf of Mexico has been shut-in. The remaining shut-in production is not associated with any reported damage.

The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BOEMRE compares to historical production reports to ensure the estimates follow a logical pattern.

After the tropical storm passes, facilities are inspected. Once all standard checks have been completed, production from undamaged facilities is brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BOEMRE will no longer report Tropical Storm Don statistics.

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Vanguard, Encore Finalize Permian Basin Acquisition

- Vanguard, Encore Finalize Permian Basin Acquisition

Monday, August 01, 2011
Vanguard Natural Resources, LLC

Vanguard and Encore Energy announced that on July 29, 2011 they consummated the previously announced joint acquisition of oil and natural gas producing properties from an undisclosed seller for an adjusted purchase price of $81.4 million, subject to customary post-closing adjustments. The effective date of the acquisition was May 1, 2011.

The acquired properties are all located in the Permian Basin of West Texas and include:
  • Estimated total net proved reserves of 5.48 MMboe
  • 70% oil and natural gas liquids
  • Reserve to production ratio of approximately 15 years
  • Approximately 1,000 Boe/d of net daily production
In conjunction with this acquisition, both VNR and ENP have entered into new oil and natural gas hedges covering a substantial portion of the estimated production through 2014.

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Anadarko Declares Dividend

- Anadarko Declares Dividend

Monday, August 01, 2011
Anadarko Petroleum Corp.

The Board of Directors of Anadarko declared a quarterly cash dividend on the company's common shares.

A dividend of 9 cents per share was declared on the company's outstanding common stock, payable Sept. 28, 2011 to stockholders of record at the close of business on Sept. 14, 2011.

The amount of future dividends for Anadarko common stock will depend on earnings, financial condition, capital requirements and other factors. The Board of Directors will determine dividends on a quarterly basis.

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Keppel On Track to Deliver Saipem Rig

- Keppel On Track to Deliver Saipem Rig

Monday, August 01, 2011
Keppel Corp. Ltd.

Keppel FELS is on track to deliver Scarabeo 9, a 6th generation ultra-deepwater semisubmersible drilling rig, to Saipem S.p.A (Saipem) on time and with no lost time incidents.

A significant part of Keppel FELS' workscope on Scarabeo 9 involved the completion and commissioning of marine and drilling systems onboard.

The rig was named by Lady Sponsor, Mrs. Anna Tatka, spouse of Mr. Pietro Franco Tali, CEO of Saipem.

Speaking at the ceremony, Mr. Tali said, "With Keppel's proven track record, we were confident of receiving a rig of the highest quality delivered on time and in a safe manner. This sixth generation rig will be an important addition to our fleet as we expand our foothold to be one of the best balanced turnkey operators in the offshore and marine industry."

The Frigstad D90 semisubmersible rig is equipped with a Dynamic Positioning 3 system and will be capable of operating in water depths of up to 3,600 meters.

Mr. Tong Chong Heong, CEO of Keppel Offshore & Marine, added, "In completing this complex rig, we leveraged our in-house engineering expertise, proven project management and execution capabilities to ensure quick turnaround times in providing value added solutions.

"We thank Saipem for their trust in us and are glad to be able to demonstrate our capabilities with this safe and on time delivery. This extends to all our projects for Saipem, including the completion of Castorone at Keppel Shipyard. We look forward to supporting Saipem as they grow their fleet of high specification products for different parts of the world."

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Momentive Opens New Facility in Arkansas

- Momentive Opens New Facility in Arkansas

Monday, August 01, 2011
Momentum Specialty Chemicals Inc.

The Oilfield Technology Group (OTG) of Momentive Specialty Chemicals Inc., announced the startup of a new manufacturing plant in Batesville, Ark., to provide additional resin coated proppants to fracturing service companies and operators in the oil & gas industry.

"We continue to add needed capacity to satisfy our customers' demand for specialty proppants for the growing horizontal fracturing market. The addition of this facility to our current manufacturing grid will enable us to ensure an ongoing and secure supply of specialty proppants for the industry," said Jerry Borges, Vice President, Oilfield Technology Group.

The Batesville plant is the second addition to the OTG manufacturing grid in 2011. The business expanded its plant in Cleburne, Texas, earlier this year and has incremental expansions in process at other facilities. It now operates a total of six manufacturing plants with multiple production lines and fourteen transload facilities serving the U.S. and Canadian markets.

The new Batesville facility will manufacture OTG's newest addition to its product line, called Black Pro™ proppant, which offers next-generation resin bonding technology.

"We continue to develop new products to address the shale exploration requirements in North America," Borges said. "Black Pro proppant is another addition to our line of curable products that provides flowback control for our customers in the numerous frac treatments in the horizontal sections. The benefits of curable resin coated proppants have helped our customers maintain clean wellbores when producing these prolific wells," Borges said.

Resin coated proppants are used in the hydraulic fracturing process to help optimize production from oil and gas wells by maximizing fracture flow capacity from the reservoir to the wellbore. Technological innovations and Momentive's introduction of enhanced materials have expanded the use of resin coated proppants into unconventional reservoirs that feature complex and challenging geological formations.

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Rowan Names New COO, Senior VP

- Rowan Names New COO, Senior VP

Monday, August 01, 2011

Rowan announced that Thomas P. Burke has been appointed to serve as the Company's Chief Operating Officer, and Melanie M. Trent has been appointed to serve as Senior Vice President, Chief Administrative Officer and Corporate Secretary.

Matt Ralls, Rowan's President and Chief Executive Officer, commented, "We are delighted to announce these two new positions with the Company. I believe Tom's strong qualifications and leadership will help ensure Rowan's continued success, as we seek to further grow and diversify our offshore drilling business. While at LeTourneau, Tom successfully implemented many organizational and operational improvements, and was a key factor in the sale of that business to Joy Global. Likewise, Melanie provided invaluable leadership in our recent divestiture processes and will strengthen both our Human Resources and Information Technology efforts with her strong organization skills. I am confident that these two appointments will be great additions to the strong Rowan management team and look forward to Tom and Melanie's contributions to Rowan's future success."

Mr. Burke, who joined the Company in December 2009, previously served as the President and Chief Executive Officer of the Company's manufacturing subsidiary, LeTourneau Technologies, Inc., which was sold to Joy Global in June 2011. Prior to such time, he was employed by Complete Production Services, an oilfield services company, as a Division President from 2006 to 2009, and as Vice President Corporate Development from 2004 to 2006. Before joining Complete Production, Mr. Burke held various positions at Schlumberger Limited and McKinsey & Company.

Ms. Trent joined the Company in 2005 and served most recently as Vice President & Corporate Secretary, assisting in the Company's securities, corporate governance and transactional legal work.

Rowan also announced that David Russell, Executive Vice President of Drilling Operations, is leaving the Company to pursue other interests. Mr. Ralls said, "I respect David's decision to pursue other opportunities, but I am very sorry to see him leave. David has been with Rowan nearly 29 years and has been instrumental as a senior executive in the company's success and evolution. His leadership and many contributions will be sorely missed. Speaking for the Board of Directors and myself, I want to extend heartfelt gratitude to David for all he's done for Rowan and wish him continued success in his future endeavors."

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CCS Expands Operations with New Bakken Acquisition

- CCS Expands Operations with New Bakken Acquisition

Monday, August 01, 2011
CCS Corp.

CCS Corporation continues to expand into the United States with the acquisition of KT Hot Oil Company (KT) of Watford City, North Dakota. This is the company's second acquisition this month in the attractive Bakken region shale play and third in the United States. Financial details were not disclosed.

"KT is a well-respected organization with a long history of providing safe and reliable solutions in the basin," said John Gibson, CCS Corporation Chief Executive Officer. "This acquisition will add significant value to our current Bakken operations and builds on CCS's commitment to providing innovative energy and environmental solutions to the oil and gas industry."

KT was founded in 1995 and operates in four key segments: frac water heating, hot oiler services, fluid hauling and salt water disposal wells.

"We are very happy to join the CCS family," said Kent Norbeck, President of KT Hot Oil Company. "I feel the CCS high-performance culture matches well with KT and that we will continue offering our customers with the highest quality services."

KT's 53 employees will join the CCS team and operate under the CCS brand.

Today's acquisition of KT, in addition to last week's purchase announcement of Venture Oilfield Service Inc., further strengthens CCS Corporation's position as one of the leading providers of frac water heating and hot oil services in North Dakota.

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General Motors Starts Sonic Production at Orion plant

- General Motors Starts Sonic Production at Orion plant

Aug 1, 2011

The Detroit News reported that General Motors (NYSE:GM) has begun production of the Chevrolet Sonic at its Orion Assembly Plant. The company's executive director for global and North American Manufacturing Engineering made the announcement today.

Ken Knight, executive director for global and North America Manufacturing Engineering for GM, said "We started our regular production today -- two-and-a-half hours ago. Since, my phone hasn't rung off the hook. I think we are doing well."

General Motors (NYSE:GM) has a potential upside of 56.3% based on a current price of $27.81 and an average consensus analyst price target of $43.45.

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Report: UK O&G Production Declines Continue

- Report: UK O&G Production Declines Continue

Monday, August 01, 2011
Rigzone Staff
by Karen Boman

UK oil and natural gas production declined in 2010, mirroring the larger trend seen over the past decade, the UK Department of Energy and Climate Change (DECC) reports.

In the Digest of United Kingdom Energy Statistics (DUKES) 2011 report, DECC reports that primary energy production in 2010 totaled 158.1 million tones of oil equivalent, down 5.3 percent from 2009. Production has fallen each year since 1999, and is down 46.9 percent on 1999 levels, an average rate of decline of 5.6 percent.

Crude oil production, which includes natural gas liquids (NGLs), in 2010 was 63 million tones, 7.7 percent lower than in 2009, and now accounts for 44 percent of primary energy production.

DECC notes that net imports of crude oil and NGLs rose to meet demand with oil exports decreasing by six percent. Net imports grew to just under 9 million tones or around 13 percent of the UK's demand.

The decrease in oil production over the past 10 years shows a sharp rate of decline between 2002 and 2006, with a shallower profile in later years. The main factor behind this flattening effect was the Buzzard field development, which compensated for the sharper falls seen in existing fields. On average, crude oil production has been decreasing by around seven percent a year.

Gross UK gas production has been decreasing since 2000, and in 2010 was down 4.3 percent from 2009. Gross gas production has fallen by 47.3 percent since its peak in 2000. Gas imports in 2010 were almost a third higher than in 2009, mainly because of lower production and higher demand.

Liquefied natural gas (LNG) is increasingly important as a source of imports to supplement existing ones. In September 2010, imports from shipped LNG surpassed the gas imported via pipeline from Norway for the first time; in 2010, LNG imports accounted for 35 percent of the UK's total commercial imports.

UK primary energy consumption in 2010 grew by 3.2 percent, largely driven by the colder weather in 2010. Total oil consumption in the UK fell marginally in 2010; the majority of final consumption of oil, around 75 percent, was consumed in the transport sector. Energy use for transport fell by one percent in 2010 compared to 2009, largely due to falls in aviation fuel resulting from disruptions due to snow and volcanoes.

Overall gas demand grew by 8.4 percent in 2010, with gas demand for electricity generation growing by 3.5 percent; gas's share of the UK's supply of electricity was 47 percent.

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Poll Shows Growing Support Among Californians for Offshore Drilling

- Poll Shows Growing Support Among Californians for Offshore Drilling

Monday, August 01, 2011
Knight Ridder/Tribune Business News
by Josh Richman, The Oakland Tribune, Calif.

Environmental disasters seem to have cooled Californians' support for nuclear power but not for offshore oil drilling, according to the latest survey by the Public Policy Institute of California.

The poll generally shows Californians remain green-minded, showing substantial support for forcing automakers to improve fuel efficiency; for federal funding for renewable energy sources; and for the goals of the state's landmark greenhouse-gas emissions law.

But Japan's Fukushima Daiichi nuclear meltdown disaster -- caused by March's cataclysmic earthquake and tsunami, and widely seen as the world's worst nuclear accident since 1986's Chernobyl blast -- apparently has sapped Californians' support for building new power plants.

The poll found 65 percent of Californians now oppose building more plants while 30 percent are in favor, the lowest level of support since PPIC began asking the question in 2001 and a 14-point drop since one year ago.

And the Deepwater Horizon disaster, an April 2010 explosion followed by three months of uncontrolled oil flow into the Gulf of Mexico, the nation's worst offshore spill, no longer curbs Californians' growing support for more offshore drilling, likely driven by concern over high gas prices.

The poll found 46 percent of Californians favor more drilling -- a 12-point increase since one year ago -- while 49 percent are opposed. Republicans, at 71 percent, are twice as likely as Democrats, at 35 percent, to support more drilling; 40 percent of independent voters support it. Residents of the Central Valley, Orange and San Diego counties, and the Inland Empire were much more likely to support offshore drilling than those in Los Angeles or the Bay Area.

Meanwhile, 76 percent of adults say high gas prices have caused financial hardship for their households.

Unlike Californians' consistently solid support over the long haul for renewable energy and improved fuel efficiency standards for the U.S. auto industry, support for nuclear power and oil drilling "are more volatile -- they move around with news events, and in the case of oil drilling, with gas prices," PPIC President and CEO Mark Baldassare said.

Indeed, as the Obama Administration rolled out new fuel-efficiency standards Friday, 84 percent of Californians favor significantly tighter standards, the poll found, including 90 percent of Democrats, 81 percent of independents and 76 percent of Republicans.

And 80 percent of Californians support having more federal funding to develop renewable energy sources such as wind, solar and hydrogen technology, while 77 percent support the state's policy requiring that a third of the state's electricity come from such sources by 2020 -- unless that leads to higher electricity bills, in which case only 46 percent favor it.

"Seventy-seven percent support for the renewable energy portfolio shows that this policy is a floor," Environment California legislative director Dan Jacobson responded. "California should look to moving the state to 100 percent clean energy by 2040."

AB 32, the state's landmark greenhouse-gas emissions reduction law, survived a rollback from the failed Proposition 23 in November, and the new poll shows 67 percent of Californians still support the law's goal of rolling emissions back to 1990 levels by 2020; 21 percent are opposed and 11 percent are undecided.

Most Californians see global warming as a serious threat to the state's future economy, with 47 percent saying it's very serious and 28 percent saying it's somewhat serious.

And 57 percent of Californians believe that the state should make its own policies, separate from the federal government's, to address global warming. Most -- 58 percent -- say California should act now to reduce emissions, while 38 percent prefer to wait until the economy and job situation improve. Nearly half say state action would result in more jobs and 23 percent say it would result in fewer, while 20 percent foresee no change in employment.

But while an overwhelming 79 percent of residents favor government regulation of greenhouse gas emissions, just over half -- 54 percent -- favor the kind of cap-and-trade system under development in California, with 36 percent opposed; 60 percent favor a carbon tax.

David Allgood, the California League of Conservation Voters' Southern California director, said the poll shows that "people when they're not emotional about these issues tend to agree with our point of view." Things like conservation, renewable energy and strict pollution controls are "very strongly supported by California voters -- we basically lead the nation because they've taken the longer view time after time."

Allgood said past experience shows voters will support reforms that cost them money if they've been well-educated on how the money will be spent and how their investment will create jobs and other economic benefits in the future.

Said Jacobson: "Californians see the path to getting out of our economic recession as one where we have clean cars, clean energy, and clean jobs."

Findings are based on a survey of 2,504 adult Californians reached by landline and cell phones from July 5 through 19, with a 3-point margin of error.

Copyright (c) 2011, The Oakland Tribune, Calif.

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Lundin, Partners Submit Field Development Plan for Brynhild Field

- Lundin, Partners Submit Field Development Plan for Brynhild Field

Monday, August 01, 2011
Lundin Petroleum AB

Lundin as operator has, with its partners Noreco and Talisman, submitted a plan for development and operation (PDO) for the Brynhild field (formerly called Nemo) to the Norwegian Ministry of Petroleum and Energy. The Brynhild field is an oil field located in the Norwegian sector of the North Sea. First production from the Brynhild field in PL148 is expected in late 2013.

The Brynhild field is located adjacent to the Norwegian – United Kingdom (UK) international border. The PDO includes three wells and pipelines/umbilical tied back to the existing Shell operated Pierce field infrastructure in the UK sector of the North Sea. Brynhild holds 22 million barrels of oil (MMbo) in gross proved and probable reserves with a forecast gross peak production of approximately 12,000 barrels of oil per day (bopd). The oil will be processed and stored on the Pierce floating production, storage and offloading (FPSO) vessel before offshore loading to shuttle tankers.

Lundin Petroleum has a 50 percent working interest in the Brynhild field. Talisman and Noreco hold a 30 percent and a 20 percent interest, respectively.

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Anadarko Resumes Exploration, Drilling in North Slope Foothills

- Anadarko Resumes Exploration, Drilling in North Slope Foothills

Monday, August 01, 2011
Alaska Journal of Commerce
by Tim Bradner

Anadarko Petroleum Corp. will test its Chandler No. 1 gas discovery made in 2009 in the foothills region of the southern North Slope, the company said. The company will move equipment to the site for testing later this year when cold weather allows the construction of a snow road, Anadarko spokesman Mark Hanley said.

Anadarko drilled the Chandler well over two winter seasons in 2008 and 2009, but did not conduct a production test, Hanley said. A production test was conducted, however, on another gas exploration well Anadarko drilled at Gubik, about 10 miles north of the Chandler well. Results of that test have not been disclosed, Hanley said.

Gas was first discovered at Gubik in exploration in the 1960s but the deposit was considered too small to be commercial. Anadarko and its partners acquired leases on the prospect and drilled two tests to delineate the old discovery including the one where production testing was done.

Anadarko has been active in exploring in the foothills region for several years but took a two-year hiatus after PetroCanada, who was a partner with Anadarko in the foothills exploration, merged with Suncor Energy in 2009. Suncor remained in the venture along with BG Energy and Anadarko, and has now approved its share of expenses related to the planned testing.

Encana and BP were previous partners with Anadarko in the foothills, but have pulled out.

Geologists consider the foothills of the southern North Slope to be gas-prone, but there is also some oil potential.

"There is gas in this region and almost every well that is drilled finds gas. The question is whether enough can be found to make a gas field," Hanley said.

Land ownership in the region is split between the state of Alaska and Arctic Slope Regional Corp., a private development corporation owned by Inupiat people of the region.

Hanley said Anadarko will build a snow road about 75 miles to the Chandler site from the Dalton Highway, a year-around road that parallels the Trans-Alaska Pipeline System. Testing will be done without a drill rig, he said.

Discussions are also underway with Linc Energy, an Australian-based independent, about coordinating winter exploration logistics with that company's plan to do test drilling at Umiat, a small oil field within the National Petroleum Reserve-Alaska about 13 miles west of the Chandler discovery.

Linc Energy has said it will be moving a drill rig to Umiat later this year for its drilling but had initially planned to move the rig by air. Umiat has an existing all-weather airstrip.

Copyright (c) 2011, Alaska Journal of Commerce, Anchorage

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Beach Makes Oil Discovery at AU Western Flank

- Beach Makes Oil Discovery at AU Western Flank

Monday, August 01, 2011
Beach Energy Ltd.

Beach Energy announced two new field oil discoveries at Bauer-1, the third successful well in a five well exploration drilling campaign in PEL 91, and at Rincon-1, the final exploration well of the initial eleven well program for PEL 92. The commencement of the FY12 Joint Venture approved nine well exploration and development program, set down for PEL 92, will now follow this program.

The Bauer-1 well (Beach (Operator) - 40%, Drillsearch Energy Ltd - 60%) encountered a gross oil column of fifteen meters, with thirteen meters of net pay, in the McKinlay/Namur Sandstone section of the well. Preliminary volumetric assessment indicates the potential of the discovery could be in the order of two million barrels of recoverable oil (gross).

Following the completion of the evaluation program, the Ensign#18 rig will be moved to the Searcy-1 exploration well which is located approximately eight and a half kilometers to the north-east of Bauer-1. Bauer-1 is expected to be on-line in the fourth quarter of 2011.

The Rincon-1 well (Beach (Operator) - 75%, Cooper Energy Ltd - 25%) encountered a gross oil column of five meters, with four and a half meters of net pay, in the McKinlay/Namur Sandstone section of the well. Beach’s preliminary volumetric assessment suggests up to five hundred thousand barrels of recoverable oil (gross).

Following the completion of the evaluation program, the Ensign#30 rig will be moved to the Elliston-1 exploration well which is located approximately 25 kilometers to the south of Rincon-1. Options to bring Rincon-1 on-line are currently being assessed.

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Bering to Participate in La. Prospect

- Bering to Participate in La. Prospect

Monday, August 01, 2011
Bering Exploration Inc.

Bering has entered into an agreement to participate in a prospect in southeast Louisiana. The initial well in the prospect will be drilled to a depth of approximately 7,500 feet to test the prospective zones in the Wilcox formation. This prospect has the potential for multiple wells and potential gross reserves of 500,000 barrels of oil. Bering will have a 10% working interest in this prospect.

"We are happy to be participating in a new prospect that has great upside potential and is expected to be drilled in the next two months," stated Steven Plumb, VP of Finance of Bering. "This prospect meets our criteria of participating in projects which provide the company the maximum amount of value with a minimal amount of risk, and if successful, will increase our shareholder value."

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Solo Oil Updates Ausable Field Operations

- Solo Oil Updates Ausable Field Operations

Monday, August 01, 2011
Solo Oil plc

Solo Oil announced further updates of operations at the Ausable Field in South Western Ontario operated by its Joint Venture partner Reef Resources Limited.

Further to the announcement of July 12, 2011, Reef has informed the Company that the Ausable#5 well has been tied-in to the Ausable central production facilities and has been producing oil at variable rates since July 22, 2011 by means of a beam pump. Reef has indicated that the produced oil continues to foam with the completion fluids and that as a result it has so far not been possible to establish a representative production rate. The fluids used to acidize and stimulate the well have yet to be fully recovered. Reef is exploring alternative pumping strategies and has indicated that they will report further on progress shortly.

Work on recovering the frack tool left in Ausable#2 during work in 2010 has been started and fishing tools are being run in hole to make the first of several planned cuts in the tubing in order to retrieve the equipment resting across the production zone. These operations are expected to take one to two weeks to conclude.

Neil Ritson, Solo's Executive Director, commented, "The presence of moveable oil is very encouraging and we are pleased with the progress being made to bring both wells on to sustained production. We will further update shareholders as soon as additional information becomes available."

Solo currently holds a 23.8% working interest in the Reef Ausable properties and an option to increase its interest to 38.1% through co-investing a further CDN$1.5 million, with Reef, in the development of the Ausable and adjacent assets.

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Kulczyk Oil Highlights Testing Ops at Ukraine Well

- Kulczyk Oil Highlights Testing Ops at Ukraine Well

Monday, August 01, 2011
Kulczyk Oil Ventures Inc.

Kulczyk Oil has published in Canada, through SEDAR system, the news release concerning gas tested from second zone at Olgovskoye-9 well in Ukraine and O-8 well update.

The O-9 well is located approximately 1.2 kilometers to the northwest of the O-8 well. O-9 well commenced drilling on March 5th, 2011 and reached a total depth ("TD") of 2,638 meters on April 4th, 2011. The well was primarily designed to test gas-bearing reservoirs in the Middle Bashkirian and further develop the gas production capability of the Olgovskoye Field.

The testing of the O-9 well began in June when a 5.5 meter thick reservoir unit in the Lower Bashkirian at a depth of approximately 2,560 meters (the R37 unit) was perforated. A two-meter section of the R37 unit was perforated and tested over two periods of time. The first test flowed gas at a rate of 1.2 MMcf/d (840 Mcf/d net to KOV) through a 6 mm choke. The second test flowed gas at a stabilized rate of 762 Mcf/d (533 Mcf/d net to KOV) through a 5 mm choke. This new discovery of gas in the Lower Bashkirian was disclosed in the KOV news release dated June 28, 2011 (current report No 35/2011).

The testing of the Middle Bashkirian sandstones, which are the primary target of the O-9 well, commenced on July 22nd, 2011 when two 3 meter zones of one of the potential gas zones in the Middle Bashkirian were perforated from measured depths of 2,304 to 2,307 meters and from 2,309 to 2,312 meters, respectively. These perforated intervals flowed gas at rates ranging between 1.7 MMcf/d (on a 5 mm choke) to 4.4 MMcf/d (on a 9 mm choke) i.e. between 1.19 to 3.08 MMcf/d net to KOV. with a stabilized flow rate of 2.9 MMcf/d on a 7 mm choke (2.03 MMcf/d net to KOV). The tested zone, which is only one of several potential gas producing zones seen in the Middle Bashkirian section in the O-9 well, is expected to commence commercial production at a gross rate of approximately 1.5 MMcf/d (1.1 Mmcf/d net to KOV) prior to the end of the third quarter.

Initially, this well will produce only from the tested Middle Bashkirian zone and gas reserves indicated by the testing of the Lower Bashkirian gas zone described in the June 28, 2011 news release will be available to produce at a later date. O-9 was the second new well drilled in the Olgovskoye field since the Company acquired its interest in KUB-Gas in June 2010 and it is part of a larger development program on the KUB-Gas assets which will continue through 2011 and 2012.

The service rig is now being moved to the Olgovskoye-8 well which was the first new well drilled on KUB-Gas Ukraine licenses since the acquisition by KOV in June 2010. The O-8 well reached a TD of 2,780 meters in early January and encountered multiple potential gas zones. Testing of the O-8 well will commence in a few weeks once the service rig move is completed.

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Treaty to Work-Over Tx. Wells

- Treaty to Work-Over Tx. Wells

Monday, August 01, 2011
Treaty Energy Corp.

Treaty Energy reported on activities of C&C Petroleum Management LLC, the Company's Texas operations subsidiary, related to increasing oil production from its Texas leases.

Stephen L. York, President and COO of Treaty Energy Corporation, stated, "I recently made arrangements to contract three work-over rigs to commence work beginning this past Saturday, July 30th on our Texas leases. We will work-over 14 wells in the next two weeks."

Mr. York added, "I've also purchased pump parts, barrels, seals, cups and other items to allow us to rebuild pumps on our Texas properties. Purchased items include drifted and tested tubing to replace defective joints that are found."

C& C Petroleum has also contracted an electrician to revamp circuit boxes on the McComas Lease to handle additional electrical supply needs on this lease and has requested bids on water storage tanks for the Company's Willingham Lease.

Mr. York commented, "These rework activities are expected to increase our oil production by 300-420 barrels per month over the next two weeks, to about 1500 to 2000 barrels per month. While our stated goal is to bring our Texas oil production to 30,000 barrels of oil per month as soon as practical, the economical steps being taken at this time are crucial to us meeting our long term goals in Texas."

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Guv Fills Up O&G Commission

- Guv Fills Up O&G Commission

Monday, August 01, 2011
The Pueblo Chieftain, Colo.
by Patrick Malone

Gov. John Hickenlooper announced eight appointments Friday to the Colorado Oil and Gas Conservation Commission. Two are reappointments.

Republicans criticized the omission of representation from the Eastern Plains, but expressed optimism that Hickenlooper's appointees will be more friendly to the oil and gas industry than the commission was under former Gov. Bill Ritter.

"There is no representation on there from Eastern Colorado," said Rep. Jon Becker, R-Fort Morgan, whose district includes parts of Southeastern Colorado. "Without representation from Eastern Colorado, we leave out a whole region of the state that is very important to oil and gas. The governor overlooked that. He should have made at least one appointment from the Eastern Plains. There are plenty of qualified people there to serve on this commission," Becker said.

Hickenlooper has often said he supports common-sense changes to regulation of the oil and gas industry in Colorado. A favorite example of the governor's is the water-treatment rule that many ranchers and gas companies agree creates unnecessary expense for drilling operations in the Raton Basin near Trinidad.

Becker said he is optimistic the new commission will tackle regulations with an eye on spurring business and be more mindful of the economic impact of its decisions than the commission was under Ritter.

Environmental groups said they will keep a watchful eye on the new commission.

"Gov. Hickenlooper has repeatedly said he would 'strike the right balance' in overseeing the oil and gas industry," said Elise Jones, executive director of the Colorado Environmental Coalition. "The jury is still very much out as to whether this set of appointments meets that important standard or whether instead the balance has shifted away from protecting Colorado's air, water, wildlife and communities from the impact of drilling."

Hickenlooper said he feels assured that his mix of appointees will address the competing interests of business and the environment.

"Different voices and a united spirit of collaboration are key to the success of the commission," the governor said. "We are confident this group will serve the industry, land owners and the environment well as it navigates through issues that are important to both the state's economy and the protection of Colorado's beautiful landscapes."

Hickenlooper appointed eight new commissions to replace those whose terms expired July 1. The appointees are subject to Senate confirmation. Their four-year terms expire July 1, 2015.

Copyright (c) 2011, The Pueblo Chieftain, Colo.

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Gazprom Neft, Petronas Sign PSA with Cuba on 4 Offshore Blocks

- Gazprom Neft, Petronas Sign PSA with Cuba on 4 Offshore Blocks

Monday, August 01, 2011
Dow Jones Newswires
by Alexander Kolyandr

Gazprom Neft, which is controlled by state gas company Gazprom, said Monday it has signed a product-sharing contract on four blocks in the Gulf of Mexico offshore Cuba with Petronas, the Malaysian national oil company, and Cubapetroleo, the Cuban national oil company.

Following the signing, Gazprom Neft becomes a party in the contract and acquires 30% stake in the project, while Petronas retains 70% in the project. Prior to the agreement Petronas had a 100% stake in the project.

In October 2010, Gazprom Neft and Petronas signed the Farm-out Agreement

"This partnership with Petronas will help Gazprom Neft to enforce its competence in the sphere of deep water development and expand its expertise in projects outside of Russia," Alexander Dyukov, chairman of Gazprom Neft management board said.

Apart from Cuba, Gazprom Neft participates in international exploration and production projects in Iraq, Equatorial Guinea, Venezuela and--through its Serbian affiliate company--in Angola, Romania and Hungary.

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

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Polarcus to Start Multi-Client Survey in Barents Sea

- Polarcus to Start Multi-Client Survey in Barents Sea

Monday, August 01, 2011
Polarcus Ltd.

Polarcus will commence acquisition imminently of a 3D multi-client project over the Bjarmeland Platform in the Barents Sea, offshore Norway. The project, with the potential to cover an area of up to 1,100 square kilometers, is supported through strong industry pre-funding. The survey will be acquired by the vessel POLARCUS SAMUR and is expected to take up to 60 days depending on final program size. Data processing will be undertaken by GX Technology, the imaging solutions group of ION Geophysical. A preliminary dataset will be available within one month after completion of acquisition, with delivery of the final migrated data volume expected to take place within February 2012.

The Bjarmeland Platform 3D multi-client survey, designed in conjunction with GeoPartners and MoVa, targets an area of the Barents Sea currently witnessing a resurgence of exploration interest. The survey is located in the south eastern part of the platform where two small oil and gas discoveries located in blocks 7124 and 7125 on the Nyslepp Fault Complex were drilled in the late eighties by Saga Petroleum. These wells proved the presence of hydrocarbon bearing sandstones with good reservoir properties in the Late Triassic/Early Jurassic formation of the Kapp Toscana Group.

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Noble Adds to High-Spec Jackup Fleet with Two Newbuilds

- Noble Adds to High-Spec Jackup Fleet with Two Newbuilds

Monday, August 01, 2011
Noble Corp.

Noble has exercised options with Sembcorp Marine's subsidiary Jurong Shipyard for the construction of two additional high-specification heavy duty, harsh environment JU3000N jackup drilling rigs. This order will bring to six the total number of new jackup rigs the Company will have under construction with the Jurong Shipyard.

David W. Williams, Chairman, President and Chief Executive Officer, Noble Corporation, stated, "We continue to see a growing interest from clients for the advanced features of the JU3000N jackup design. Opportunities for these units are evident in several offshore regions, including the North Sea, Middle East and Asia. This latest rig order reflects our continuing commitment to expand our ownership of industry-leading offshore drilling technology, enabling us to address some of the most demanding well construction challenges around the world."

Total delivered costs for these latest two orders are estimated at approximately $245 million per rig, including project management, spares, and start-up costs, but excluding capitalized interest. Payment terms are consistent with the order of the four previous rigs placed with the Jurong Shipyard since December 2010: 20 percent of the construction price due at contract signing, 20 percent due at steel cutting, and the remainder due at rig delivery. The two latest orders are expected to be delivered from the shipyard during the third and fourth quarters of 2014, following which would be mobilization and acceptance testing by their respective future customers.

The Friede & Goldman JU3000N design is an enhanced evolution of the JU2000E design and represents the latest generation of high-specification jackup drilling rig with greater capacities and capabilities than most existing units. The rigs, which are approximately 231 feet in length and 270 feet in breadth, will have the capability to operate in water depths up to 400 feet and drill to depths of 30,000 feet. The rigs will each have a seventy-five foot cantilever, 2.5 million pounds of hook load capacity, a high-capacity mud circulating system, and a 15,000 psi blowout preventer system. The units are capable of off-line pipe handling and offer accommodations for up to 150 people.

In addition to six newbuild jackup projects, Noble has seven ultra-deepwater drillships under construction, three of which are scheduled to be delivered later this year. The Company continues to evaluate an option it has with Hyundai Heavy Industries Co. Ltd. for the construction of an additional ultra-deepwater drillship that expires on August 31, 2011, with delivery taking place in the second half of 2014.

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Bowleven Flows Oil at Sapele-2 Offshore Cameroon

- Bowleven Flows Oil at Sapele-2 Offshore Cameroon

Monday, August 01, 2011
BowLeven plc

Bowleven announced the following update on activities on block MLHP-5, Etinde Permit, offshore Cameroon.

  • Sapele-2 testing program completed despite compromised well bore conditions and operational issues, with oil and gas produced from the Deep and Lower Omicron intervals
  • Peak flow rate of 2,738 boepd, including high quality light oil, produced by DST 2 in the Deep Omicron interval
  • Drilling results, comparisons with Sapele-1 and seismic interpretation infer a laterally extensive Deep Omicron system, allowing updates to our views of system volumetrics
  • P90 unrisked in place estimates for Sapele Deep Omicron discovery area and Mean for Deep Omicron fairway assessed by Bowleven as 87 mmboe and 477 mmboe respectively
  • Flowed gas condensate from Lower Omicron interval; operational issues curtailed testing
  • P90 unrisked in place estimates for Sapele Lower Omicron discovery area and Mean for Lower Omicron fairway assessed by Bowleven as 14 mmboe and 203 mmboe respectively
  • Further appraisal drilling will be carried out as part of the appraisal plan

Kevin Hart, Chief Executive of Bowleven plc, commented, "We are delighted to have now flowed oil on test from the Deep Omicron interval at both Sapele-1ST and Sapele-2 and to have achieved the first hydrocarbon flow from the Lower Omicron interval. Comparisons with Sapele-1 and seismic interpretation indicate that we have a laterally extensive Deep Omicron system. The Sapele discoveries provide a foundation to Bowleven's strategy of moving resources to reserves on block MLHP-5 and the preparation of an appraisal plan for the area is already underway. With extensive remaining potential yet to be targeted, Bowleven's strategy will also comprehensively embrace the exploration opportunities on the acreage and we now look forward to drilling Sapele-3."

Sapele-2 test update

The principal objective of Sapele-2 was to appraise both the Lower and Deep Omicron discoveries encountered in the Sapele-1 exploration well.

As previously announced, the Sapele-2 well encountered log evaluated net pay of approximately 19 meters and 16 meters within the Deep Omicron and Lower Omicron intervals respectively. The well was drilled to a TD of 3,749 meters in water depths of around 25 meters approximately five kilometers south west of the original Sapele-1 vertical well.

The results of the three drill stem tests (DSTs) performed at Sapele-2 are outlined below:

Deep Omicron


The basal sand situated on top of the cross-cut event, encountered at Sapele-1 and Sapele-1ST but not tested, flowed light oil on test at Sapele-2, the first hydrocarbon flow from this interval. A peak flow rate of 381 boepd, comprising 233 bopd of light oil and 0.89 mmscfd of associated gas on a 12/64 inch choke was produced. While no MDT data was acquired to confirm connectivity, all three wells have log evaluated net pay at this level and based on seismic correlation, the interval can be mapped between all three wells and over a wide area.


A peak rate of 2,738 boepd, comprising 1,818 bopd of light oil and 5.52 mmscfd of associated gas on a 32/64 inch choke was produced. Reservoir pressure was seen to re-charge over the period of the DST, inferring a wider hydraulic system. Based on initial log evaluation, lower productivity was encountered on test than anticipated, potentially due to formation damage sustained during drilling activities.

Light oil ranging from 39 to 42 degree API was produced from the two DSTs performed in the Deep Omicron interval. The Sapele-1 well had a confirmed oil pressure gradient at Deep Omicron and oil samples were obtained during logging activities. The oil quality, gas-oil ratio and pressures measured on test at Sapele-2 are comparable to the samples and pressures taken at Sapele-1. DST pressures, the log correlation between wells and seismic interpretation infer a laterally extensive Deep Omicron system. Pressure communication between Sapele-1 and Sapele-2 at an individual reservoir level cannot be confirmed given the inability to acquire MDT data due to borehole conditions.

Lower Omicron


The interval flowed gas at rates of up to 3.1 mmscfd, the first hydrocarbon flow from this interval, however testing operations were curtailed due to a pressure leak in the test string. Consequently, although liquids were present their flow rate was not recorded.

Forward plan

With the testing programme now concluded at Sapele-2, the Sapphire Driller rig is expected to move to the Sapele-3 location. A further announcement will be made on commencement of drilling operations at Sapele-3. The proposed location for Sapele-3, an exploration well with an appraisal component, has been selected, subject to attaining government approval. The well design on Sapele-3 has been optimised to take into account the pressure regimes encountered on the Block so far. Sapele-3 is targeting a prospect size of 50 million barrels. The joint venture partner, Vitol, has elected not to participate in the drilling of the Sapele-3 exploration well. Consequently Bowleven, as operator, has proposed drilling this well on a sole risk basis, as Sapele-3, which is designed to appraise the sands of the D1-R Discovery and explore the periphery of the Upper and Lower Omicron fairways, is a potentially significant well with material upside.

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Drilling Commenced at Nostra Terra's Colorado Well

- Drilling Commenced at Nostra Terra's Colorado Well

Monday, August 01, 2011
Nostra Terra O&G Co. plc

Nostra Terra O&G announced that drilling has begun on it's initial well in the Verde prospect, located in south-eastern Colorado.

The Company has a 16.25% working interest in the Verde prospect. The initial well will be drilled to a depth of approximately 5300 feet.

Drilling of the well is expected to be completed by the end of August, depending on operations and possible formation tests. Drilling will be followed by completion and initial production testing.

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Chesapeake CEO: Utica Shale Acres Worth $15B-$20B

- Chesapeake CEO: Utica Shale Acres Worth $15B-$20B

Monday, August 01, 2011
Dow Jones Newswires
by Ryan Dezember

Chesapeake Chief Executive Aubrey McClendon said Friday that the company believes its acreage above the Utica Shale formation in eastern Ohio, 1.25 million acres the company has quietly pieced together over the last year and a half, is worth $15 billion to $20 billion.

"That's a big number to share but we believe we understand the hydrocarbon potential under our acreage and we also know a fair amount about how to create and extract value from a play such as this," McClendon told investors during a conference call to discuss the company's second-quarter earnings. "The Utica should emerge as a key driver in the future growth of U.S. energy supplies, especially in natural gas liquids."

Oklahoma City-based Chesapeake reported earnings of $510 million, or 68 cents a share, compared with a prior-year profit of $255 million, or 37 cents a share. Excluding mark-to-market and other impacts, adjusted earnings rose to 76 cents from 75 cents. Revenue jumped 65% to $3.32 billion on higher production and rising oil and gas prices.

Analysts surveyed by Thomson Reuters expected a per-share profit of 72 cents on revenue of $2.77 billion.

In order to contend with rising oilfield service costs and ramp up drilling in Ohio, Chesapeake said it will boost spending by $1 billion over the next two years to between $6 billion and $6.5 billion annually.

McClendon said Chesapeake, which is drilling into the Utica with five rigs, plans to add three more rigs by the end of the year and eventually have as many as 40 drilling in eastern Ohio by the end of 2014.

Chesapeake has spent between $1.5 billion and $2 billion on leasing property in eastern Ohio and continues to add parcels, McClendon said. The acreage will exceed the $15 billion to $20 billion range once more of it is developed into producing oil fields, but that is its value now as Chesapeake shops it to potential joint venture partners.

Chesapeake plans to sell a stake in the property during the fourth quarter.

The Utica, a deeply buried rock formation, lies below parts of eight states, from Tennessee to New York, as well as parts of Canada. Oil companies, however, have concentrated their leasing and exploration efforts in eastern Ohio, which they believe will yield more valuable oil and natural gas liquids.

While McClendon decline to detail the results from the 15 Utica wells it's drilled so far, he said the activity that will come there should lift an Ohio work force that has suffered for years as manufacturers flee the Rust Belt. Abundant water, needed to hydraulically fracture shale formations, easy transport by rail, highway and river, and a large base of industrial workers make the Utica more attractive and potentially more profitable than many other recent shale discoveries, McClendon said.

"We think that our activity can help rejuvenate this area and we're quite pleased with the size of the work force and the quality of the work force," he said. "This is pretty much the most ideal place in America for a new play."

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

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