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Oil and Gas Energy News Update

Wednesday, August 24, 2011

Oil & Gas Post - All News Report for Wednesday, August 24, 2011

Wednesday, August 24, 2011

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Commodity Corner: Late Selloff Pushes WTI Downward

- Commodity Corner: Late Selloff Pushes WTI Downward

Wednesday, August 24, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil on the New York Mercantile Exchange benefited from bullish U.S. inventory data for much of the day Wednesday, but a selloff late in the midweek session resulted in 28-cent day-on-day loss.

The WTI ended the day at $85.16 a barrel after receiving a boost for much of the day from the latest oil stocks figures from the U.S. Energy Information Administration (EIA). EIA reported Wednesday that U.S. commercial crude oil inventories fell by 2.2 million barrels last week to 351.8 million barrels. Analysts surveyed by Platts had expected a 2 million-barrel build, rather than a draw, for the period.

Light sweet crude peaked at $86.59 and bottomed out at $84.55 Wednesday.

The Brent contract price did manage to settle higher Wednesday, gaining 38 cents to finish at $110.15 a barrel. Brent traded within a range from $109.20 to $110.96.

After Tuesday's East Coast earthquake rattled nerves and contributed to a spike in natural gas futures, Wednesday's relative geologic calm in the U.S. helped the front-month price return to negative territory. The September contract lost seven cents to end the day at $3.92 per thousand cubic feet.

Natural gas fluctuated from $3.91 to $4.03 Wednesday.

Reformulated gasoline for September delivery remained flat at $2.88 a gallon Wednesday after trading from $2.85 to $2.91.

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Estimates for Greenhouse Emissions from Shale Production Overstated -Study

- Estimates for Greenhouse Emissions from Shale Production Overstated -Study

Wednesday, August 24, 2011

Estimates used by the United States Environmental Protection Agency (EPA) and others for greenhouse gas emissions from upstream shale gas production are likely significantly overstated, according to a new report by IHS Cambridge Energy Research Associates (IHS CERA). The estimates are based on assumptions that do not reflect current industry practice and should be reevaluated, it says.

"Methane emissions have become a very important and controversial issue given their potency as a greenhouse gas," said Mary Barcella, IHS CERA director of North American natural gas. "Unfortunately, such emissions are not being measured. Estimates are being used that are not supported by data, do not reflect current industry practice and would be unreliable to use as a base for decision-making."

The report cites as one example the EPA's 2010 revised estimates of methane emissions during well completion—the period after the well has been drilled but before it is placed into production. The current EPA methodology for estimating methane emitted during this phase was based on a small sample of wells and primarily measured methane that was captured rather than released into the atmosphere, the report says.

The EPA estimates were based on two workshop presentations describing methane captured during "green completions"—operations designed to capture as much methane as possible. The EPA assumed that (1) similar levels of methane were produced at every other well in the United States and (2) that those emissions went completely uncaptured. Such assumptions do not conform to current industry practices, the report says.

"The assumption that all methane recovered from these sample wells would otherwise have been flared or vented is questionable at best, given that common industry practice is to capture gas for sale as soon as it is technically feasible," said Surya Rajan, IHS CERA director. "Gas that cannot be sold is generally flared rather than vented for safety reasons. If the methane emissions at wells were as high as some methodologies assume, you would have extremely hazardous conditions at the well site that neither regulators nor industry would permit."

Another key mis-characterization found in the EPA estimates and other recent reports, such as a study led by Cornell University professor Robert W. Howarth, is the assumption that wells in flowback contain methane in quantities equal to their post-completion daily production, the report says. This assumption results in a significant overestimation of methane emissions. (The flowback phase is the phase of production when fluids injected into the well flow back out ahead of the tapped gas.)

The IHS CERA report notes that data on unconventional gas well GHG emissions is currently lacking due to the fact that they are not adequately measured. More reliable data is needed in order to produce estimates with any degree of certainty.

The report says that the most productive result of additional regulations proposed by the EPA in July could be better documentation of actual GHG emissions which would provide the accurate measurement that is needed. Some of the other proposed regulations, such as requiring green completions and flaring of any produced gas that is not suitable for sale, are already common practice in the industry, it says.

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Beach Spotlights Discoveries in Egyptian Abu Sennan Concession

- Beach Spotlights Discoveries in Egyptian Abu Sennan Concession

Wednesday, August 24, 2011
Beach Energy Ltd.

Beach announced discoveries from its two wells in the Egyptian Abu Sennan concession, with production testing on both wells continuing to assess volumes and commerciality. It is expected that there will be an expeditious tie-in of the wells due to the location of the wells being within 10 kilometers of existing pipeline infrastructure. Details regarding the outcomes of the flow testing from the wells will be advised in due course.

GPZZ-4 was drilled as the first well of a six-well program in the Abu Sennan concession. During initial drilling, hydrocarbon shows were found in the lower and upper Bahariya Formations, and the Abu Roash "G" Member. An extensive testing program of these formations is currently underway.

The second well, Al Ahmadi-1, has also encountered hydrocarbon shows within the Kharita Formation, the lower Bahariya Formation, the Abu Roash "G" Member and the Abu Roash "E" Member. Hydrocarbon zones highlighted by the wireline logging and testing will be followed up with a significant cased hole testing program.

Beach Managing Director, Mr Reg Nelson said, "This is a fantastic result for Beach's International operations and is a credit to the team that identified the potential of this permit in Egypt's Western Desert. We have mentioned on a number of occasions that in order to grow reserves and production, one has to look beyond its own shores, hence why we strategically identified and invested in countries such as Egypt. These discoveries at Abu Sennan justify this strategy and we firmly believe that there will be further success in the not too distant future."

The Joint Venture equity interests in Abu Sennan are:
  • Beach (via wholly owned subsidiary Beach Petroleum (Egypt) Limited) - 22%
  • Kuwait Energy - 50% and Operator
  • Dover Petroleum - 28%

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PGI, Fossil to Begin Drilling Kentucky Assets in Sept.

- PGI, Fossil to Begin Drilling Kentucky Assets in Sept.

Wednesday, August 24, 2011
PGI Energy Inc.

PGI through its joint venture with Fossil Energy as operator enters into E&P in Kentucky. PGI and Fossil will begin drilling in the beginning of September and will post videos and photos of the drilling activity. We expect to complete the proven wells within 90 days and begin receiving revenues. PGI Energy owns 40% of the project leases which was purchased for an undisclosed amount. PGI will receive 75% of the Net 80% NRI from the monthly production until payout of PGI contribution, and then drop to 50 Net WI. Specific details of the field will be posted to our company website. "We are excited to have closed on this asset purchase and look forward to receiving revenues from this production," said Robert Gandy, Senior Underwriter for PGI Energy.

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KBR Wins Pre-FEED for BP Hod Proj.

- KBR Wins Pre-FEED for BP Hod Proj.

Wednesday, August 24, 2011
KBR Inc.

KBR was awarded a contract by BP NORGE AS (BP) to execute pre-front-end engineering and design (pre-FEED) engineering studies for the Hod Re-Development (HRD) Project, operating on behalf of BP and HESS NORGE AS.

KBR’s contract includes engineering services for the development of a replacement stand alone wellhead platform in the Norwegian sector of the North Sea. The pre-FEED study will provide the basis for a decision to progress to the Define Stage of the Hod Re-Development Project.

"This award follows the successful execution of various projects by KBR and our long established relationship with BP," said Dennis Calton, President, KBR Oil & Gas. This work has been awarded as a call off against BP's Offshore Engineering and Project Management Services Global Agreement with KBR.

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TDW Finishes Isolation Ops Offshore Malaysia

- TDW Finishes Isolation Ops Offshore Malaysia

Wednesday, August 24, 2011
TDW Offshore Services AS

TDW Offshore Services (TDW) has successfully completed a series of pipeline pressure isolation operations offshore western Borneo in Malaysia for Sarawak Shell Berhad. The operations were carried out on the Jintan, B11 and F6 platforms in the South China Sea, as part of Sarawak Shell Berhad's ongoing pipeline valves maintenance program.

Pipeline pressure safely isolated

The first of the three operations took place on the Jintan platform on a 24-inch gas export pipeline that extends from the JNDR-A platform to platform M1 off the West coast of Sarawak. TDW executed a double-block pressure isolation against 90 bar pipeline pressure so that Shell could safely replace a passing shut down valve (SDV). A 24-inch SmartPlug® isolation tool was pigged using production gas approximately 30 meters into the pipeline and set at the vertical section of the riser. Throughout the entire operation the SmartPlug tool was remotely operated, monitored and tracked continuously by TDW with its SmartTrack™ technology. The SmartTrack system, which uses proprietary electromagnetic and Extremely Low Frequency (ELF) technology, provides the operational security required to safely isolate pipelines in a wide range of operating environments. After the topside section was safely depressurized, a spool section was replaced and a new flange welded to it to accommodate the new shutdown valve. TDW utilized a joint tester tool to verify the flange installation prior to Shell installing the replacement SDV. Overall, the affected section was isolated for a period of 13 days at a pressure of 90 bar while necessary testing and SDV installation took place.

Passing motor-operated valves (MOVs) replaced at B11-A platform

On the second operation, a 32-inch SmartPlug isolation tool was utilized to replace two passing launcher motor-operated valves (MOVs) on a 32-inch gas export pipeline at the B11 platform that connects to the E11RB platform. By pigging in a SmartPlug tool with water over a distance of 50 meters and monitoring it with SmartTrack technology, TDW set the tool vertically in the riser and created a double-block isolation against the gas pressure. The SmartPlug tool remained in the riser for eight days at 102 bar to facilitate safe replacement of the MOVs.

One-month isolation facilitates replacement of MOVs and topside maintenance

The third operation also involved replacement of launcher MOVs on a 32-inch gas export pipeline that extends from the F6P-A platform to the E11 hub. This particular operation required TDW to utilize the SmartPlug system to successfully isolate the pipeline against 70 bar. The pipeline was isolated for 11 days for the replacement of defective MOVs and an extended duration for additional topside maintenance activities.

TDW carried out all three pressure isolation operations with SmartPlug tools that were custom-built at its headquarters in Stavanger, Norway. Local support was provided by TDW personnel based in Singapore and TDW's agent Amserve Engineering in Malaysia.

Reliable isolation services play pivotal role in pipeline maintenance

Since 2001, TDW has performed a number of pipeline pressure isolation operations to facilitate safe valve replacements on behalf of Sarawak Shell Berhad in Malaysia. "On behalf of Shell and the SKME2 team, I would like to thank TDW for their commitment and dedication to making sure that the isolation operations were executed with care and attention to detail," said Redzuan Zulkflie, Mechanical Static Engineer for Sarawak Shell Berhad.

"I am very proud of the isolation work that the TDW team carried out for Shell in Malaysia," said Rolf Gunnar Lie, Business Development Manager for TDW. "As a result of our joint efforts, TDW successfully isolated the designated sections of the pipeline network for safe execution of riser valve replacement. Had Shell been required to depressurize the long pipelines to replace the valves, it would have caused longer production downtime. It would also have been extremely costly, time-consuming and harmful to the environment had flaring taken place," he added.

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EDS Welcomes New Area Manager for Marcellus Ops

- EDS Welcomes New Area Manager for Marcellus Ops

Wednesday, August 24, 2011
Environmental Drilling Solutions LLC

Environmental Drilling Solutions, (EDS), a leader in solids control, cuttings processing and zero discharge services, has named Richard Guillory Area Manager for Marcellus Shale operations.

Guillory will manage day-to-day field operations locally and be based out of the company's local office in Bradford County, Pa.

Guillory most recently served as Environmental Solutions Projects Manager with M-I SWACO where he developed new systems to manage growing numbers of projects in multiple locations.

"Richard has proven himself as an effective project manager with the ability to create more efficient operations," said Jake Garber, EDS Regional Manager. "His assignment to the Marcellus Shale region is an essential step toward meeting our growing demand in the area."

Guillory received a master of business administration in management and a bachelor's degree in mechanical engineering, both from the University of Louisiana at Lafayette.

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Xodus Adds Director Duo to Support Global Growth

- Xodus Adds Director Duo to Support Global Growth

Wednesday, August 24, 2011
Xodus Group

Xodus Group has made two senior appointments to support its strategy for further international growth.

Nigel Ross joins as business development director from Wood Group GTS where he was global key account director. Maggie Leitch has been appointed global director for technical safety and risk (TSR) and joins from PSN where she was global head of safety & environmental engineering, managing a team she grew from 12 to 70.

Nigel brings more than 30 years' international industry experience and has helped to develop oil and gas businesses in key energy regions including West Africa, Middle East, the Caspian and Russia. He will sit on the board of the firm's XMOS joint venture in Nigeria and will help to expand the multi-disciplined global team.

A Russian speaker, Nigel is determined that his industry experience and contacts will be instrumental to Xodus achieving its bold growth targets in the coming years. He said, "Xodus is an ambitious, top flight consultancy on the cusp of further international expansion and I'm very keen to apply my global experience and structured business development and market entry skills to help the company achieve its growth target of 1,000 employees by 2015."

Nigel joins Xodus after 18 months at Wood Group where he worked as Global Key Account Director. Prior to this he worked at Petrotechnics Ltd as a business development manager overseeing a number of high-profile projects in the Middle East, West Africa and Brunei. Previously, Nigel worked in Shell International, SDPC Nigeria and Shell UK fronting up and downstream capital projects after starting his career with Scottish Enterprise where he spent 11 years developing export links with the former Soviet Union, on behalf of Scottish-based businesses.

Maggie Leitch joins Xodus with an extensive background within safety, loss prevention and risk management, boasting 22 years' industry experience.

Maggie worked at PSN as chief of safety and environmental engineering for over eight years. While there she was responsible for developing best practice and global policies for safety and environmental engineering groups, developing strategic plans for international growth and promoting personnel and industry development.

Further to this, Maggie set up her own internal consultancy which at peak boasted 22 technical specialists attracting its own external international clients. She previously worked at Atkins Process as the principal safety engineer building upon her past expertise at Total Fina Elf Exploration UK where Maggie spent the bulk of her early career.

Between 1989 and 2002 she performed various roles at TFEE UK ranging from process engineer to her peak position as the head of safety engineering and subsequently the senior project engineer on the £30 million Alwyn Systems Upgrade Project.

She said, "I'm looking forward to the challenge ahead and my aspiration is to help Xodus excel in the field of technical safety and risk. I want Xodus to be both the employer of choice for technical safety, value systems, risk and reliability engineers and the consultant of choice for clients."

Colin Manson, CEO of Xodus Group welcomed the duo to the team. He said, "We are very pleased to be appointing two high-caliber industry specialists and these new positions will help to greatly strengthen our management team as we continue to expand in the UK and new markets overseas."

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Wentworth CEO to Resign

- Wentworth CEO to Resign

Wednesday, August 24, 2011
Wentworth Resources Ltd.

Wentworth announced that Richard (Rick) Schmitt, Chief Executive Officer, has made a decision to resign due to unforeseen personal circumstances. Rick will remain with Wentworth as a Non-Executive Director and in that role will continue to provide his valued expertise. Following his resignation, Geoff Bury will become Managing Director reporting to Bob McBean as Executive Chairman.

Bob McBean, Wentworth Executive Chairman commented, "We are very grateful for Rick's contribution to Wentworth and respect and support his decision to take a reduced role."

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NOAA Administrator Discusses Inlet O&G Industry, Belugas

- NOAA Administrator Discusses Inlet O&G Industry, Belugas

Wednesday, August 24, 2011
Knight Ridder/Tribune Business News
by Lisa Demer, Anchorage Daily News, Alaska

U.S. Sen. Mark Begich and a top Obama administration official sat down Tuesday with Cook Inlet gas and oil interests to discuss whether exploration and production could get a boost by streamlining requirements for protection of endangered Cook Inlet beluga whales.

Begich said he is trying to create an environment for increased natural gas production. He called natural gas critical to Southcentral Alaska's economic health. Utilities have said they expect a shortage by 2014.

Jane Lubchenco, administrator of the National Oceanic and Atmospheric Administration, told the group that NOAA knows it must work with industry.

"I think there is uniform agreement that we need to get our act together and be good partners with many different entities and certainly private sector looms large among those," she told the group.

She said NOAA is the federal government's steward of the oceans and stands as the lead science agency responding to oil spills at sea.

NOAA intends to use sound science in its decisions on resource development, Lubchenco said, a vision that developers applauded.

Before an oil or gas project in Cook Inlet can go forward, the federal agency overseeing its permits must consult with NOAA's National Marine Fisheries Service to assess any impact on belugas.

Projects may need to be modified, especially if they are in the more than 3,000 square miles of Cook Inlet designated as critical habitat for the whales.

Some developers are worried.

"The impacts on the industries are going to be profound, yet those industries did not lead to the decline," Jason Brune, formerly the executive director of the Resource Development Council and now with mining giant Anglo American, told Lubchenco. That's frustrating, he said.

The only known cause for the drop in the beluga population was overhunting in the 1990s by Alaska Natives, who sought the whales as a traditional, subsistence food, federal biologists have said.

One specific concern, Brune said later, centers on a prohibition against the discharge of fluids from the deep, specifically water separated from oil and treated, within or near critical habitat for belugas.

"The question comes up, how do we get that additional oil and gas exploration and development to happen?" Brune asked Lubchenco. "Let's face it, discharges do have to happen."

He said even if projects go forward, explorers and producers will be concerned about being hit by lawsuits.

Developers have spent $10 million in the last decade studying belugas and want to protect them, but also want to see their projects go through, he said.

When Escopeta Oil Co., a Houston-based independent, sought a permit to place its exploration jack-up rig in Cook Inlet, the project was analyzed for any impact to belugas, one official said after the meeting. The company was allowed to put it in place with no additional requirements, said Kaja Brix, Juneau-based assistant administrator over protected resources for the National Marine Fisheries Service.

Steve Sutherlin, strategic officer for Escopeta, told Lubchenco the company will monitor the belugas closely and provide to NOAA and its fisheries service detailed reports on any sightings, including what the belugas were doing, what direction they were headed in and how they reacted to the encounter with the company's boats or aircraft.

If whales get too close to the drilling area during the rig's operation, the crew must suspend drilling until the whales leave, federal officials said. Sutherlin said they may be able to slow their work, lowering the decibel level so that it doesn't harass belugas.

Also on Tuesday, representatives of Shell, Conoco Phillips and Statoil signed an agreement with NOAA to share scientific information from research in Arctic waters. Data on ocean currents, for instance, will be shared, Shell Alaska vice president Peter Slaiby said.

Copyright (c) 2011 Anchorage Daily News (Anchorage, Alaska)

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France Working at UN to Unblock Rebel Access to Libya

- France Working at UN to Unblock Rebel Access to Libya

Wednesday, August 24, 2011
Deutsche Presse-Agentur (dpa)

France is working with other countries at the United Nations to unblock access for Libya's rebel-led Transitional National Council (TNC) to the country's resources, the French foreign ministry confirmed Wednesday.

The United Nations in a resolution in March blacklisted five Libyan companies, including the National Oil Corporation, as part of a series sanctions against Moamer Gaddafi's regime.

Traders have since been wary of buying Libyan oil.

Libya's rebels have been campaigning to have the oil sanctions lifted.

Ahead of a meeting between French President Nicolas Sarkozy and rebel leader Mahmoud Jibril in Paris, a foreign ministry spokesman said France considered the TNC should be able to "dispose of the financial resources that have been frozen by the UN Security Council sanctions resolutions."

"We are currently working towards that goal in New York, in close concertation with our partners," the spokesman said.

France, along with several other countries, recognize the TNC as a legitimate representative of the Libyan people.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Audit Slams Ca. Lands Panel for Failing to Collect Millions from Leases

- Audit Slams Ca. Lands Panel for Failing to Collect Millions from Leases

Wednesday, August 24, 2011
The Sacramento Bee, Calif.
by David Siders

The state is mismanaging oil and other leases on public land, failing for years to collect rent from some companies and costing California millions of dollars in lost revenue, the state auditor said Tuesday.

State Auditor Elaine Howle said in a blistering report that the State Lands Commission could have generated as much as $8.2 million in revenue from just a sample of the leases her office reviewed.

The commission "is not effectively managing its leases, and as a result it has failed to collect or generate millions of dollars in potential revenue for the state's General Fund," the report said.

Of the commission's nearly 1,000 revenue-generating leases, the report found 130 were past due on rent. In one case, Howle's office said, a marine services company remained on public land for more than 20 years without paying its $10,170 annual rent. The company itself, the report said, subleased the land and collected rent from its tenant.

Howle accused the commission of failing to adequately track the status of its leases, sometimes losing track of them. Her report said the commission failed to appraise its land as often as lease agreements allow and failed to quickly renew expired leases, missing opportunities to increase rent.

The State Lands Commission manages about 9 million acres of land granted to California by the federal government when it became a state, including tidelands and submerged lands on California's coast and rivers. Of its revenue-generating leases, the commission manages about 85 oil and gas, geothermal and mineral leases, and about 900 agricultural, commercial and other leases, according to the audit report.

The three-member commission consists of Lt. Gov. Gavin Newsom, Controller John Chiang and Finance Director Ana Matosantos.

Commission Executive Director Curtis Fossum blamed staffing reductions. He agreed with many of the auditor's recommendations but said in a written response that the commission has endured severe staffing cuts, from 242 general fund positions in 1991 to about 63.

He called the commission staff "a relatively small, hardworking and professional group dedicated to acting in the state's best interest."

Fossum also criticized the auditor for selecting to review in depth a 35-lease sample he said is not representative.

"What is clear is that this was not a representative sample of State Lands Commission leases, but rather a subjectively selected list of leases chosen to highlight specific problem areas," Fossum wrote, adding that the report relies on examples that "distort the bigger picture of commission successes."


State Auditor Elaine Howle said that of the State Lands Commission's nearly 1,000 revenue-generating leases, an audit found 130 were past due on rent. In one case a company remained on public land for more than 20 years without paying its $10,170 annual rent, the report said.

Copyright (c) 2011 The Sacramento Bee (Sacramento, Calif.)

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Akasa Well Sings for Kosmos Offshore Ghana

- Akasa Well Sings for Kosmos Offshore Ghana

Wednesday, August 24, 2011
Kosmos Energy Ltd.
by SubseaIQ

Kosmos announced a light oil discovery at the Akasa-1 exploration well on the West Cape Three Points Block offshore the Republic of Ghana. Full analysis of well results, including wireline logs, reservoir pressures and fluid samples, confirms that the well penetrated 33 meters (108 feet) of oil-bearing pay in four good-quality Turonian–aged sand packages. The Turonian reservoirs encountered are similar in age to those discovered at Jubilee and Mahogany East. Oil samples recovered from the Akasa-1 well indicate 38 degrees API gravity.

Paul Dailly, Senior Vice President of Exploration, commented, "The Akasa discovery is a great result for Kosmos Energy, and it continues our high exploration success rate offshore Ghana. With this find, we have enhanced our inventory of discovered resources, further supporting the appraisal and development programs in the Mahogany East and Teak areas."

Brian Maxted, President and CEO, added, "We are very pleased with the new oil discovery at Akasa. The Company's development portfolio, including ramping production at Jubilee, is well-defined and substantial, and our continued drilling success highlights the value of our exploration portfolio. We are focused on accelerating first production from these projects, as well as from our discoveries on the adjacent Deepwater Tano Block."

The Atwood Hunter rig drilled the Akasa-1 well to a total depth of 3,918 meters (12,854 feet) in 1,158 meters (3,798 feet) of water. The drilling rig will be released to another operator following final operations at Akasa-1. The Company and its partners' near-term drilling plans include the Cedrela exploration prospect, which is currently under Force Majeure discussions, and two appraisal wells at the Teak discovery on the West Cape Three Points Block. In addition, the Company and its partners plan to drill at least two appraisal wells at the Enyenra field on the adjacent Deepwater Tano Block offshore Ghana.

The Company also announced successful flow test rates at the Tweneboa discovery on the Deepwater Tano Block. At Tweneboa-4, the flow test resulted in sustained rates of approximately 3,500 barrels of condensate per day and 30 million cubic feet of natural gas per day. A drill stem test at the Tweneboa-2 well achieved flow rates of 6,500 barrels of oil per day and 5 million cubic feet of natural gas per day. The data from these tests is being used to optimize development plans for the Tweneboa/Enyenra complex.

West Cape Three Points Block Ownership Interest

Kosmos Energy is the operator of the West Cape Three Points Block with a 30.875% interest. Anadarko Petroleum Corporation has a 30.875% interest, Tullow Oil plc has a 26.396% interest, Sabre Oil & Gas Holdings Limited has a 1.854% interest; and the Ghana National Petroleum Corporation has a 10% carried interest.

Deepwater Tano Block Ownership Interest

Kosmos Energy holds an 18% interest in the Deepwater Tano Block. Tullow Oil plc is the operator with a 49.95% interest. Anadarko Petroleum Corporation has an 18% interest, Sabre Oil & Gas Holdings Limited has a 4.05% interest, and the Ghana National Petroleum Corporation has a 10% carried interest.

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Statoil Unlocks Third Gullfaks Discovery in 2011

- Statoil Unlocks Third Gullfaks Discovery in 2011

Wednesday, August 24, 2011
by SubseaIQ

An exploration well and a sidetrack currently being completed by Statoil near Gullfaks South have yielded the third discovery made in the Gullfaks license so far this year.

"This confirms yet again that infrastructure-led exploration is important and yields highly commercial finds which can be brought on stream quickly," said Tom Dreyer, exploration head for the northern North Sea.

"We regard the area around Gullfaks South as prospective and the find confirms our faith in the area. Even though the volumes are modest compared with the large finds made off Norway earlier, this type of discovery is important for maximizing the potential on the Norwegian continental shelf, and contributes to extending the production life of installations."

The wells were intended to prove petroleum in Middle Jurassic reservoir rocks of the Brent group, and whether communication exists with the producing structures in Gullfaks South. Wells 34/10-52 A and B were drilled by Deepsea Atlantic, which will proceed to shore for modification work after completing this operation

Oil- and gas-bearing intervals were observed in the upper part of the Brent group along both well paths, and a column about 120 meters thick with good reservoir quality was proven.

No hydrocarbons were found in the lower Brent group. The wells have not been formation tested, but data were collected and cores taken to determine the hydrocarbon system and contacts.

Preliminary calculations indicate that 3 to 9.5 million barrels of recoverable oil equivalent are present, which are planned to be tied back to existing infrastructure in the Gullfaks area.

The two other discoveries made so far this year in the Gullfaks license are Rutil and Opal.

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Statoil Spuds Well at Aldous Major North Structure

- Statoil Spuds Well at Aldous Major North Structure

Wednesday, August 24, 2011
Lundin Petroleum AB
by SubseaIQ

Lundin announced that drilling of appraisal/exploration well 16/2-9S on the Aldous Major North structure has commenced. The well is located in license PL265 in the Norwegian North Sea.

The Aldous Major North structure is believed to be the north-westerly continuation of the Aldous Major South discovery in PL265 and the Lundin Petroleum operated PL501 Avaldsnes discovery with primary target in sandstone of Upper Jurassic age.

The planned total depth is 2,241 meters below mean sea level. The well will be drilled with the drilling rig Transocean Leader and the duration is expected to be 40 days.

Lundin Petroleum holds 10 percent interest in PL265. Partners are Statoil Petroleum AS (operator) with 40 percent interest, Petoro (30 percent) and Detnorskeoljeselskap ASA (20 percent).

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Faroe Makes Oil Discovery West of Shetlands

- Faroe Makes Oil Discovery West of Shetlands

Wednesday, August 24, 2011
Faroe Petroleum plc

Faroe announced an oil discovery in its first operated exploration well on the Fulla prospect in the west of Shetland (Faroe Petroleum 50% and operator).

  • The 206/5a-3 exploration well discovers oil in the Fulla prospect
  • The well penetrated a gross oil column in the well of 133 feet and a net oil column of 45 ft. Reservoir quality is better than expected.
  • The oil has been sampled and details of the oil quality will be confirmed by further analysis conducted in the onshore laboratory.
  • Faroe’s first operated exploration well has been successfully drilled in accordance with UK's HSE guidelines.

Well 206/5a-3 on the Fulla prospect was spudded on July 6, 2011 and was drilled to a total depth of 7,711 feet total vertical depth sub-sea (TVDSS) in 407 feet water depth. This Atlantic Margin well, located 31 kilometers to the north east of the BP-operated Clair field platform, was targeting potentially oil-bearing Clair and Whiting reservoir sands with the primary objectives of confirming hydrocarbons within the structure and, if present, running a comprehensive suite of wireline logs and obtaining representative oil samples.

The targeted reservoirs were encountered close to prognosis. The well drilled through a gross oil column of 133 feet and a net oil column of 45 ft. The average porosity in the net interval has been estimated at 23%. Oil samples were successfully recovered to allow detailed fluid analysis to be conducted in the onshore laboratory. Detailed data analysis will now commence on interpreting the results of this well, and subsequently, we will work to identify development options that include the Freya discovery made in 1980, which is located immediately to the south in the adjoining Block 206/10a (Faroe 50% and operator).

The Awilco-owned WilPhoenix semi-submersible drilling rig, which was used for the drilling operation, is now actively engaged in operations to plug and abandon the well as planned, and is expected to move away from the location in the coming days.

In December 2010, Faroe farmed out a 50% interest in this license to Canadian Overseas Petroleum Limited on promoted terms.

Graham Stewart, Chief Executive of Faroe Petroleum plc, commented, "We are very pleased with the positive outcome of this frontier West of Shetlands exploration well. To announce a discovery in our first operated well is a significant achievement for Faroe Petroleum and is a realization of the team’s vision and ability. Further work will be conducted in the coming weeks to gain a deeper understanding of the structure and its contents. With better than expected reservoir quality and good indications of mobile oil, we believe there is potential for a commercial field development, most likely in combination with our nearby Freya discovery.

"Faroe Petroleum applied for and won this license, which also contains the Freya discovery to the south, in the 22nd UK Licensing Round in 2005, and has worked continuously to de-risk this opportunity. This important new Fulla discovery is a great testament to the diligence and skill of our technical team.

"We look forward to three further exploration wells to be drilled in Norway this year. The Butch well with Centrica as operator is currently drilling, and we have two further wells, T-Rex and Kalvklumpen planned to commence in the coming months."

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Gulfsands: Fully Compliant With Syrian Sanctions

- Gulfsands: Fully Compliant With Syrian Sanctions

Wednesday, August 24, 2011
Gulfsands Petroleum plc

Gulfsands provided the following information on the Company's activities in Syria.

In light of the recent sanctions against Syria, and following certain comments in the press concerning the relationship between the Group, Mr. Rami Makhlouf and corporate entities in which Mr Makhlouf and other members of his family are involved (collectively the "Makhlouf Interests"), Gulfsands wishes to provide the following clarifications.

US and EU Sanctions

Gulfsands notes that the US and EU have imposed a number of sanctions against Syria and various named individuals and organizations. Gulfsands is fully compliant with all applicable sanctions and is committed to continuing compliance with any sanctions that may apply from time to time.

Background to the Group's involvement in Syria

The Group first entered Syria in 2000, as the junior partner of Ocean Energy in a collaborative venture which was subsequently awarded a license to explore and develop Block 26 ("the Block 26 Joint Venture"). This followed a public tender in 2002 in which several other international oil companies participated, with the resultant Production Sharing Contract ("PSC") eventually being signed in May 2003. The PSC was ratified by the People's Assembly and signed into Syrian law via presidential decree. The public tender for Block 26 was the first such tender in Syria, all previous oil and gas licenses having been awarded by direct negotiation.

Following the takeover of Ocean Energy by Devon Energy in 2003, the latter elected to withdraw from the Middle East in 2005, as a result of which Gulfsands was able to increase its interest to 50% and assume operatorship of Block 26. The remaining 50% interest was assumed by a Russian company which was subsequently purchased by Emerald Energy, which in turn was taken over by Sinochem in 2009.

The Group's Syrian interests are held in a subsidiary of Gulfsands Petroleum PLC, which is a UK incorporated, British managed and UK domiciled public company. Gulfsands Petroleum PLC has not changed its place of incorporation or domicile since incorporation, and recent press reports that might suggest otherwise are incorrect.

Relationships with the Makhlouf Interests.

Since the time of its first entry into Syria, the Group has had constructive commercial relationships with various Makhlouf Interests. All such relationships have been conducted on arms-length commercial terms, have been properly documented and have been disclosed as required by pertinent laws and regulations, including the AIM Rules of The London Stock Exchange ("the AIM Rules.")

The Group has fulfilled all contractual obligations pertaining to such commercial relationships and has behaved at all times with absolute propriety.

Following the imposition by the UK in May 2011 of sanctions against certain individuals and organizations in Syria, including Mr. Rami Makhlouf and members of his family, the Group has suspended all payments to the Makhlouf Interests under the commercial agreements noted below, and has suspended the voting, dividend and transfer rights pertaining to the shares in Gulfsands held by Al Mashrek.

The commercial relationships between the Group and the Makhlouf Interests are as follows:

Al Mashrek Shareholding

Al Mashrek Global Invest ("Al Mashrek"), a company owned beneficially by Makhlouf Interests, owns 5.75% of the Company's issued share capital. These shares were acquired in August 2007, at a premium to the then prevailing market price, in a placing that was disclosed at the time in accordance with the AIM Rules. Al Mashrek is not represented on the Board of the Company, has no influence over or involvement in the management of the Group's affairs and has at no time sought such influence or involvement.

Damascus Office Lease

The Group rents office premises in Damascus from a company owned beneficially by Makhlouf Interests. The lease is on terms negotiated at arms-length and considered normal for a commercial lease of this kind in Syria. The rent payable has been approved for cost recovery by Syria's General Petroleum Corporation, pursuant to the Block 26 Production Sharing Agreement.

Cham Holdings, a company in which Al Mashrek is reported to be a material shareholder (alongside other prominent Syrian businessmen and companies also rents space in the same building). Its lease is completely independent of the Group's lease, as are the operations of the two organizations.

Ramak Services Agreement

Ramak, a company owned beneficially by Makhlouf Interests, has since 2000 provided various support and administrative services to the Block 26 Joint Venture(s). Ramak was engaged by the original Ocean Energy (80%) and Gulfsands (20%) joint venture to provide advice and to assist in identifying, evaluating and pursuing E & P opportunities in Syria, including in connection with the successful public tender for Block 26.

These services, which are all in the ordinary course of business for an E & P venture operating in a foreign jurisdiction, are documented in a service contract with the original joint venture which is governed by English law and has been amended as appropriate from time to time. The fees payable in respect of these services, which today aggregate less than $250,000 per annum, have been borne by successive joint ventures pro rata to the participants' respective participating interests from time to time and are today the responsibility of the current 50/50 joint venture between the Company and Sinochem.

In addition, Ramak has since the commencement of the original agreement in 2000, received milestone payments totaling US$900,000 from these joint ventures. Gulfsands has been responsible for US$270,000 of these payments, reflecting the Company's, pro rata interest in these joint ventures at various points in time. Further, modest milestone payments may be earned by Ramak in the event various Block 26 production targets are reached. None of those production levels have been reached to date and only one such production level involving the potential payment of a US$500,000 milestone payment is anticipated to be reached.

The services agreement entered into with Ramak and documented at that time under the oversight of Ocean Energy's general counsel (as 80% participating interest holder and senior partner in the collaborative venture), provided Ramak with an entitlement to receive a 2.5% Net Profit Interest on Block 26 production attributable to the joint venture and Ramak began to receive payment in respect of this Net Profit Interest during 2010. The cost of the Net Profit Interest has been borne in equal proportions by the Group and Sinochem.

Lapsed 2007 Proposal for Joint Venture with Cham Holdings

In October 2007, as announced at the time pursuant to the AIM Rules, the Group proposed to establish a strategic joint venture in partnership with Cham Holdings. The purpose of the proposed joint venture was to pursue the acquisition of several high value energy projects in Syria and Iraq. The joint venture did not in fact proceed and no projects were acquired.

There are no other commercial relationships between the Group and Makhlouf Interests and no additional commercial relationships are currently in contemplation.

Block 26 Operations

To date the company's operations in Block 26 continue unaffected by events in Syria. Further, we have no information beyond that which has appeared in the press as would enable speculation as to the possible course of future events in Syria.

Andrew West, Chairman, said, "The Board of Gulfsands Petroleum recognizes the importance of the Company's interests in Syria and is satisfied that the Group is in compliance with the current US, EU and UK sanctions regime and that our commercial relationships with various Makhlouf Interests have at all times been conducted with propriety and in accordance with pertinent laws and regulations, including the disclosure obligations enshrined in the AIM Rules."

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Max Petroleum Updates Activities in Kazakh Blocks

- Max Petroleum Updates Activities in Kazakh Blocks

Wednesday, August 24, 2011
Max Petroleum plc

Max Petroleum announced an operational update of its activities in the Blocks A&E License area in Kazakhstan.

Drilling Commences at Sagiz West Prospect

Drilling has commenced at the SAGW-1 exploration well on the Sagiz West prospect in Block E, which has estimated unrisked mean resource potential of 26 million barrels of oil ("mmbo") in a four-way, Triassic rim structure. Total depth of the well will be approximately 1,600 meters.

New Drilling Contract for Additional Shallow Rig

The Company has executed a drilling contract with PM Lucas for a ZJ-50 rig capable of drilling to 5,000 meters, to drill the ASK-2 exploration well in the Asanketken Field in Block E. The rig is on location and is expected to commence drilling operations before 31 August 2011. The ASK-2 well is designed to test the field's deep Triassic potential, as well as further evaluate potential reservoirs in the shallower Jurassic section found to be productive in the ASK-1 discovery well.

Status of Pre-salt Drilling on Emba B Prospect

The Company expects to commence drilling operations for the NUR-1 pre-salt exploration well in the Emba B Prospect on Block E in October 2011, based on the Company's latest discussions with the drilling contractor, Saipem. The deep rig is currently completing a well for another operator and is expected to begin mobilization to NUR-1 location by the end of the month.

Expanded Post-salt Prospect Inventory

The Company has matured two additional prospects into the post-salt inventory, including the Uytas North and Karasai South prospects, both of which are four-way, Triassic rim prospects on Block A. Uytas North has unrisked mean resource potential of 11 mmbo with a 38% geological chance of success ("COS"), while Karasai South has unrisked mean resource potential of 12 mmbo and a 34% COS.

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Sound Oil Gets Govt Nod for Rapagnano Concession

- Sound Oil Gets Govt Nod for Rapagnano Concession

Wednesday, August 24, 2011
Sound Oil plc

Sound Oil announced that the Italian Ministry for Economic Development has awarded the Rapagnano Concession, located in the Marche Region of central Italy, to the Company's wholly-owned subsidiary Apennine Energy srl. The award is subject to the acceptance of any environmental impact assessment that may be required by the Marche regional authorities. In view of the previous production history at the site which is within an industrial area, the Company anticipates that this acceptance will be granted.

The Rapagnano gas field on the concession had previously produced 4.1 Bscf of gas into the national network until it was shut-in in 2001. A recent reservoir engineering study by consultants Senergy (GB) Ltd has estimated that an additional 2.45 Bscf of gas is potentially recoverable from the field. Apennine's objective will be to put the field back on stream at an approximate estimated cost of US $0.5 million with expected first revenue in 2Q of 2012.

Commenting on the news, Gerry Orbell, Sound Oil's Chairman and Chief Executive, said, "This is very encouraging news. The Italian Ministry has awarded the Rapagnano field to us at no cost with the expectation that we can put it back on stream quickly. We intend to produce to the national gas network through the connection which is on site and provide an early cash flow with minimal investment."

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ATP Brings Mirage Well Online in GOM

- ATP Brings Mirage Well Online in GOM

Wednesday, August 24, 2011
ATP O&G Corp.

ATP announced first oil production at its Mississippi Canyon (MC) Block 941 A-2 (#4) well in the deepwater Gulf of Mexico. The MC Block 941 A-2 well is located on the Mirage Field and is the third well brought on production at the Telemark Hub location utilizing the ATP Titan floating drilling and production platform. The well delivered on ATP's original expectations with an initial rate exceeding 7,000 Boe per day. When drilled, the A-2 well encountered four Miocene sands that are approximately 500 feet structurally higher than the same sands in the MC 941 A-1 well. The A-2 well is completed at a measured depth of 17,600 feet in the C and D sands. All permits to immediately begin drilling the fourth well, MC 942 #2, have been approved with production projected later this year. Company-wide production now exceeds 31,000 Boe per day.

"Bringing the third Telemark Hub well to first production again demonstrates ATP's technical expertise and safe operations in the deepwater Gulf of Mexico," said T. Paul Bulmahn, ATP Chairman and CEO. "We have finally realized the planned material production revenue of this well that has been much anticipated for 16 months. This well was already drilled to 12,000 feet and cased prior to the Macondo spill and became subject to the moratorium. The greater-than-a-billion-dollar investment at Telemark reflects ATP's continuing commitment to develop America's energy resources."

ATP operates the deepwater Telemark Hub in approximately 4,000 feet of water with a 100% working interest and holds a 100% ownership in ATP Titan LLC which owns the ATP Titan and associated pipelines and infrastructure.

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Oilex Continues Preps for Production Testing at Cambay Well

- Oilex Continues Preps for Production Testing at Cambay Well

Wednesday, August 24, 2011
Oilex Ltd.

Oilex advised that operations to prepare for well clean-up flow and production testing are continuing. Some delays have been experienced during coil tubing unit interventions to open up the remaining fracture stimulation stages.

After clean-up operations a flow test will be conducted.

The Cambay-76H "proof of concept" horizontal well is evaluating the production mpotential of the Y Zone interval of the extensive deep Eocene "tight" reservoirs in the onshore Cambay Production Sharing Contract area, Gujarat, India.
  • Report date: August 23, 2011
  • Status: Opening up fracture stimulation stages
  • Past Week's Operations:
    • Retrieving milling tools in well
    • Run milling tools in well
    • Repairs to coil tubing unit
    • Initial flow-back of hydrocarbons and stimulation fluids from first fracture stimulation stage
  • Objective: Cambay Eocene "tight" reservoir Y Zone
  • Total Depth: 2,740 meters including 610 meters horizontal section

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

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Testing Begins at Global's 2nd Eagle Ford Well

- Testing Begins at Global's 2nd Eagle Ford Well

Wednesday, August 24, 2011
Global Petroleum Ltd.

Texon has advised that the second Eagle Ford well in which Global has an interest (Tyler Ranch EFS #2H) has been successfully fracked over 17 stages and will now be tested. The recovery of frac fluid will probably take a few days after which Texon will conduct a proper flow test of the well.

Global has a 7.939% working interest in approximately 1,651 acres beneath the Olmos formation including the Eagle Ford Shale. Global's interest in the Leighton prospect also includes a 15% working interest in approximately 873 acres from the surface down to the stratigraphic equivalent of the Olmos formation.

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CNOOC Sees 51% Increase in YOY Profit

- CNOOC Sees 51% Increase in YOY Profit

Wednesday, August 24, 2011

CNOOC announced its interim results as of June 30, 2011.

The Company's total net oil and gas production amounted to 168.7 million barrels of oil equivalent (BOE), representing an increase of 12.9% year-on-year (YOY). This is mainly attributed to: firstly, the new oilfields and development wells which continued to introduce new momentum to the Company's production; secondly, production contributions from newly acquired projects since 2010; and thirdly, the composite decline rate of producing oil and gas fields which has remained low through comprehensive adjustment measures.

Meanwhile, international oil prices fluctuated sharply, although generally, it sustained at a high level. Having benefited from this, the Company's realized oil price reached US $108.16/barrel, 40.8% higher than that of the same period last year. The Company's realized gas price was US $4.92/mcf, increasing 15.5% YOY.

Due to stable oil and gas production growth, as well as higher realized prices, the Company's oil and gas sales revenue for the first half of the year surged 45.0% YOY to RMB97.03 billion. Despite escalating prices of oilfield services and raw materials, the Company's production cost has remained at a low level mainly due to cost savings and efficiency enhancement. The seasonality factor has also lowered the production cost. During the first half of 2011, our operating cost was down 3.8% from 2010 average of US $7.28 to US $7.00 per barrel. The Company recorded net profit of RMB39.34 billion ($5.06B), representing a significant increase of 51.4% YOY.

In the area of exploration, the Company made 6 new discoveries and 18 successful appraisal wells. The first commercial discovery of Wushi 17-2 was made in Wushi Sag in the Western South China Sea. In terms of rolling exploration, two new discoveries Qinhuangdao 33-2 and Qinhuangdao 33-3 were made following the discovery of Qinhuangdao 33-1 South last year in the Shijiutuo uplift area.

Since the beginning of the year, the Company has further expanded its investments in shale oil and gas play and oil sands of North America, through the acquisition of a 33.3% interest in Chesapeake's Niobrara project and the acquisition of OPTI Canada Inc. In addition, we successfully acquired a one-third interest held by Tullow Oil in each of Exploration Areas 1, 2 and 3A in Uganda.

The Company has kept a good track record on health, safety and environmental protection (HSE) since established more than a decade ago. However, the oil spill incident of Penglai 19-3, an oilfield operated under production sharing contract in Bohai Bay, posed HSE challenges to the Company. This incident has made certain impact on the marine environment. Being a responsible energy company, we will continue to urge and assist ConocoPhillips China Inc., the operator of the Penglai 19-3 oilfield, to complete the cleanup work in a timely manner and to minimize the impact on the marine environment.

In addition, due to the combination of the progress of acquisition project and the impact from the oil spill incident, we reset the Company's annual production target at 331-341 million BOE.

Mr. Wang Yilin, Chairman of the Company said, "The outstanding results for the first half of 2011 demonstrated our operating and management capabilities. At the same time, we faced a challenge posed by the oil spill incident occurred at Penglai 19-3 oilfield and we felt deeply sorry about it. The Company has already started performing inspection on the major facilities, equipments and production operations of all our oilfields, and reinforcing our risk management measures, to avoid similar incidents happening in the future."

Mr. Yang Hua, Chief Executive Officer of the Company commented, "Since the beginning of the year, the Company has increased its investments in unconventional energy through the acquisition of shale oil and gas and oil sands projects, building an important resource base for the future. Year 2011 is a year of steady growth for the Company. In the second half of the year, the Company will continue to progress steadily to lay a solid foundation for the Company's long term development."

In the first half of the year, the Company's basic earnings per share reached RMB0.88. In order to share our outstanding results with shareholders, the board has declared an interim dividend of HK $ 0.25 per share (tax inclusive).

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Tullow Touts Record Results in 1H11

- Tullow Touts Record Results in 1H11

Wednesday, August 24, 2011
Tullow Oil plc

Tullow announced its half-yearly results for the six months ended 30 June 2011.

2011 Half-yearly results summary
  • Record first half revenue and profit
  • Interim dividend doubled
  • Exploration success continues and developments being progressed

Tullow had a very strong first half. Record results were driven by increased production from the Jubilee field in Ghana and higher commodity prices. Exploration and appraisal success continued and the Group strengthened its portfolio with farm-ins in East Africa and two strategic acquisitions. Further progress was made in Uganda and Tullow now expects completion of its farm-down to CNOOC and Total in September. In July the Group listed Tullow Oil plc shares on the Ghana Stock Exchange.

Key highlights
  • Record sales revenue of over $1 billion driven by Jubilee Production; interim dividend doubled.
  • 71% exploration and appraisal success year-to-date (17/24); Akasa-1 discovery announced today.
  • Completion of farm-in to six blocks in Kenya and Ethiopia; first well to spud in Kenya in Q4 2011.
  • Group production expected to average 82-84,000 bopd for 2011 and exceed 100,000 bopd by year-end.
  • Jubilee production in Ghana is expected to increase to 105,000 bopd in October; plateau production of 120,000 bopd is now expected before year-end.
  • MoU signed with the Government of Uganda; $2.9 billion Sale and Purchase Agreements signed for the farm-down to CNOOC and Total; completion now expected in September.
  • Nuon E&P and EO Group acquisitions completed in June and July respectively.
  • Secondary listing on the Ghana Stock Exchange completed in July following successful $72.3 million offer.

Commenting, Aidan Heavey, Chief Executive, said, "We have delivered a strong performance and achieved record results in the first half allowing us to double the dividend. We continue to make good progress with production plans in both Ghana and Uganda and while delays to the farm-down to CNOOC and Total have been frustrating, we now expect completion in September. With a strong balance sheet, growing production and a potentially transformational drilling campaign to come, we move into the second half of the year with real confidence."

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