Odfjell, Ross to Merge Companies

- Odfjell, Ross to Merge Companies

Thursday, July 14, 2011
Odfjell Drilling AS

Odfjell announced the merger between Odfjell Well Management (OWM) and Ross Offshore (RO). Ross Offshore acquires the two Odfjell Drilling companies Odfjell Well Management AS and Odfjell Well Management Consultants AS. The name of the combined company will be Ross Offshore.

The combination of Odfjell Well Management and Ross Offshore will provide clients with a spectrum of services from qualified professionals to assuming the role as the "in-house" drilling and well department. The services of total well management comprise planning, operations, logistics, project-management, cost control, HSE, authority applications and marine management. With this broad service offering, Ross Offshore will be well positioned to serve its clients with the complete value chain.

Drilling activity on the NCS is expected to increase significantly over the next 3-4 years, which supports a strong underlying growth in the well management and the consultancy outsourcing market. Further, there is a growing focus on Carbon Capturing and Storage. The range of growth opportunities in the coming strong market is large, and Ross Offshore has now secured a good position to capture on these opportunities.

Peder Sortland, currently the CEO of Subsea Technology Group (STG) and also in his capacity as the designated CEO of the combined business, expresses satisfaction that the owners of the two companies have agreed to join forces based on sound industrial logic. The merger is strongly supported by the management of RO and OWM as well as STG.

Furthermore, Bjornar Iversen, Executive Vice President of Business Development in Odfjell Drilling, expressed, "By joining forces, this merger will create a focused company positioned to be a leading provider of well management and subsurface competence in Norway with international potential. This enhanced platform will enable us to better serve the needs of our jointed customers and provide them with existing capabilities, a more complete service offering and a broader resource base."

Post the transaction, STG and Odfjell Drilling will, through a joint holding company control approximately 40% each of the combined business whilst the balance will be held by minority shareholders. Prior to this transaction Ross Offshore has been owned 69% by STG. STG is again predominantly owned by the oil and gas specialist private equity investor HitecVision. OWM and its subsidiary OWMC have been owned by Odfjell Drilling Technology Ltd.

The combined business will have revenue of approximately NOK 530 million, and close to 200 employees and consultants. The head office of the combined business will be in Stavanger. The purchase price is not disclosed. The transaction is subject to customary approval by the Norwegian Competition Authority. Expected closing of the transaction is medio August.

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Petro Matad Encounters Hydrocarbons at Davsan Tolgoi Well

- Petro Matad Encounters Hydrocarbons at Davsan Tolgoi Well

Thursday, July 14, 2011
Petro Matad Ltd.

Petro Matad announced that the Davsan Tolgoi-7 well ("DT-7") has reached a total depth of 1,733m in metamorphic rocks below the Tsagaantsav Formation objectives.

DT-7 was drilled as a test of the Uppermost Tsagaantsav and the Lower Tsagaantsav reservoirs of the Davsan Tolgoi Mod Prospect, a fault and fold structural trap consisting of three subsidiary fault blocks.

The well penetrated the Uppermost Tsagaantsav at 1,149m depth, 22 meters high to prognosis. Initial petrophysical analysis has identified three zones of possible net pay totaling 4.8m in thickness and averaging 25% porosity. An additional 18.5m of water-bearing net reservoir with 19% average porosity is distributed between the three zones of moveable hydrocarbons. A similar pattern of alternating oil and water-bearing sandstone reservoirs is common in the Tolson Uul field on Block XIX to the north of Davsan Tolgoi. The three Uppermost Tsagaantsav hydrocarbon zones are being evaluated as candidates for future testing, and additional well locations are being evaluated up to 75m up-dip (higher) to DT-7, where more complete hydrocarbon saturation may be expected.

The Lower Tsagaantsav objective was penetrated between 1,208 and 1,703m depth with minor hydrocarbon saturation at 1,542m depth. 23m of reservoir quality sandstone is distributed between twelve thin zones that average 17% porosity.

Drilling, casing and cementing operations have been completed at DT-7 and the rig has been moved to the new DT-8 location as part of the Company's drilling program to evaluate its inventory of twelve independent prospects in the Davsan Tolgoi area of Block XX.

The DT-8 well is scheduled to be spud today and is located 700m northeast and 38m lower than the DT-5 well that was drilled in June, and 1.8 km south and 80m higher than the Daqing 19-62 oil well in Block XIX. The well will test a stratigraphic pinch-out of the Uvgan Gol paleovalley reservoir between the thin hydrocarbon-saturated sandstones at DT-5 and the thick oil-producing sandstones of the 19-62 well. On further analysis and comparison of data from the DT-5 and 19-62 wells, a secondary stratigraphic trap objective in Lower Zuunbayan sandstones has been identified and the location of DT-8 is well situated to test this objective. Lower Zuunbayan sandstones are the primary reservoirs in the North Tolson Uul field of Block XIX and if productive at DT-8, they will confirm a new play for the Davsan Tolgoi area.

The Company also wishes to give an update on the progress of the planned well-testing program for Davsan Tolgoi. As of today, 135 truckloads of equipment accompanying the workover rig are waiting at the Chinese side of the border post, 150kms south of Petro Matad's Block XX operations. Mongolian national holidays are in progress, and the border point is due to re-open today. Whilst there is a large back-up of cross-border traffic awaiting that re-opening, Petro Matad and its contractor DQE International are confident that mobilization will continue shortly.

The Company is also well advanced in all other aspects of the extensive testing program. Matters such as explosives for well perforation, permits, extended test equipment and international specialists are all either in place or planned.

In other matters pertaining to Davsan Tolgoi, the Company's geo-scientists are currently completely re-mapping the Davsan Tolgoi 3D survey, using a newly processed set of data that adds new definition and clarity to the model. Additionally, data from the drill holes is being added and used in the assessment as it becomes available. This large undertaking is scheduled to be completed by the end of August.

In the immediate vicinity of Davsan Tolgoi, the recently completed 2D seismic lines have been processed, and are currently being incorporated into the previous 2,700kms of survey, ready to be re-mapped. This is expected to add much greater clarity to the areas adjacent to Davsan Tolgoi, both to the east and the west, and enable the generation of new volumetrics, as well as possibly defining drill targets.

Additionally, the Company advises that the 2D seismic surveys over the three sub-basins in the south of Block XX have now been completed and processed. Early processing results indicate similar depths of basins as those in the northernmost parts of Block XX, near Davsan Tolgoi. Interpretation and collation of the entire 1,300kms of new 2D is proceeding.

Petro Matad CEO, Doug McGay stated, "Once again, it is pleasing to note that we have encountered hydrocarbons in our Davsan Tolgoi drilling program and to have the reservoir formations' prognosis confirmed.

"We are methodically working our way through our portfolio of targets in the Davsan Tolgoi area, having so far encountered hydrocarbons in all but one of the seven wells drilled to date. Our management and exploration team note the less-than-resounding results in DT-5 and DT-7 and the dry hole at DT-6, and conclude that is a statistically anticipated outcome of the type of exploration drilling program needed on such a structure as Davsan Tolgoi. Each of the wells has already given us important information that is being used to refine our geologic model, and hence our drill site selection. This should serve us well not only for the continued drilling of our prospect inventory, but also for the ongoing exploration of the remainder of Block XX.

"Progress is being made with the other aspects of the exploration of Block XX, particularly the complex well-testing program. The re-mapping of the newly re-processed 3D survey will also be an important milestone. The area outside of Davsan Tolgoi is also being methodically explored, and we are looking forward to refining our portfolio of leads and prospects in the immediate vicinity, as well as furthering the more grass-roots exploration of other sub-basins."

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Solimar Doubles Stake in Paloma West Project

- Solimar Doubles Stake in Paloma West Project

Thursday, July 14, 2011
Solimar Energy Ltd.

Solimar has confirmed terms to increase its working interest to 25% (doubling the original 12.5%) in the Paloma West project and is soon to be participating in an appraisal well on the project.

The Paloma Deep -1 appraisal well will be drilled using Nabors Rig #710 which is expected onsite at the end of July supporting commencement of drilling in early August.

The Paloma West project is operated by Neon Energy and covers some 1400 acres all within the structural closure of the Paloma oil and gas field which has produced some 61 million barrels of light oil and 432 billion cubic feet of gas (133 MMBOE) since discovery in the 1930s. The Paloma field is a large anticline structure some 12 miles long by 4 miles wide.

The well location has been chosen using 3D seismic which was acquired after the prior development of the field. The 3D data has been used to help identify favourable reservoir trends within the field closure and all the targeted sandstone reservoirs at the well location are characterised by amplitude anomalies on the seismic. This is believed to support the presence of hydrocarbons and may also be indicative of reservoir quality.

There are seven (7) individual, stacked reservoir targets in the well commencing at approximately 10,000 feet. The well has a planned total depth of 15,500 feet and will take up to 2 months to drill. All the targeted sandstone and shale reservoirs are part of the Miocene age Monterey Formation, the famous oil source and reservoir formation in the southern San Joaquin Basin. The estimated unrisked in place hydrocarbon volumes are up to 300 million barrels OIP and based on an 11% recovery factor (equivalent to the historic recovery from the main producing reservoir of the Paloma field) the targeted recoverable resource is 33 MMBOE. Significant upside to these estimates is possible if higher recoveries are attainable.

The well will drill though a series of shallower Pliocene mostly dry gas reservoirs on the way down that are expected to be depleted by historic production. Some of these sand reservoirs are equivalent to the San Joaquin Formation gas sands that Solimar is attempting to develop at its SELH gas project further to the northwest in the basin. The shallow sands produced 23 Billion cubic feet (Bcf) of gas at Paloma.

The first reservoir to be evaluated will be in the Antelope Shale member of the Monterey which envelopes the main reservoir of the field, the Paloma or Upper Stevens Sandstone. This sand has produced 58 mmbbls and 415 Bcf and is likely to be at least partially depleted at the well location and is therefore considered a secondary target. All the Monterey Formation sandstone reservoirs including the Paloma Sandstone were originally formed as submarine fans derived from the NE and deposited into the deep water basin prevalent in the San Joaquin Basin during the Miocene. The anticlinal structure which traps the hydrocarbons was formed much later and has a
different, NW – SE orientation. So there has been varying sand quality encountered across the field which affected the historic field development, particularly for the Lower Stevens Sandstone reservoirs which were not discovered until 1973.

Only three wells have penetrated to the deeper reservoir levels in the west half of the field area (the most recent being some 26 years ago in 1985) each encountering extensive live oil and gas shows and with two wells flowing oil and gas at low rates.

Solimar believes that the 3D seismic data and modern drilling and completion technologies provide an excellent chance for a successful appraisal of the sandstone reservoirs in the western Paloma oil field. Unlike most of the original field wells that were drilled using water based muds that can react with clays in the reservoir reducing permeability (or ability to flow), the Paloma Deep - 1 will be drilled with a synthetic oil based mud to reduce drill time and minimise formation damage.

With the exception of one old vertical well recompleted for production in the Antelope Shale in 1993, the fractured oil shale potential of the acreage remains untapped. In the context of the escalating production and re development of equivalent rocks in other fields in the area, the fractured oil shales present an exciting opportunity for the new joint venture.

Solimar is increasing its interest via a farmin with Neon. The increased position in the project will be subject only to any consents to assignment of the interests that may be required by the underlying lessors and to completion of Solimar's previously announced private placement to raise A$7 million which will be processed at an EGM on July 29.

The dry hole cost of the Paloma Deep -1 is estimated at US $4.9 million. Solimar will be funding its share from cash reserves and the proceeds of the placement.

Commenting on the drill program Solimar CEO John Begg said, "It is very pleasing to be announcing another step up in the scale of the Company's assets in the San Joaquin Basin focus area. The Paloma West project perfectly illustrates Solimar's strategy of acquiring
material interests in oil prone assets that have targets in both conventional and unconventional reservoirs. Further, where hydrocarbons have already been discovered. Solimar has the opportunity to be part of the first joint venture to apply modern, off the shelf technologies to evaluate and exploit the assets. The Paloma Deep -1 is an ambitious drill program designed to evaluate a series of targets within part of a known field where the reservoirs have not been adequately tested by the historic drilling. The project provides an exciting opening to a virtually continuous 12 month program of drilling and production testing on the Company's core projects which is well illustrated in the activity schedule accompanying this release. Each of these projects represent stand - alone, technically independent opportunities for growth."

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AGR Receives Contract Extension from Statoil

- AGR Receives Contract Extension from Statoil

Thursday, July 14, 2011
AGR Group ASA

AGR Field Operations has been awarded an extension worth approximately NOK 60 million by Statoil for Inspection and Certification of non-complex lifting equipment. The services will cover Statoil's operations on the NCS, from Snøhvit in the North to Sleipner in the South.

The contract covers 30 offshore installations and 4 onshore facilities. The duration of this extension is 24 months with an option for a further 24 month period worth approximately NOK 60 million in revenue. Including the remaining option, AGR Field Operations estimates the total value to be around 120 MNOK.

Åge Landro, Executive Vice President commented, "We are very pleased with the continued trust shown in our technology and services from Statoil. We have had a successful long term partnership with Statoil across a range of products and services and view this extension as an affirmation of the value we bring to their operations. The geographical coverage and breadth of the workscope under this contract has been challenging and we feel we have managed to deliver both quality and a high standard of service to our customer."

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