Sevan Marine Reports Financial Results for 1Q11

- Sevan Marine Reports Financial Results for 1Q11

Tuesday, June 14, 2011
Sevan Marine ASA

Sevan Marine reported the results for the first quarter of 2011.

The Company's working capital is insufficient to support its present requirements and there is an immediate need to solve the Company's financial situation. The Company, together with its advisors, is in the process of seeking a debt restructuring, potentially in combination with a share issue as well as a reduction of overhead cost to secure the Company's financial position. A robust financial structure coupled with the Company's FPSO assets and technology should form the basis for creating shareholder value and securing stakeholders going forward. However, the Company is dependent on a successful restructuring in order to meet its commitments. The Company is in constructive dialogue with its stakeholders, but at the date of this report, no firm resolution has been reached.

The Board confirms that the 1Q 2011 financial statements have been prepared based on a going concern assumption. The basis for this assumption is the Company's strategic plan and a successful outcome of the restructuring plans described above. The outcome of the restructuring is however, at the date of this report, still uncertain and may impact the assumptions applied in the preparation of the 1Q 2011 financial statements. In addition to the going concern assumption, this particularly relates to "Sevan Capital Assets" and "Deferred Tax Assets" as further described in the attached report. Sevan Marine has engaged ABG Sundal Collier, DnB NOR Markets, Pareto Securities and SEB Enskilda to address a financial and strategic restructuring of Sevan Marine.

The loss from continued business carry only rounding differences compared to the preliminary figures presented in the announcement on May 20, 2011. However, a temporary breach of an equity covenant as further described in note 9 in the attached report, requires that amounts which formally could be held to be mandatory repayable at balance sheet date to be classified as current. All interest-bearing debt was therefore classified as current as per March 31, 2011.

Operating revenue for the quarter amounted to USD 51.1 million (USD 53.5 million). EBITDAFX was USD 20.4 million (USD 27.6 million). Operating profit was USD 3.8 million (USD 13.0 million), and net loss was USD 53.3 million (net loss of USD 63.3 million).

Operating revenue was USD 2.4 million lower than the previous quarter mainly as a result of a non-recurring compensation received from the Oilexco administration in previous quarter. This effect was partly offset by higher revenue from rebillable expenses from FPSO Sevan Voyageur and FPSO Sevan Hummingbird and higher revenue from the Topside and Process Technology segment.

Operating expense was USD 4.7 million higher than the previous quarter mainly due to higher rebillable operating expense on FPSO Sevan Voyageur and FPSO Sevan Hummingbird as well as higher operating expense in the Topside and Process Technology segment, all of which are also reflected in the revenues above.

A net foreign exchange loss relating to financing of USD 21.4 million (gain of USD 0.7 million) was mainly a result of unrealized disagio on NOK-nominated bonds following a strengthening in NOK compared to USD of 5.8% during the quarter.

Financial expense through profit and loss decreased by USD 25.4 million to USD 22.0 million (USD 47.4 million) mainly due to non-recurring expenses relating to refinancing activities in previous quarter.

Net loss on continued business was USD 39.7 million (loss of USD 45.4 million) for the quarter. Net pro forma loss reflects the net loss as if the drilling segment was a third party to the Sevan Marine Group and amounted to USD 33.6 million for the quarter.

Net loss on discontinued business, which reflects the net loss from the drilling segment to be de-consolidated following the initial public offering executed on May 3, 2011, amounted to USD 13.6 million (USD 17.9 million) for the quarter.

As of March 31, 2011, total assets amounted to USD 2.723 billion (USD 2.587 billion), of which USD 1,169.7 million (USD 2,145 billion) was capitalized as 'Sevan Capital Assets'. Assets of disposal group, which reflect the total assets in the drilling segment, amounted to USD 1.298 billion. Cash and cash equivalents amounted to USD 29.2 million (USD 116.1 million).

As of March 31, 2011, Sevan Marine has undrawn USD 52.1 million on a bank facility to part finance the upgrade of FPSO Sevan Voyageur which is not reflected on the balance sheet as per March 31, 2011. As at the date of this report, USD 10.0 million remains undrawn under the financing facility. In addition, the discontinued operation has undrawn USD 342.9 million on a bank facility to fund the construction of Sevan Brasil which is not reflected on the balance sheet as per March 31, 2011.

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Strategic O&G Boosts 1Q11 Production by 150%

- Strategic O&G Boosts 1Q11 Production by 150%

Friday, June 03, 2011
Strategic O&G Ltd.

Strategic O&G announced its financial results for the three months ended March 31, 2011. The three month period ended March 31, 2011 is the first interim period for which the Corporation has prepared its financial statements under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Highlights

• A net loss of $4,891,000 was recorded in the period.
• Spent $11.9 million on the capital expenditure program in the first quarter, primarily at Steen River and Maxhamish.
• Steen River winter program was successfully implemented and included:
  • Repair of the crude oil pipeline at Steen River (Marlowe North) by late January, 2011
  • Completion of a $3.2 million 3-D and 2-D seismic program at Marlowe North
  • Completion of a 6 well workover and optimization program at Marlowe North and Marlowe West
  • Drilled, completed and tied in two successful Keg River oil wells at Marlowe North (8-22 and 10-22)
  • Completed an all year access road to core areas of Marlowe North
• Committed to a drilling rig from Akita Drilling Ltd. from August, 2011 to April, 2012 for use primarily at the Steen River area
• Acquired an additional 38 sections (24,320 acres) of 100% working interest land in the North Marlowe area of Steen River at the June 1, 2011 Alberta land sale. These lands were acquired for an average price of $250 per hectare and are contiguous to Strategic's current Steen River landholdings.
• Completed an all season road and well pads with its partner at Maxhamish. The all season infrastructure will facilitate drilling, completion and production operations through most of the year
• March exit production was 1,150 boe/d as a result of the successful workover program in the Steen River area
• Line of credit was recently increased from $5.0 million to $21.0 million, reflecting the increased reserve base from the Steen River acquisition and the subsequent workover and drilling program.

Overview of Performance

Summary

As previously disclosed, on December 22, 2010, Strategic closed an arms-length acquisition of all of the issued and outstanding shares of Steen River Oil & Gas Ltd. ("Steen River"), a private oil and gas exploration and production company.

At the time of acquisition, production was approximately 250 boe/d with additional production shut-in as a result of a pipeline break. In late January, 2011 the pipeline was repaired and 400 boe/d of production was brought back on-stream. Total production from this field at that time was approximately 650 boe/d, of which greater than 2/3 is light oil.

In the first quarter of 2011, Strategic completed 2 Keg River wells, a 3D seismic program and an all weather road into the North Marlow area of Steen River. Based on the preliminary results from the workover program, Strategic exited March with production of approximately 1,150 boe/d.

At Maxhamish, the 2011 development program is proceeding. The all weather road and well pad is nearing completion. The all season infrastructure will facilitate drilling, completion and production operations through most of the year. Drilling operations are expected to commence in the near future with completion of up to 4 multi-frac horizontal wells by the fourth quarter.

2011 first quarter results

The three months ended March 31, 2011 showed an increase in volumes over the comparable period of 2010. Average daily sales volumes increased by 151% to 790 boe/d in 2011 versus 315 boe/d in 2010. Revenues also increased by 186% to $4,613,896 for 2011 versus $1,689,641 in 2010. The increase was the result of the 150% increase in production and 9% increase in product prices realized in the first quarter of 2011 over same period in 2010. The Corporation received an average price of $64.85 per boe versus $59.44 in 2010 which is an increase of 9%.

For the three months ended March 31, 2011 average daily production was 790 boe/d versus 317 boe/d for the fourth quarter of 2010. Revenues for the first quarter of 2011 were $4,613,896 versus $1,639,920 in the fourth quarter of 2010. The increase in production and revenues is the result of a full two months of production included from the Steen River acquisition following resumption of pipeline access in the current quarter and oil prices improving over the quarter. The Corporation received an average price of $64.85 per boe in the first quarter of 2011 versus $56.21 per boe in the fourth quarter of 2010, a 15% increase.

For the three months ended March 31, 2011, the Corporation had a net loss of $4,891,099 or $0.04 per share basic and diluted as compared to a net loss of $1,225,601 of $0.02 per share for the three months ended March 31, 2010. The loss in 2011 arises from the stock-based compensation expense of $2,657,400 as a result of the issuance of stock options in the quarter and increased operating expenses. Negative funds from operations for the three months ended March 31, 2011 was $1,294,800 as compared to a funds from operations of $37,861 for the three months ended March 31, 2010.

Outlook for 2011

Strategic spent over $11.9 million on its capital program in the first quarter of 2011, primarily at Maxhamish and Steen River

Maxhamish

At Maxhamish, the 2011 development program is proceeding.

This includes:

• completion of a year-round access road in early June to improve access to the area;
• licensing and construction of drilling pads that can accommodate up to 8 wells per pad;
• drilling up to 4 wells by the fourth quarter of 2011, with completions to follow;
• building infrastructure where necessary, including battery, pipelines, etc.; and
• assessment of future drilling program.

Steen River, northwest Alberta

At Steen River, where the Corporation has a 100% working interest and operates the field, Strategic has moved forward aggressively to develop the property. This included shooting a $3.2 million 3-D and 2-D seismic program, workovers/optimizations on 6 wells, building a year round road into certain core areas of the property and drilling two Keg River oil wells. The seismic program is currently being interpreted, and combined with the regional geological study currently being performed will help determine future drilling locations for late summer or early fall drilling.

Strategic has signed an agreement with Akita Drilling Ltd. to secure a drilling rig from August 2011 to April 2012. Over the next 12 months Strategic plans to drill up to 10 wells in Steen River.

Production has increased steadily from December 31, 2010 with March production of approximately 1,150 boe/d due to the repair of the pipeline, workovers and optimization at Steen River. An additional production increase is anticipated in the second quarter from the drilling of two successful Keg River wells at Steen River.

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Africa Oil Reports Operational, Financial Ops for 1Q11

- Africa Oil Reports Operational, Financial Ops for 1Q11

Friday, May 27, 2011
Africa Oil Corp.

Africa Oil announced its financial and operating results for the three months ended March 31, 2011.

Highlights and accomplishments during the first quarter of 2011 included:

• The Company completed the acquisition of Centric Energy Corp. ("Centric"), a publicly traded oil and gas company listed on the TSX Venture Exchange. Total consideration paid was valued at $60.2 million and included the issuance of 30,155,524 AOC common shares. Centric's primary asset is Block 10BA in Kenya which is strategically located within the highly prospective East African Tertiary Rift System between AOC's Block 10BB and its South Omo Block. Centric and Tullow Oil plc ("Tullow") are joint venture partners on the Block 10BA. In addition, Centric also has a carried 25% interest in Block 7 and Block 11, both located in the Republic of Mali and operated by Heritage Oil Corporation.
• Africa Oil entered into amending agreements with the Government of Puntland in the quarter, represented by the Puntland Petroleum and Mineral Agency, in respect of the production sharing agreements ("PSAs") for the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area. Under the PSAs, as amended, the First Exploration Agreement has been extended for a further 12 months, from January 17, 2011 to January 17, 2012. Under the amended PSAs, AOC is obligated to spud a minimum of one exploratory well in the Dharoor Valley Exploration Area by July 27, 2011. A second exploratory well is required to be spudded in the Nugaal Valley Exploration Area or, at the option of AOC, in the Dharoor Valley Exploration Area, by September 27, 2011. In conjunction with this amendment, the Company completed its farmout agreement with Red Emperor Resources NL ("Red Emperor"). Under the terms of the farmout agreement and an election made by Red Emperor to increase their interests, Red Emperor will earn a 20% interest in both the Dharoor and Nugaal Valley Blocks and is committed to paying a disproportionate share of costs related to the one well drilling commitment included in the first exploration period of both the Dharoor and Nugaal Valley Production Sharing Agreements.
• The Company signed a definitive agreement with Lion Energy Corp. ("Lion"), a publicly traded oil and gas company listed on the TSX Venture Exchange, to acquire all of the issued and outstanding common shares of Lion. Pursuant to the agreement with Lion, AOC will acquire, by way of a plan of arrangement, all of the issued and outstanding shares of Lion in consideration for 0.20 common shares of AOC for each common share of Lion. It is anticipated that 17,233,636 AOC shares will be issued as consideration to acquire Lion. Lion is a joint venture partner of AOC in Kenya and Puntland (Somalia), and currently holds the following working interests; 33.3% in Block 9 (Kenya), 10% in Block 10BB (Kenya), and 15% in each of Dharoor Valley and Nugaal Valley (Puntland). In addition to the above properties, Lion estimated that it had cash, accounts receivable and investments in marketable securities with an approximate aggregate value of CAD$30 million at the date of signing the definitive agreement. A meeting of Lion shareholders, to approve the transaction, is scheduled to be held on June 8, 2011 and, assuming shareholder approval, the transaction is expected to close shortly thereafter.
• Subsequent to the end of the first quarter, Africa Oil entered into a letter of intent for the creation of a new Puntland focused oil exploration company. The new company will be created as a result of the transfer of AOC's interest in its oil and gas properties in Puntland (Somalia) to Denovo Capital Corp. ("Denovo") (the "Transaction"). Denovo is a capital pool company and intends for the Transaction to constitute the "Qualifying Transaction" of Denovo, as that term is defined in the policies of the TSX Venture Exchange. Under the terms of the letter of intent:
  • Africa Oil and Denovo will negotiate and enter into a definitive agreement pursuant to which Africa Oil will transfer to Denovo all of the issued and outstanding shares of its subsidiary holding companies (the "Puntland Subsidiaries") which hold participating interests in the Dharoor Valley and Nugaal Valley Production Sharing Agreements in Puntland (Somalia) (the "Puntland PSAs"). Africa Oil will receive, in consideration of the transfer, 27,777,778 common shares of Denovo. As a result of the Transaction, the Puntland Subsidiaries will become wholly owned subsidiaries of Denovo.
  • Africa Oil currently holds a 45% participating interest in the Puntland PSAs. Upon completion of the transaction for the acquisition of Lion Energy Corp, AOC's participating interest in the Puntland PSAs will be increased, directly or indirectly, to 60%. It is anticipated that the entire 60% participating interest will be transferred to Denovo.
  • The definitive agreement will provide for conditions precedent that are standard for a transaction of this nature, including receipt, by both AOC and Denovo, as required, of all regulatory, partner and third party approvals including TSX Venture Exchange approval. Denovo will also seek Denovo shareholder approval for a proposed 0.65 (new) for 1.00 (old) consolidation of its common shares and a change of name of the company, both of which are conditions precedent to completion of the transaction. It will be a condition precedent of the transaction that Africa Oil will have completed its proposed acquisition of Lion Energy Corp. and that Denovo will have completed a private placement of CAD$35 million comprised of 38,888,889 subscription receipts of Denovo sold at a post-consolidation price of CAD$0.90 per subscription receipt. Each subscription receipt will be exercised, upon completion of the transaction, into a unit of Denovo, comprised of one common share and one share purchase warrant (a "Denovo Warrant"). Each Denovo Warrant will entitle the holder to acquire an additional Denovo share for $1.50 for two years, subject to accelerated exercise provisions if the Denovo shares trade at greater than $2.00 for 10 consecutive trading days. It is anticipated that the definitive agreement will be entered into during the second quarter of 2011.
  • Africa Oil will acquire 11,111,111 subscription receipts in the private placement financing, for proceeds of CAD$10 million. At the conclusion of the Transaction and the private placement financing described above, AOC is anticipated hold approximately 55% (non-diluted) of the issued and outstanding common shares of Denovo. Upon completion of the Transaction it is expected that Denovo will meet the listing requirements of the Exchange for a Tier II Oil and Gas Issuer.
• Africa Oil ended the quarter in a strong financial position with cash of $77.8 million and working capital of $57.2 million as compared to cash of $76.1 million and working capital of $70.6 million at December 31, 2010. The Company's liquidity and capital resource position improved since year end primarily as the result of payments received upon the completion of farmout transactions. Working capital improved $24.4 million subsequent to the end of the quarter as the current portion of the warrant and convertible debenture obligations were settled in shares.
• Africa Oil currently has more than sufficient funds to meet its portion of the $163 million expenditure obligations ($43 million net) as per the active work programs approved by the Company's Board of Directors for 2011. During the first quarter, the Company spent $5.0 million of the 2011 Board of Directors approved $43 million in capital expenditures.
• As of the end of the first quarter, the Company has completed all previously announced farmout transactions with Tullow. Tullow has acquired a 50% interest in, and operatorship of, five of AOC's east African exploration blocks, comprised of four exploration blocks in Kenya and one exploration block in Ethiopia.
• The Company completed the amendment to their farmout agreement with Lion. The amendment reduced Lion's interest in Block 10BB to 10% (originally 20%) and eliminated its interest in Block 10A (originally 25%).
• The Company, together with its joint venture partner Lion, entered into the First Additional Exploration Phase under the Block 9 PSC in Kenya. As a result of the withdrawal of its two other joint venture partners, AOC will now hold a 66.7% working interest in the PSC and has been approved by the government as Operator of Block 9. Lion will hold the remaining 33.3%. The First Additional Exploration Phase commenced on December 31, 2010 and will expire on December 31, 2013 with a one well work commitment (minimum depth 1,500 meters).
• The Company continued to actively explore in East Africa:
  • In Block 10BB, the Company, together with its partners, is currently in the process of undertaking Full Tensor Gravity ("FTG") surveys and finalizing the prospect and lead inventory on Block 10BB. Drilling is scheduled to commence in the third quarter of 2011.
  • In Block 10A, the Company, together with its partners, has completed recording approximately 800km (gross) of 2D seismic. Seismic data acquired is currently being processed. The Company expects to drill a well on this block in the fourth quarter of 2011.
  • In Puntland, the Company has recently signed a letter of intent with a drilling contractor and plans to spud the first well in the Dharoor Block during the third quarter of 2011. A second well in the Dharoor Block is planned to commence following completion of the first exploration well.
  • In Block 9, the Company, together with its partners, has recently commenced 750km (gross) 2D seismic survey focused on the oil prone Kaisut sub-basin. The seismic crew has recently commenced recording and is anticipated to be completed during the third quarter of 2011.
  • The Company completed its seismic acquisition program in the Company's Ogaden area of Ethiopia, acquiring 500 km 2D seismic. The new data has been integrated with existing seismic to generate a series of new prospect maps. The Company continues to focus efforts on the large El Kuran prospect.

Keith Hill, President and CEO, commented, "Africa Oil continued to add highly prospective exploration acreage to its portfolio during the first quarter of 2011. Exploration activities continued throughout the quarter with FTG, 2D seismic and drilling preparations continuing on multiple blocks. The Company is very well financed, has a well diversified exploration portfolio and reputable joint venture partners. We are looking forward to the commencement of continuous drilling in 2011."

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Antrim Reports Financial, Operational Results for 1Q11

- Antrim Reports Financial, Operational Results for 1Q11

Wednesday, May 25, 2011
Antrim Energy Inc.

Antrim reported its financial and operational results for the three month period ended March 31, 2011.

All financial figures are unaudited and in US dollars unless otherwise noted

HIGHLIGHTS:

• Antrim to drill three wells in the UK North Sea
• Joint venture with Premier Oil on the Fyne Field proceeding
• Heads of Terms export agreement signed for Causeway oil production
• Average gas price in Argentina increased 12% to $2.08 per mcf
• Antrim raised Cdn $48.5 million from equity financing
• Current cash position of $76 million and no bank debt

In the first quarter 2011, average production in Argentina was 1,640 barrels of oil equivalent per day ("boepd") compared to 1,835 boepd in the first quarter 2010. The decline in production is attributable to the sale of the Puesto Guardian property in February 2010, as well as scheduled gas plant maintenance and service rig repairs in Tierra del Fuego.

Oil and gas revenue, net of royalties, was $2.4 million for the three months ended March 31, 2011 compared to $2.7 million for the same period in 2010. Net revenue decreased as a result of lower oil and gas sales partially offset by higher oil and gas prices received. Antrim generated cash flow from operations of $0.6 million for the three months ended March 31, 2011 compared to a cash flow deficiency of $0.2 million for the same period in 2010.

Antrim's average gas price for the first quarter of 2011 was $2.08 per mcf compared to $1.85 per mcf for the same period in 2010, a 12% increase. For the first quarter, oil prices averaged $55.00 per barrel compared to $46.54 per barrel for the same period in 2010, an 18% increase.

On April 5, 2011, Antrim announced that a Heads of Terms agreement had been signed for the export of Causeway crude oil to the Cormorant North production platform. The Cormorant North platform is operated by TAQA Bratani Limited and is located approximately 15 km west of the Causeway Field.

On April 4, 2011, Antrim announced that Premier Oil UK Limited ("Premier") had elected to drill the East Fyne well under the Earn-In Agreement ("EIA") previously announced on October 6, 2010. The well is an appraisal well designed to de-risk the eastern extent of the Fyne Field and is expected to be drilled before the end of 2011. Under the terms of the EIA, Antrim will be carried for all development expenses, including the East Fyne drilling costs, up to $50 million.

On March 28, 2011, Antrim announced that it had signed a Letter of Award ("LOA") to provide well project management and drilling services for two wells commencing in the third quarter of 2011.

On March 17, 2011, Antrim issued 48,191,700 common shares at a price of Cdn $1.07 per common share for gross proceeds of Cdn $51.6 million (net proceeds Cdn $48.5 million) which included 6,191,700 common shares issued to the underwriters pursuant to the 98.3% exercise of the over-allotment option. Net proceeds from the equity financing will be used for exploration of the Greater Fyne Area including the West Teal Prospect and either the Carra or Erne Prospects.

OVERVIEW OF OPERATIONS

United Kingdom

Fyne Field

On April 4, 2011, Antrim announced that Premier had elected to drill the East Fyne well in the Fyne Field in P077 Block 21/28a (the "Fyne License") under the

Chevron Reports $6.2B in 1Q11 Earnings

Chevron Reports $6.2B in 1Q11 Earnings

Friday, April 29, 2011
Chevron Corp.

Chevron reported earnings of $6.2 billion ($3.09 per share – diluted) for the first quarter 2011, compared with $4.6 billion ($2.27 per share – diluted) in the 2010 first quarter.

Sales and other operating revenues in the first quarter 2011 were $58 billion, up from $47 billion in the year-ago period, mainly due to higher prices for crude oil and refined products.

"Our first quarter financial performance was strong," said Chairman and CEO John Watson. "Current quarter earnings from upstream operations benefited from higher prices for crude oil, while downstream operations benefited from improved margins on refined petroleum products. We continue to operate safely, advance our major capital projects and restructure our downstream portfolio."

Watson continued, "We are aggressively investing in affordable supplies of new energy to meet the needs of a growing economy. Our combined capital outlays and investments during the quarter amounted to over $8 billion." The company completed the acquisition of Atlas Energy, Inc., which provides a premier position in the Marcellus Shale in southwestern Pennsylvania, and strengthens the company's global position in developing unconventional gas resources. The company continues to advance its major capital projects, including deepwater projects in the Gulf of Mexico and multiple LNG projects in Angola and Australia. The Gorgon Project in Australia continues on pace, and the company finalized agreements to bring another major participant into the Australian Wheatstone Project as both a natural gas supplier and equity participant.

Watson continued, "We recently received our first deepwater exploratory drilling permit in the Gulf of Mexico following the moratorium, and have resumed work on our Moccasin well that was suspended in June of last year. The resumption of deepwater drilling activity in the Gulf of Mexico is vital to improving our nation's energy security and supporting the economic recovery. We are working with the government to improve the efficiency and transparency of the permitting process."

"In the downstream business, we made further progress on streamlining our asset portfolio," Watson added. The company announced an agreement to sell its 220,000-barrels-per-day Pembroke Refinery and other downstream assets in the United Kingdom and Ireland for $730 million, plus additional proceeds estimated at $1 billion for the company's inventory and other working capital. The transaction is expected to close in the second-half 2011. The company also announced an agreement to sell its fuels, finished lubricants and aviation fuels businesses in Spain, and completed the sale of its fuels-marketing and aviation businesses in nine eastern Caribbean countries as well as its fuels-marketing businesses in two African countries.

Also in the first quarter, the company announced the final investment decision on a $1.4 billion project to construct a lubricants base oil manufacturing facility at the Pascagoula, Mississippi, refinery. The facility is designed to manufacture 25,000 barrels per day of premium base oil. Project completion is expected by year-end 2013.

The company purchased $750 million of its common stock in the first quarter 2011.

UPSTREAM

Worldwide net oil-equivalent production was 2.76 million barrels per day in the first quarter 2011, down from 2.78 million barrels per day in the 2010 first quarter. Production increases in Brazil, Nigeria, Thailand and Canada were more than offset by normal field declines, a one percent negative volume effect of higher prices on cost-recovery volumes and other contractual provisions as well as decreases due to weather- and maintenance-related downtime.

U.S. upstream earnings of $1.45 billion in the first quarter 2011 were up $293 million from a year earlier. The benefit of higher crude oil realizations was partly offset by decreased net oil-equivalent production and lower natural gas realizations.

The company's average sales price per barrel of crude oil and natural gas liquids was approximately $89 in the 2011 quarter, compared with $71 a year ago. The average sales price of natural gas was $4.04 per thousand cubic feet, down from $5.29 in last year's first quarter.

Net oil-equivalent production of 694,000 barrels per day in the first quarter 2011 was down 40,000 barrels per day, or about 5 percent, from a year earlier. The decrease in production was associated with normal field declines and weather- and maintenance-related downtime. Partially offsetting this decrease was new production at both Perdido in the Gulf of Mexico and from the acquisition of Atlas Energy, Inc. The net liquids component of oil-equivalent production decreased approximately 5 percent in the 2011 first quarter to 482,000 barrels per day, while net natural gas production declined about 8 percent to 1.27 billion cubic feet per day.

International upstream earnings of $4.53 billion increased $960 million from the first quarter 2010. Higher prices and sales volumes for crude oil increased earnings between quarters. This benefit was partly offset by higher operating expenses, including fuel, and tax items. Depreciation expenses were also higher between periods. Foreign currency effects decreased earnings by $116 million in the 2011 quarter, compared with a decrease of $102 million a year earlier.

The average sales price for crude oil and natural gas liquids in the 2011 quarter was $95 per barrel, compared with $70 a year earlier. The average price of natural gas was $5.03 per thousand cubic feet, up from $4.61 in last year's first quarter.

Net oil-equivalent production of 2.07 million barrels per day in the first quarter 2011 was up approximately 17,000 barrels per day from a year ago. The increase included 73,000 barrels per day associated with higher production in Brazil, Nigeria, Thailand and Canada. Partially offsetting this increase were a negative effect of higher prices on cost-recovery volumes and other contractual provisions as well as decreases due to weather- and maintenance-related downtime and normal field declines. The net liquids component of oil-equivalent production remained flat at 1.43 million barrels per day, while net natural gas production was up about 3 percent to 3.83 billion cubic feet per day.

CAPITAL AND EXPLORATORY EXPENDITURES

Capital and exploratory expenditures in the first quarter 2011 were $5.0 billion, compared with $4.4 billion in the first quarter 2010. The amounts included approximately $200 million in 2011 and $300 million in 2010 for the company's share of expenditures by affiliates, which did not require cash outlays by the company. Expenditures for upstream projects represented 92 percent of the companywide total in the first quarter 2011. These amounts exclude the acquisition of Atlas Energy, Inc.

Shell Reports $6.9B in 1Q11

Shell Reports $6.9B in 1Q11

Thursday, April 28, 2011
Royal Dutch Shell plc

Shell's first quarter 2011 earnings, on a current cost of supplies (CCS) basis, were $6.9 billion compared with $4.9 billion a year ago. Basic CCS earnings per share increased by 40% versus the same quarter a year ago.

• First quarter 2011 CCS earnings, excluding identified items, were $6.3 billion compared with $4.8 billion in the first quarter 2010, an increase of 30%. Basic CCS earnings per share, excluding identified items, increased by 29% versus the same quarter a year ago.
• Cash flow from operating activities for the first quarter 2011 was $8.6 billion. Excluding net working capital movements, cash flow from operating activities in the first quarter 2011 was $13.1 billion, compared with $10.4 billion in the same quarter last year.
• Net capital investment for the quarter was $1.7 billion. Total cash dividends paid to shareholders during the first quarter 2011 were $1.6 billion. Some 31.1 million Class A shares, equivalent to $1.1 billion, were issued under the Scrip Dividend Programme for the fourth quarter 2010.
• Gearing at the end of the first quarter 2011 was 14.0%.
• A first quarter 2011 dividend has been announced of $0.42 per ordinary share, unchanged from the US dollar dividend per share for the same period in 2010.

Royal Dutch Shell Chief Executive Officer Peter Voser commented, "Our first quarter 2011 earnings have risen from year-ago levels, driven by higher industry margins and our own operating performance.

"We continue to make good progress in implementing our strategy; improving near-term performance, delivering a new wave of production growth, and maturing the next generation of growth options for shareholders.

"We have announced new asset sales and cost savings programs, as part of Shell's focus on continuous improvement, to enhance our profitability and performance. Shell sold $3.2 billion of non-core positions, including tight gas assets in South Texas, in the quarter. Exits from non-core positions continue, with the announcements of further disposals, with proceeds mainly expected during 2011-2012. These additional disposals include refining capacity in the United Kingdom, and marketing positions in Chile and several African countries. This will enhance our competitive performance, and improve our customer and partner focus.

"Shell started commercial production at two new projects during the quarter; the 20 thousand boe/d Schoonebeek Enhanced Oil Recovery project in the Netherlands, and Qatargas 4 LNG, with a capacity of 7.8 million tonnes per year. Together, in an industry that needs sustained investment in diverse energy sources to meet customer demand, these projects are expected to add 90 thousand boe/d of peak production for Shell. These projects are part of a sequence of over 20 new Upstream start-ups planned for 2011-14, as we deliver on our plans for sustainable growth. The first gas flowed from Qatar's North Field into the new Pearl Gas-to-Liquids project during the quarter, where Shell's value-added technology is underpinning the development of the world's largest GTL facility.

"We continue to crystallize new investment options for medium-term growth, including the confirmation of the Geronggong discovery in deep water Brunei, and new LNG potential in the Wheatstone development in Australia, where our gas discoveries have been included in a new partner-operated LNG project, which is under study."

Voser concluded, "We are making good progress against our targets, to deliver a more competitive performance."

First quarter 2011 portfolio developments

Upstream

In Qatar, Shell and Qatargas announced delivery of the first cargo of LNG from the Qatargas 4 project (Shell share 30%). Production is expected to ramp up to 1.4 billion standard cubic feet of gas per day (scf/d), delivering 7.8 million tonnes per annum (mtpa) of LNG and 70 thousand barrels per day (b/d) of condensate and liquefied petroleum gas.

In the Netherlands, Shell produced its first oil from the Schoonebeek Enhanced Oil Recovery (EOR) project (Shell share 30%). The field is expected to ramp up to produce some 20 thousand barrels of oil equivalent per day (boe/d).

Shell sold non-core Upstream assets, with proceeds totalling $2.4 billion in the quarter. As previously announced, Shell completed the sale of a group of predominately mature tight gas fields in South Texas in the USA, producing some 200 million scf/d (Shell share), for some $1.8 billion. In addition, Shell sold various other non-core assets in Canada, Pakistan, the United Kingdom and the USA (combined Shell share of production of some 25 thousand boe/d) as well as exploration acreage in Colombia.

During the first quarter 2011, Shell confirmed a significant oil and gas discovery, Geronggong, drilled in 2010 in deep water Brunei.

Key features of the FIRST quarter 2011

• First quarter 2011 CCS earnings were $6,925 million, 41% higher than in the same quarter a year ago.
• First quarter 2011 CCS earnings excluding identified items, were $6,288 million compared with $4,822 million in the first quarter 2010.
• Basic CCS earnings per share increased by 40% versus the same quarter a year ago.
• Basic CCS earnings per share excluding identified items increased by 29% versus the same quarter a year ago.
• Cash flow from operating activities for the first quarter 2011 was $8.6 billion, compared with $4.8 billion in the same quarter last year. Excluding net working capital movements, cash flow from operating activities in the first quarter 2011 was $13.1 billion, compared with $10.4 billion in the same quarter last year.
• Total cash dividends paid to shareholders during the first quarter 2011 were $1.6 billion. During the first quarter 2011, some 31.1 million Class A shares, equivalent to $1.1 billion, were issued under the Scrip Dividend Program for the fourth quarter 2010.
• Net capital investment for the first quarter 2011 was $1.7 billion. Capital investment for the first quarter 2011 was $4.9 billion.
• Return on average capital employed (ROACE) at the end of the first quarter 2011, on a reported income basis, was 12.9%.
• Gearing was 14.0% at the end of the first quarter 2011 versus 17.1% at the end of the first quarter 2010.

 

Upstream

• Oil and gas production for the first quarter 2011 was 3,504 thousand boe/d, 3% lower than in the first quarter 2010. Production for the first quarter 2011 excluding the impact of divestments was in line with the same period last year.

Production in the first quarter 2011 increased by some 230 thousand boe/d from new field start-ups and the continuing ramp-up of fields, which more than offset the impact of field declines.

• LNG sales volumes of 4.42 million tonnes in the first quarter 2011 were 4% higher than in the same quarter a year ago.

First quarter Upstream earnings excluding identified items were $4,638 million compared with $4,305 million a year ago. Identified items were a net gain of $1,120 million, compared with a net gain of $110 million in the first quarter 2011.

Upstream earnings excluding identified items, compared with the first quarter 2010, reflected the effect of higher crude oil and natural gas realizations on revenues, higher dividends from an LNG venture and increased realized LNG prices. These items were partly offset by lower crude oil and natural gas production volumes, higher production taxes, lower trading contributions, and higher operating expenses, mainly related to the start-up of new projects.

Global liquids realizations were 32% higher than in the first quarter 2010. Global natural gas realizations were 11% higher than in the same quarter a year ago. Natural gas realizations in the Americas decreased by 25%, whereas natural gas realizations outside the Americas increased by 20%.

First quarter 2011 production was 3,504 thousand boe/d compared with 3,594 thousand boe/d a year ago. Crude oil production was down 3% and natural gas production decreased by 2% compared with the first quarter 2010. Excluding the impact of divestments, the first quarter 2011 production was in line with the same period last year.

New field start-ups and the continuing ramp-up of fields contributed to the production in the first quarter 2011 by some 230 thousand boe/d, in particular from the ramp-up of Gbaran Ubie in Nigeria, the start-up of the Qatargas 4 project in Qatar, and the ramp-up of the Jackpine Mine at the Athabasca Oil Sands Project in Canada, which more than offset the impact of field declines.

LNG sales volumes of 4.42 million tonnes were 4% higher than in the same quarter a year ago, reflecting higher volumes from Nigeria LNG and the Sakhalin II project as well as the successful start-up of the Qatargas 4 project.

CNOOC Ramps Up Production in 1Q11

CNOOC Ramps Up Production in 1Q11

Wednesday, April 27, 2011

CNOOC Ltd.

CNOOC announced its results for the first quarter of 2011.

During the period, the Company achieved a total net production of 85.2 million barrels of oil equivalent (BOE), representing an increase of 26.6% year-on-year (YoY).

For the first quarter of 2011, the Company made five new discoveries and successfully drilled six appraisal wells offshore China. Within the period, Jinzhou 25-1 project offshore China commenced production successfully. Other major projects were progressing as planned.

In the first quarter of 2011, the Company purchased a 33.3% undivided interest in Chesapeake's Niobrara project. In addition, the Company and Tullow Oil entered into agreements for the acquisition of its one-third interests in each of Exploration Areas 1, 2 and 3A in Uganda. The transaction is expected to be completed in the first half of 2011.

Benefiting from increased oil and gas production and higher realized prices, the total unaudited revenue of the Company amounted to approximately RMB48.51 billion for the first quarter of 2011, representing a significant increase of 59.1% YoY. During the period, the Company's average realized oil price rose 32.7% YoY to US $99.98 per barrel. The Company's average realized gas price was US $4.81 per thousand cubic feet, up 8.6% YoY.

For the first quarter of 2011, the Company's capital expenditure reached approximately RMB6.40 billion, representing an increase of 10.3% YoY.

Mr. Yang Hua, Chief Executive Officer of the Company commented, "We have recorded excellent first quarter results driven by our efficient operation and higher realized oil prices. Meanwhile, we have made great progress in overseas development, which will provide a strong support for our reserve and production growth in the future."

Ensco Sees Decrease in 1Q11 Profits

Ensco Sees Decrease in 1Q11 Profits

Thursday, April 21, 2011
Ensco plc

Ensco reported diluted earnings per share from continuing operations of $0.45 for first quarter 2011, compared to $1.12 per share in first quarter 2010. There were no discontinued operations in first quarter 2011. Earnings from discontinued operations in first quarter 2010 were $0.21 per share that included a $34 million pre-tax gain from the sale of two jackup rigs. Diluted earnings per share were $0.45 in first quarter 2011, compared to $1.33 per share in first quarter 2010.

Chairman, President and Chief Executive Officer Dan Rabun stated, "Our planned acquisition of Pride International is on track and we look forward to realizing the benefits of the combination for customers, employees and shareholders. We successfully completed our debt offering to fund the cash portion of the acquisition and have commenced integration planning to ensure a smooth transition."

Mr. Rabun added, "During the quarter we were honored to be ranked first among offshore drilling contractors in total customer satisfaction by EnergyPoint Research, an independent research firm that measures customer satisfaction in the global oilfield. We earned top scores in eleven separate categories. This recognition validates the commitment of our employees who serve our customers around the world each and every day."

Chief Operating Officer Bill Chadwick commented, "Ensco has a long-established strategy of high-grading our fleet by investing in new equipment. During the first quarter, we ordered two ultra-premium harsh environment jackups and secured options for two additional rigs of the same design with similar terms. The new jackup rigs will be capable of operating in water depths up to 400' and their unique design will significantly increase the area of operability in the Central North Sea and other harsh environment regions."

Mr. Chadwick added, "ENSCO 8503 successfully commenced drilling operations in French Guiana with Tullow under a sublet agreement and we contracted ENSCO 7500 with Petrobras in Brazil. Our rig crews in the U.S. Gulf of Mexico are performing extremely well and ENSCO 8501 has commenced operations under the first post-moratoria new deepwater well permit approved by regulators."

Revenues in first quarter 2011 were $362 million, compared to $449 million a year ago. Jackup segment revenues decreased $55 million and deepwater segment revenues declined $32 million.

Total operating expenses in first quarter 2011 increased 10% to $281 million, from $255 million last year. Contract drilling expense grew 5%. Depreciation expense rose by 15% driven by growth in the deepwater segment. General and administrative expense was $30 million, compared to $21 million in first quarter 2010, primarily due to increases in professional fees related to the Pride International acquisition.

Segment Highlights

Deepwater

Deepwater segment revenues were $98 million in first quarter 2011, down from $130 million a year ago. Revenue for ENSCO 7500 declined year to year since the rig was in a shipyard during first quarter 2011, but operated during first quarter 2010. This revenue decline was partially offset by the addition of new ultra-deepwater rigs to the fleet. In first quarter 2011, the average day rate was $304,000 and utilization was 77%, down from $411,000 and 99%, respectively, a year ago.

Contract drilling expense was $41 million in first quarter 2011, down from $45 million in first quarter 2010. The decrease was primarily due to lower expenses for ENSCO 7500 while in the shipyard, offset in part by the addition of ENSCO 8502 and ENSCO 8503 to the fleet.

Total Jackup Segments

Revenues from the jackup fleet totaled $263 million in first quarter 2011, down from $318 million a year ago. The decline was primarily due to a seven percentage point decrease in utilization to 72% and a $15,000 decline in the average day rate to $97,000. Contract drilling expense increased 10% year to year, mostly due to the acquisition of ENSCO 109 in July 2010.

Weatherford Swings to Profit in 1Q11

Weatherford Swings to Profit in 1Q11

Thursday, April 21, 2011
Weatherford International Ltd.

Weatherford reported first quarter 2011 income of $78 million, or $0.10 per diluted share, excluding an after-tax loss of $18 million. On a GAAP basis, our net income for the first quarter of 2011 was $59 million, or $0.08 per diluted share. The excluded after-tax loss is comprised of the following items:

• $9 million after-tax charge incurred in connection with the termination of a corporate consulting contract;
• $8 million in after-tax severance; and
• $1 million for investigation costs.

First quarter diluted earnings per share reflect an increase of $0.07 over the first quarter of 2010 diluted earnings per share of $0.03, before charges. Sequentially, the company's first quarter diluted earnings per share, before charges, were $0.06 lower than the fourth quarter of 2010.

First quarter revenues were $2,856 million, or 23 percent higher than the same period last year, and down two percent sequentially. North America revenues increased 53 percent compared to the first quarter of 2010 while international revenues were up four percent over the same period.

Segment operating income of $353 million improved 38 percent year-over-year but was down 17 percent sequentially. Margin performance was held back primarily due to political turmoil in the Middle East and North Africa, unfavorable weather conditions and an equity tax enacted in Colombia.

The company expects earnings per share before excluded items of approximately $0.15 to $0.17 in the second quarter of 2011.

North America

Revenue increased eight percent sequentially and 53 percent compared to the first quarter of 2010. Canadian activity was strong while colder winter temperatures subdued progress in the United States. Operating income of $284 million improved $22 million sequentially, and margins increased 20 basis points to 20.9 percent.

Middle East/North Africa/Asia

Revenue decreased $109 million sequentially, or 16 percent, as political disruptions in the Middle East and North Africa and challenging weather events in Australia and China took a heavy toll, accounting for approximately two-thirds of the drop. Operating income declined $38 million sequentially, on decrementals of 35 percent.

Europe/West Africa/FSU

Revenue declined $18 million, or three percent, sequentially but was up 12 percent compared to the first quarter of 2010. The winter effect in the North Sea, Russia and Caspian were primarily responsible for the decline. Operating income declined $27 million sequentially. Contributing to the severe decrementals were increased employee-related costs, as well as higher fuel and transportation costs in Russia.

Latin America

Revenue decreased eight percent, or $36 million, on a sequential basis and declined four percent, or $17 million, compared to the first quarter of 2010. Mexico and Venezuela led the declines. Operating income fell $32 million sequentially. Approximately $16 million of the decline was due to the charge for the Colombia equity tax. Adjusting for this effect, decrementals were approximately 44 percent.

Net Debt

Net debt for the quarter increased $547 million primarily as a result of an increase in working capital of $365 million. The increase in working capital was largely driven by North America and Latin America.

McMoRan Shines in 1Q11 Operations

McMoRan Shines in 1Q11 Operations

Monday, April 18, 2011
McMoRan Exploration Co.

McMoRan Exploration reported a net loss applicable to common stock of $27.6 million, $0.17 per share, for the first quarter of 2011 compared with a net loss applicable to common stock of $66.2 million, $0.74 per share, for the first quarter of 2010.

HIGHLIGHTS

• Shallow Water, Ultra-Deep Exploration & Development Activities:
  • Davy Jones
    • Offset appraisal well (Davy Jones No. 2) has been drilled to a true vertical depth (TVD) of 30,546 feet and McMoRan is preparing to evaluate the exploration objectives in the Cretaceous section below the identified Wilcox pay sands with wireline logs.In February 2011, preliminary log results from the Davy Jones No. 2 confirmed Wilcox sand continuity and the major structural features of the Davy Jones prospect.
    • Completion and flow testing of the Davy Jones discovery well (Davy Jones No. 1) expected by year-end 2011.
  • o Blackbeard East
    • Drilled to a TVD of 32,559 feet. Plan to deepen, pending resolution of mechanical issue.
    • Exploration results to date indicate updip potential in the Miocene (178 net feet of hydrocarbons) above 25,000 feet and downdip potential in the Oligocene (Frio) and Eocene (Sparta) below 30,000 feet.
  • Lafitte
    • Commenced drilling on October 3, 2010 and is drilling below 20,950 feet towards a proposed total depth of 29,950 feet.
• Shallow Water, Deep Gas Exploration & Development Activities:
  • o Laphroaig No. 2
    • Successful production test in April 2011 – gross rate of approximately 54 million cubic feet of natural gas per day (MMcf/d), approximately 16 MMcf/d net to McMoRan.
    • Production expected to commence in the second quarter of 2011 and results from the production test will be used to determine the optimal flow rate.
  • Hurricane Deep commenced drilling on January 20, 2011 and is drilling below 17,300 feet towards a proposed total depth of 21,700 feet.
  • Boudin exploratory well commenced drilling on February 27, 2011 and is drilling below 10,800 feet towards a proposed total depth of 23,100 feet.
  • Brazos A-23 development well commenced drilling on February 13, 2011, and is currently drilling below 14,100 feet with a planned total depth of 16,120 feet.
• First-quarter 2011 production averaged 195 MMcfe/d net to McMoRan, compared with 190 MMcfe/d in the first quarter of 2010.
• Average daily production for 2011 is expected to approximate 175 MMcfe/d net to McMoRan, including 190 MMcfe/d in second quarter 2011.
• Operating cash flows totaled $33.5 million for the first quarter of 2011, including working capital uses of $22.7 million and $22.2 million in abandonment expenditures.
• Capital expenditures totaled $96.5 million in the first quarter of 2011.
• Cash at March 31, 2011 totaled $836.7 million.

James R. Moffett and Richard Adkerson, McMoRan's Co-Chairmen, said, "The theme of McMoRan's 2010 annual report, 'Buried Treasures on the Shelf,' characterizes our deep drilling activities in the shallow waters of the Gulf of Mexico and highlights the significance of this developing trend. Results to date in our program indicate the potential for large structures, similar to large discoveries onshore South Louisiana and in the deepwater of the Gulf of Mexico. We have six wells currently drilling and an extensive prospect inventory, which provide opportunities for significant future production and reserve additions."

PRODUCTION AND DEVELOPMENT ACTIVITIES

Halliburton Sets Record Revenue of $5.3B in 1Q11

Halliburton Sets Record Revenue of $5.3B in 1Q11

Monday, April 18, 2011
Halliburton

Halliburton announced that net income for the first quarter of 2011 was $557 million, or $0.61 per diluted share, excluding the Libya charge of $46 million, after-tax, or $0.05 per diluted share, related primarily to reserving certain assets as a result of recent political sanctions. This charge does not include the operating losses incurred in Libya during the first quarter. Reported net income for the first quarter of 2011 was $511 million, or $0.56 per diluted share. This compares to net income for the first quarter of 2010 of $206 million, or $0.23 per diluted share. The first quarter of 2010 results were negatively impacted by $41 million, or $0.05 per diluted share, associated with the devaluation of the Venezuelan Bolívar Fuerte.

Halliburton's consolidated revenue in the first quarter of 2011 was $5.3 billion, compared to $3.8 billion in the first quarter of 2010. Consolidated operating income was $814 million in the first quarter of 2011, compared to $449 million in the first quarter of 2010. These increases were attributable to increased activity in United States land, as the unabated shift to unconventional oil and liquids-rich basins more than offset geopolitical issues in North Africa and the ongoing effects of the suspension of deepwater activity in the Gulf of Mexico.

"I am extremely pleased with our Q1 results, as overall revenue in the first quarter set a company record of $5.3 billion. North America delivered strong performance as margins progressed due to increased activity while Eastern Hemisphere operating income was significantly impacted by geopolitical events in North Africa, delays in Iraq, and typical seasonality," said Dave Lesar, chairman, president and chief executive officer.

"In North America, rig activity increased 2% from the prior quarter, while revenue and operating income grew 13% and 16%, respectively. This is a result of our continued strategic investment in oil and liquids-rich growth areas where service intensity continues to grow.

"Service intensity in oil and liquids-rich basins is increasing due to the demand for tailored solutions that require more complex fluid chemistry, longer laterals, higher proppant volumes, and strategic placement of frac stages. Going forward, we believe this structural shift will continue through 2011, further increasing demand for our services.

"We have been confident about the robust outlook in North America, and the prospect of higher activity in the coming quarters has made us more bullish in the strength of our business in 2011 and beyond. We believe our unique technologies and operational footprint will allow us to enhance our leadership position and provide opportunities for margin expansion.

"International revenue decreased 9% from the prior quarter and operating income declined by $252 million. The decline was primarily driven by approximately $110 million in weather related issues and the typical seasonal slowdowns of software and direct sales, approximately $105 million from political unrest and other disruptions in North Africa, including asset reserves for Libya, and approximately $20 million for project delays due to customers' logistical challenges in Iraq.

"We expect our Eastern Hemisphere margins to improve in the second quarter but they will continue to be impacted by the situation in Libya and by competitive pricing. As activity accelerates during the second half of the year, we anticipate margins will return to the levels seen in 2010. In North Africa, we expect that Libya will continue to be challenged while Egypt appears to be returning to prior activity levels. In Iraq, our delayed integrated drilling projects are now scheduled to begin in the second or third quarter of this year. We remain very optimistic about this market and expect to be profitable in 2011.

"We continue to commercialize core technologies, win key contracts, and make the necessary investments to ensure that we gain momentum as the industry enters the projected upcycle. We remain focused on global growth markets including deepwater, unconventional resources, and mature fields. We have made progress on this strategy, as evidenced by a number of recent contract awards. We believe our superior execution in these markets will deliver unique growth opportunities and position us to continue to deliver superior shareholder returns," concluded Lesar.

2011 First Quarter Results
Completion and Production

Completion and Production (C&P) revenue in the first quarter of 2011 was $3.2 billion, an increase of $1.2 billion, or 62%, from the first quarter of 2010. The continued growth in activity in United States land accounted for the majority of this increase.

C&P operating income in the first quarter of 2011 was $660 million, an increase of $422 million, or 177%, over the first quarter of 2010. Excluding the impact of the charge for Libya, C&P operating income improved $458 million, or 192%, from the prior year quarter. North America C&P operating income increased $477 million compared to the first quarter of 2010, primarily due to increased demand and improved pricing. Latin America C&P operating income increased $7 million, as lower activity in Mexico was offset by higher activity and improved pricing for production enhancement services in Argentina and higher cementing activity in Colombia. Europe/Africa/CIS C&P operating income was negatively impacted by activity disruptions caused by geopolitical issues in North Africa and project delays in Kazakhstan. Middle East/Asia C&P operating income increased $3 million as higher demand for completion tools and production enhancement services in Malaysia and China was partially offset by startup costs in Iraq.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the first quarter of 2011 was $2.1 billion, an increase of $313 million, or 17%, from the first quarter of 2010 due to higher activity in the Western Hemisphere and the commencement of work in Iraq.

D&E operating income in the first quarter of 2011 was $230 million, a decrease of $40 million, or 15%, from the first quarter of 2010. Excluding the impact of the charge for Libya, D&E operating income decreased $17 million, or 6%, from the prior year quarter. North America D&E operating income increased $25 million compared to the first quarter of 2010, as higher drilling activity in United States land offset the decline in the Gulf of Mexico. Latin America D&E operating income increased $23 million, primarily due to Mexico and Venezuela. Europe/Africa/CIS D&E operating income was negatively impacted due to activity disruptions caused by geopolitical issues in North Africa and lower drilling activity in the North Sea. Middle East/Asia D&E operating income decreased $19 million, primarily due to higher costs in Saudi Arabia and certain locations in Asia Pacific and startup costs in Iraq.

Corporate and Other

During the first quarter of 2011, Halliburton spent approximately $11 million on strategic projects aimed at improving Halliburton's business model, which include lowering service delivery costs in North America and repositioning supply chain, manufacturing, and technology infrastructure to support projected international growth. While the level of investment was tempered in the first quarter due to activity declines in the Eastern Hemisphere, Halliburton expects to continue funding this effort throughout 2011.

Significant Recent Events and Achievements

• Halliburton has the broadest portfolio of high-pressure and high-temperature (HP/HT) tools in the industry. Recent contract wins which expand Halliburton's market position in offshore HP/HT environments include the following:
  • Halliburton was awarded several contracts by Statoil to provide services for two HP/HT fields offshore Norway. Halliburton estimates that these significant multi-year awards have the potential to exceed more than $200 million in value. Under these contracts, Halliburton will provide directional drilling, logging-while-drilling, cementing, drilling fluids, and completion equipment and services. Drilling is scheduled to begin in the third quarter of 2011.
  • Halliburton was awarded several contracts for equipment and services on two offshore blocks in the South China Sea. This is the first ultra-HP/HT oil and gas drilling project in Asia. This project will push existing technology limits, with required equipment specifications at 250°C and 15,000 psi. Under these contracts, Halliburton will provide several ultra-HP/HT technologies for drilling, completions, cementing, and testing, including two industry-first technologies. The exploration campaign calls for two firm wells and one potential well. Drilling is scheduled to start in the third quarter of 2011.
  • Halliburton was awarded a $120 million, three-year contract extension by Chevron Thailand for directional drilling, measurement-while-drilling, and logging-while-drilling services for its ongoing offshore developments in the Gulf of Thailand. The majority of the wells that Halliburton's Sperry Drilling product service line will service are high temperature wells that exceed 150°C (302°F), with some exceeding 200°C (392°F).
• Halliburton has been awarded a contract by Statoil to provide integrated drilling and well services in offshore Norway with options up to eight years in duration with extended scope and activity. Under the first phase of the contract, Halliburton will provide directional drilling services, logging- and measurement-while-drilling services, surface data logging, drill bits, hole enlargement and coring services, cementing and pumping services, drilling and completion fluids, completion services – including multilateral junctions, SmartWell® completion systems and VersaFlex® expandable liner hangers – and project management. This is the first time Statoil has awarded an integrated well services contract in Norway, which includes project management by Halliburton, with the intent to increase efficiency and reduce development costs.
• Halliburton was awarded a contract by Exxon Mobil Iraq Limited to provide drilling services for 15 wells in the West Qurna (Phase I) oil field located in southern Iraq. This is in addition to work awarded in this field by the same customer in 2010. Under this contract, Halliburton will provide a complete range of well construction services, utilizing three drilling rigs to deliver the wells.
• As reported in the Oil and Gas Journal, Halliburton received the No. 1 overall ranking and was named the most sustainable oil/gas full service engineering company by Management and Excellence, a sustainability rating firm. Halliburton earned an AAA ranking through demonstrating quantifiable performance and risk reduction in areas such as energy consumption, earnings per share, and debt. Further, Halliburton was named "Best in Class" among all oil and gas service companies in corporate governance, sustainable management, emissions reductions, and executive remuneration effectiveness. Halliburton's score registered at 90.4 out of 100 possible points, a 26% increase from the last survey performed in 2009.
• Halliburton announced its plan to build a 200,000-square-foot manufacturing facility in Lafayette, Louisiana. The facility is expected to produce complex machined components for oilfield service operations with state-of-the-art manufacturing equipment, and will support the fast-growing needs of the Western Hemisphere oil and gas industry, including the shale markets. Construction on the new facility is scheduled to begin by July 2011 and to be completed in early 2012.
• Landmark Software and Services, a Halliburton product service line, announced that leading Brazilian exploration and production company, OGX Oil and Gas, will migrate all users of geophysical and geological software applications to the Landmark DecisionSpace® Desktop system. OGX explored and tested the capabilities of the DecisionSpace Desktop technology as part of a Landmark pre-release program launched in early 2010. OGX determined that the software suite greatly enhanced its workflow capabilities with significant improvements in productivity.
• Halliburton announced that it has integrated the drilling capabilities of several product service lines to deliver significant drilling performance gains and save operators millions of dollars in well costs. Halliburton's Optimized Drilling Performance™ approach includes the delivery of a proprietary engineering workflow, an integrated suite of drilling applications that sit on the DecisionSpace® InSite® global infrastructure, and localized, cross-functional teams. Optimized Drilling Performance has already improved production rates and saved thousands of days in drilling time in all of the major basins globally, both in deepwater and on land.

PetroLatina Ramps Production in 1Q11

PetroLatina Ramps Production in 1Q11

Thursday, April 14, 2011
PetroLatina Energy plc

PetroLatina announced a production update in respect of the first quarter of 2011.

The Company achieved total gross production from its Tisquirama, La Paloma and Midas license blocks located in the Middle Magdelana Valley, Colombia, in the three months to 31 March 2011 of 193,790 barrels of oil (bbls) (2010 equivalent period: 155,323 bbls) and total net production of 90,536 bbls (2010 equivalent period: 72,465 bbls) at an average gross production rate of 2,154 barrels of oil per day (bopd) (2010 equivalent period: 1,726 bopd) and an average net production rate of 1,006 bopd (2010 equivalent period: 805 bopd).

As announced previously, the Serafin-1 gas well located in the Company's Tisquirama license block is currently on an extended 6 month production test at a flow rate of 5.5 MMscf/d of gas and a well pressure of 1,850 pounds per square inch (psi). The well has, during the test period to date, achieved total gross production of 95.98 MMscf of gas (15,997 barrels of oil equivalent) and total net production of 44.15MMscf (7,359 boe). Gas produced during the 6 month extended test period is being sold to Ecopetrol S.A. at 90% of the regulated price for Texaco for Barranca-Ballena's gas (as regulated by CREG, the Regulatory Commission of Energy and Gas of Colombia). The regulated price is currently $4.2562/million British thermal unit (BTU). The Serafin-1 well is jointly owned by PetroLatina (50%) and PetroSantander Corporation (50%).

The Company expects to release the results of an updated independent reserves report commissioned from Ryder Scott Company, L.P. and various geological and petrophysical studies during the current quarter.

Juan Carlos Rodriguez, Chief Executive of PetroLatina, commented, "Our first quarter average production rates and the initial results to date from the Serafin-1 gas well have been very encouraging and in line with our expectations. We continue to pursue our strategy of seeking to increase production and reserves and expect to resume our development drilling in a more effective and low risk manner later this year."

Harvest Natural Resources Updates 1Q11 Ops

Harvest Natural Resources Updates 1Q11 Ops

Friday, April 08, 2011

Harvest Natural Resources Ltd.

Harvest Natural Resources provided an operational update of its first quarter domestic and international exploration and production activity.

• Venezuela
  • During the first three months of 2011, Petrodelta drilled and completed four wells and produced approximately 2.6 million barrels of oil (MMBO) for a daily average of approximately 28,700 barrels of oil per day (BOPD), an increase of 32 percent over the same period in 2010;
  • Petrodelta's current production rate is approximately 29,800 BOPD;
  • Petrodelta's first well in the untested Isleno field, ILM-8, was drilled and completed in March 2011 and was tested at 1,800 BOPD. Based on this successful test, Petrodelta will likely drill several additional wells in the Isleno field this year.
• United States
  • On March 22, 2011, Harvest announced it entered into a definitive agreement with an affiliate of Newfield Exploration Company to sell all of the Company's oil and gas assets in Utah's Uinta Basin for $215 million in cash. The sale has an effective date of March 1, 2011, and closing is expected to occur in May 2011.
• Indonesia
  • On January 5, 2011, Harvest exercised its right of first refusal to acquire an additional 10 percent equity in the Budong Budong Block PSC bringing its working interest in the block to 64.4 percent.
  • The Lariang LG-1 well was spud on January 6, 2011 in the Budong Budong Block.
  • The well was drilled to a total depth of 5,311 feet and encountered multiple hydrocarbon shows and overpressure in Miocene formations requiring up to 16.5 pound per gallon mud. After encountering difficulty in controlling the well due to high pressures, the well was plugged and abandoned on April 6, 2011.
  • The test confirmed the presence of hydrocarbons as well as the existence of an effective trap and seal in the Lariang sub-basin.
  • The rig is preparing to move to the KD-1 location in the adjacent Karama sub-basin.
• Gabon
  • The Company plans to spud the first exploration well, the Ruche Marin-A, in late April 2011. Harvest is the operator and will drill the exploration well using Transocean's Sedneth 701 semi-submersible drilling unit.
• Oman
  • Well planning and procurement of long lead items is planned for the second quarter of 2011 in anticipation of spudding the first of the two exploratory wells in late 2011.

Harvest President and Chief Executive Officer, James A. Edmiston, said, "As expected, 2011 is shaping up to be an exciting year with multiple catalysts for growth to be tested in the coming months. Already, we have seen Petrodelta initiate first production from the Isleno field giving our Venezuelan business another field development opportunity in addition to the Temblador and El Salto field developments."

Edmiston continued, "We remain encouraged by our initial drilling on the Budong Budong Block in Indonesia. Although we were not able to test the primary Eocene target due to high formation pressure and safety reasons, the well confirmed the existence of hydrocarbons within the secondary Miocene target and the effectiveness of the trap and seal given the high pressure gradients. We are now turning our attention to the KD-l well, 50 miles from the LG location, which will test the larger of the two initial structures on the Budong Budong Block to be tested. In Gabon, we will spud the Ruche Marin well later this month with results expected before the end of the second quarter of 2011. In Oman, we are getting underway with well planning and procurement to allow for drilling late this year."

In closing Edmiston added, "The sale of our Utah properties provides the Company with the capital to reduce debt, strengthen its balance sheet and fully fund its growth activities well beyond 2011. This year's exploration program combined with our ongoing strategic evaluation offers our shareholders multiple catalysts for growth throughout the year."

 

VENEZUELA

During the three months ended March 31, 2011, Petrodelta produced approximately 2.6 MMBO for a daily average of 28,700 BOPD, an increase of 32 percent over the same period in 2010 and an increase of 9 percent over the previous quarter. Petrodelta also sold 0.5 billion cubic feet (BCF) of natural gas for a daily average of 5.2 million cubic feet per day (MMCFD), a decrease of 29 percent over the same period in 2010 and an increase of 13 percent over the previous quarter.

During the first quarter of 2011, Petrodelta drilled and completed four wells, three of which were development wells drilled in the Uracoa, El Salto and Temblador fields, and the fourth was the first appraisal well drilled in the untested Isleno field. Currently, Petrodelta is operating two drilling rigs and one workover rig and is continuing with infrastructure enhancement projects in El Salto and Temblador.

Petrodelta's first well in the untested Isleno field, ILM-8, was drilled and completed in mid-March 2011 and was tested at 1,800 BOPD with 2 percent water. The horizontal well was completed in the Lower Oficina Sand of the northern fault block. With an oil gravity of 15.5 API, this crude is of similar quality to that being produced in the Uracoa field, just seven kilometers to the north.

The current production of approximately 1,600 BOPD is being trucked to the Uracoa field, but plans are underway to build a pipeline connection between Isleno and the UM2 main production facility at Uracoa field.

Petrodelta's production target for the year 2011 is projected to be approximately 36,000 BOPD. The 2011 Petrodelta capital budget is expected to be approximately $224 million with a significant portion of that total related to infrastructure costs to support the further development of the Temblador and El Salto fields. This program should be self-funding at a WTI oil price of $70 per barrel in 2011. Petrodelta expects to drill 28 oil wells, two water injector wells and one gas injector well, and the drilling program includes utilizing two rigs to drill both development and appraisal wells for both increasing production capacity and appraising the substantial resource base.

 

UNITED STATES- Antelope Project - Utah

On March 22, 2011, Harvest announced it has entered into a definitive agreement with an affiliate of Newfield Exploration Company to sell all of the Company's oil and gas assets in Utah's Uinta Basin for $215 million in cash. The sale has an effective date of March 1, 2011.

The net proceeds from the sale are estimated to be $205 million after deduction for transaction related costs. Closing is expected to occur in May 2011 and the final sales price is subject to customary adjustments at closing. Land related due diligence and operational transition activities are in progress and on schedule.

The oil and gas assets are located in Harvest's Antelope project area in the Uinta Basin of Utah and consist of approximately 69,000 gross acres (47,600 net acres), seven operated oil wells and 15 non-operated oil wells. Harvest owns a working interest of approximately 70 percent in the Uinta assets. The transaction includes wells operated by both Harvest and Newfield.

This transaction is part of the Company's ongoing process of exploring strategic alternatives announced in September of 2010.

 

EXPLORATION DRILLING ACTIVITIES

Budong Budong PSC - Indonesia

The Lariang LG-1 well, the first of two planned exploration wells, was spud on January 6, 2011 in the Budong Budong Block, West Sulawesi. The well has been drilled to a depth of 5,311 feet and has encountered multiple oil and gas shows within the secondary Miocene objective. Wireline logs and samples of reservoir fluids have confirmed the presence of hydrocarbons, trap and seal thus greatly de-risking the exploration potential of the license. The high formation pressures and control difficulties required the use of more casing strings at shallower depths than were originally planned. At a depth of 5,300 feet, losses of heavy drilling mud into the formation were encountered which, when coupled with the very high formation pressures, led to the decision to discontinue operations and plug and abandon the well for safety reasons. The primary Eocene targets had not yet been reached, as the well was planned for a total measured depth of approximately 7,200 feet.

The drilling rig is currently mobilizing to drill the second exploratory well on the block, the Karama KD-1 prospect, which is located approximately 50 miles south of the LG-1 well.

The KD-1 well will be drilled to a total depth of about 8,100 feet.

 

Dussafu Project - Gabon ("Dussafu PSC")

The Dussafu PSC partners and the Republic of Gabon, represented by the Ministry of Mines, Energy, Petroleum and Hydraulic Resources, entered into the second exploration phase of the Dussafu PSC with an effective date of May 28, 2007. It has been agreed that the second three-year exploration phase will be extended until May 27, 2012, at which time the partners can elect to enter a third exploration phase. Harvest expects to spud the Ruche Marin-A exploration well late April 2011 utilizing the Transocean Sedneth 701 semi-submersible drilling unit on a one well contract. The Company will take possession of the rig mid-April 2011. All critical materials required for drilling the well have been purchased and received.
Harvest has established an operational and logistics base in Port Gentil, Gabon.

The Ruche Marin-A well will be drilled in a water depth of 380 feet to test multiple stacked pre-salt targets to a planned total measured depth of approximately 10,100 feet.

 

Block 64 Gas License - Oman ("Block 64 EPSA")

Block 64 EPSA, also known as Al Ghubar or Qarn Alam, is a newly-created block designated for exploration and production of non-associated gas and condensate which the Oman Ministry of Oil and Gas carved out of the Block 6 Concession operated by Petroleum Development of Oman ("PDO"). The 955,600 acre block is located in the gas and condensate rich Ghaba Salt Basin in close proximity to the Barik, Saih Rawl and Saih Nihayda gas and condensate fields. Harvest has an obligation to drill two wells over a three-year period ending in May 2012 with a funding commitment of $22.0 million. To date, multiple existing 3-D seismic databases have been reprocessed and integrated, and detailed geological and geophysical interpretation is underway to refine the prospects and define drilling locations. Well planning and procurement of long lead items is expected to begin in the second quarter of 2011 in anticipation of spudding the first of the two exploratory wells in late 2011.