Lukoil Reports $3.25B in 2Q Earnings, Up 67%

- Lukoil Reports $3.25B in 2Q Earnings, Up 67%

Wednesday, August 31, 2011
OAO Lukoil Holdings

LUKOIL has published consolidated US GAAP financial statements for the second quarter and first half of 2011.

The Company's net income was $6.768 billion in the first half of 2011, which is 69.1% higher y-o-y, including $3.251 billion in the second quarter. EBITDA in the first half of 2011 was $10.688 billion, which is 43.8% higher y-o-y. Sales revenues were $64.538 billion (+29.7% y-o-y). Positive dynamics of our financial results was mainly due to increase in hydrocarbon prices and refining margin in the first half of 2011 compared to the respective period of 2010.

Capital expenditures including non-cash transactions in the first half of 2011 were $3.6 billion, which is 13.3% higher y-o-y. The Company's strict financial discipline helped to generate high free cash flow which reached $4,714 million in the first half of 2011 compared to $3,127 million in the first half of 2010.

In the first half of 2011, lifting costs per boe of production were $4.72, which is 17.4% higher y-o-y. The growth was mainly due to the real ruble appreciation, which was 15.0% in the first half of 2011.

In the first half of 2011, LUKOIL Group total hydrocarbon production available for sale reached 2,162 th. boe per day, which is a 4.4% decrease y-o-y.

In the first half of 2011 throughputs at the Company's refineries (including its share in crude oil and petroleum product throughput at the ISAB and TRN refining complexes) decreased by 1.2% y-o-y and reached 32.03 MM tonnes. Throughputs at the Company's refineries in Russia increased by 1.5% y-o-y, throughputs at the Company's international refineries decreased by 6.9% y-o-y due to shutdown of the Odessa Refinery because of unfavorable economic conditions in the first half of 2011.

Measures aimed at higher efficiency and cost control allowed the Company to generate strong free cash flow and increase net income.

Also, an extended meeting of the OAO LUKOIL Board of Directors was held on Wednesday. The meeting considered the Company's production and financial performance and the investment program implementation results in the first half of 2011.

In his address to the meeting, LUKOIL President Vagit Alekperov specified the need to develop a Hydrocarbon Production Stabilization Program and to rigorously implement it.

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Seadrill Ltd Reported Q2 Results

- Seadrill Ltd Reported Q2 Results



Aug 25, 2011

Seadrill Limited (NASDAQ:SDRL) reported Q2 EPS of $1.34, vs. consensus estimates of $0.69 per share. Revenues for the quarter rose 6.6% year-over-year to $995 million, missing consensus estimates of $1.01 billion.

Seadrill has a potential upside of 23.8% based on a current price of $31.04 and an average consensus analyst price target of $38.42.

Seadrill is currently below its 50-day moving average (MA) of $33.03 and below its 200-day MA of $34.15.

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- Seadrill 2Q Earnings Climb on Demand

Seadrill 2Q Earnings Climb on Demand

- Seadrill 2Q Earnings Climb on Demand

Thursday, August 25, 2011
Seadrill Ltd.

Seadrill reports second quarter 2011 results:

Highlights

• Seadrill generates second quarter 2011 EBITDA) of US $579 million
• Seadrill reports second quarter 2011 net income of US $645 million and earnings per share of US $1.34
• Seadrill distributes quarterly cash dividend of US $0.75 per share
• Seadrill records a US $416 million gain on realization of the Pride International Inc. shareholding ("Pride")
• Seadrill exercised its right to call and retire the US $750 million 2012 convertible bond
• Seadrill ordered a new ultra-deepwater drillship for an all-in cost of US $600 million
• Seadrill ordered a new tender barge rig for a total consideration of US $115 million and a new semi-tender rig for an all-in cost of US $200 million
• Seadrill agreed to sell the jackup rig West Juno for a total consideration of US $248.5 million
• Seadrill agreed to sell the jackup rig West Janus for a total consideration of US $73 million

Subsequent events

• Seadrill acquired a 33.75 percent ownership stake in Asia Offshore Drilling Ltd through a private placement
• Seadrill's majority owned subsidiary, North Atlantic Drilling Ltd, takes delivery of the harsh environment jackup rig West Elara
• Seadrill completed the divestment of the jackup rig West Juno for US $248.5 million in early July
• Seadrill secures two three-year contracts for two jackups with a US $348 million revenue potential

Second quarter 2011 results

Seadrill reported consolidated revenues for the first quarter 2011 of US $995 million compared to US $1.11 billion for the first quarter 2011. The reduction is due to de-consolidation of Archer Limited from end of February.

Operating profit for the first quarter was US $430 million in line with the preceding quarter.

Operating profit from the Floaters was US $341 million as compared to an operating profit of US $312 million in the first quarter 2011 due to improved average economical utilization rate.

Operating profit from the Jackup Rigs amounted to US $49 million as compared to an operating profit of US $64 million in the first quarter 2011 as result of lower average economic utilization rate.

Operating profit from the Tender Rigs was US $40 million, down from US $49 million in the first quarter 2011 due to the retirement of the tender rig barge T8.

Net financial items for the quarter amounted to a gain of US $264 million compared to a gain of US $441 million in the previous quarter. The second quarter included a gain on realization of our Pride position of US $416 million whereas the first quarter benefited from a US $477 million gain in connection with the deconsolidation of Archer Limited formerly known as Seawell Limited. Loss on derivative financial instruments was US $90 million compared to a US $41 million gain in the first quarter.

Income taxes for the second quarter were US $50 million compared to US $48 million in the first quarter.

Net income for the quarter was US $645 million and basic earnings per share of US $1.35.

Chief Executive Officer in Seadrill Management AS Alf C Thorkildsen commented, "Our second quarter results reflect solid operation and performance for our offshore drilling rigs. We are in particular satisfied with the improved utilization rate for our floaters that was up from 94% to 97%. Based on a sound outlook for our industry and our solid contract portfolio we continue to be optimistic about our future earnings potential and have resolved to uphold a cash dividend of US $0.75 per share for the quarter."

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Northern Offshore Reports 2Q Earnings

- Northern Offshore Reports 2Q Earnings

Thursday, August 18, 2011
Northern Offshore Ltd.

Northern Offshore reported net income for the three months ended June 30, 2011 of US $4.6 million, or US $0.03 per diluted share. This compares to a net loss of US $0.5 million, or US $0.0 per diluted share for the second quarter of 2010. Revenues for the second quarter of 2011 were US $49.9 million compared to US $48.9 million for the second quarter of 2010.

For the six months ended June 30, 2011, net income was US $7.0 million or US $0.05 per diluted share. For the same period in the prior year, net income was US $22.7 million or US $0.15 per diluted share. Revenues for the first six months of 2011 were US $90.4 million compared to US $116.9 million for the same period in 2010.

The company's directors have declared a dividend of US $0.03 per share, or approximately US $5.0 million. Shareholders of record with the VPS on August 31, 2011 will be entitled to receive the dividend, which will be paid on or around September 15, 2011. The shares of the company will be trading ex-dividend from August 29, 2011.

Second Quarter Analysis

Revenues for the three months ended June 30, 2011 were slightly higher when compared to the same period of 2010, primarily due to higher utilization of the jackup fleet, partially offset by lower utilization of the drillship Energy Searcher.

Drilling and production expenses for the three months ended June 30, 2011 were US $2.8 million lower than the same period last year primarily due to lower operating expenses for the drillship Energy Searcher and reduced idle costs for the jackup Energy Exerter. This decrease was partially offset by higher operating expenses related to the contract start-up of the jackups Energy Enhancer and Energy Endeavour. Depreciation expense for the three months ended June 30, 2011 was US $6.5 million lower than the same period in 2010 due to the decrease in depreciable basis of the jackup fleet attributable to the asset impairment charge taken in December 2010. General and administrative expenses were lower than the same period in 2010 due to lower compensation costs.

Interest expense was US $1.3 million lower than in the second quarter of 2010 primarily due to lower outstanding loan balance. Amortization of deferred financing fees was higher than the same period last year primarily due to the acceleration of the amortization of the deferred financing fees relating to the early repayment and cancellation of the US $120 million Revolving Credit Facility on May 31, 2011. Income tax expense was US $6.4 million higher than the same period last year primarily due to a higher annualized effective tax rate, partially offset by a reduction in the accrued withholding tax rate for operations in India.

At June 30, 2011, the Revolving Credit Facility balance was US $32.0 million and the cash balance was US $35.6 million, of which approximately US $28.2 million is unrestricted, leaving the company a net cash position at the end of the period of US $3.6 million.

Updates

The company is pleased to report that the semisubmersible Energy Driller was recently both technically and commercially qualified in a tender process requesting three one-thousand foot depth rated floating drilling rigs for a program offshore India. Although an award has yet to be made, the company is optimistic that the rig should receive a three-year contract due to the qualifying bid and anticipates receiving a letter of award in the next four to six weeks.

The floating production facility Northern Producer remains under contract with EnQuest. The unit continues producing in the North Sea with further field development and tie-back ongoing. The tariff from the facility for the second quarter 2011 averaged US $134 thousand per day on average per-day production of 22.4 thousand barrels.

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Aker Solutions 2Q Earnings Lower Than Expected

- Aker Solutions 2Q Earnings Lower Than Expected

Friday, August 12, 2011
Aker Solutions

Aker Solutions' operating revenues in the second quarter of 2011 were NOK 7.8 billion. Earnings before interest, tax, depreciation and amortization amounted to NOK 636 million. Order intake in the quarter was NOK 14.3 billion.

"We have a strong order intake which reflects high tendering and activity levels across all business segments. In fact, our order backlog has increased 19 percent since the beginning of the year. This is in line with our long term growth plan. However, this quarter has also provided us with some reminders about the importance of further improving our operational performance," said Øyvind Eriksen, executive chairman of Aker Solutions.

Second quarter consolidated revenues was NOK 7 809 million, compared with NOK 8 096 million in the same period in 2010. EBITDA for the second quarter of 2011 was NOK 636 million (8.1 percent EBITDA margin), compared to NOK 853 million one year ago. Profits in the quarter were negatively affected by execution challenges and the final arbitration ruling on Blind Faith.

"In the second quarter quality costs related to execution issues in Brazil alone amounted to NOK 130 million in our Subsea and Process Systems businesses. With quality and customer satisfaction as two of our top priorities, this is obviously disappointing," Eriksen said.

Order intake in the second quarter was NOK 14.3 billion. At the end of the second quarter Aker Solutions' order backlog was NOK 46 billion - an increase of NOK 5.5 billion from the previous quarter.

During the second quarter Aker Solutions concluded the structural changes outlined at the company's capital markets day in December 2010. The final step was the demerger and separation from specialized EPC contractor Kværner ASA.

"Today Aker Solutions is a pure oil service player focusing on engineering, technology, products and field-life solutions. We have a strong cash position fueled by solid earnings and gains from strategic divestments. We will convert our financial strength to capacity with the aim of facilitating further growth. However, we will also ramp up our efforts of building a stronger quality culture to further improve our day-to-day operations," said Øyvind Eriksen.

"Our growth plans are ambitious and we need qualified people to meet these objectives. In the first half of 2011 we have hired almost 1 200 new colleagues worldwide. I am pleased to see that so many new colleagues share our technology vision and company values," adds Eriksen.

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OGX Intensifies Appraisal Campaign; Posts 2Q Loss

- OGX Intensifies Appraisal Campaign; Posts 2Q Loss

Thursday, August 11, 2011
OGX S.A.

OGX announced its results for the second quarter of 2011. The financial and operating data is presented on a consolidated basis in accordance with the international financial reporting standards (IFRS) issued by the International Accounting Standards Board (IASB), and in Reais, except where otherwise indicated.

"We remain focused on executing our business plan, which has advanced significantly as we have intensified our appraisal campaign and performed additional drill-stem tests, all of which are essential in converting our resources into reserves. With the recent bond issuance as well as the significant progress made in the past three months, we are not only technically but financially prepared to proceed towards production," commented Mr. Paulo Mendonça, General Executive Officer and Exploration Officer for OGX.

From the perspective of our drilling campaign, highlights of the second quarter include the drilling of 11 appraisal wells in the Campos Basin and 2 in the Parnaíba Basin, two successful drill-stem tests performed in horizontal wells in the Campos Basin and the declaration of commerciality for two fields in the Parnaíba basin, confirming our projections and attesting to the excellent execution of our business plan. In addition, we drilled wildcat wells that continue to demonstrate the great potential of our portfolio.

With respect to the commencement of production, important steps have been achieved in the past three months including the arrival of the newly built vessel Aker Wayfarer which will be used throughout the system installation, as well as the final stage of commissioning for the FPSO OSX -1. In addition, the construction of the turret, a disconnectable buoy which is part of the OSX-1 mooring system, has been completed and is already in the mobilization process to Brazil.

Second Quarter Highlights and Subsequent Events:

• Intensification of the appraisal campaign in Waimea (OGX-50D, OGX-53D and OGX-55HP), Waikiki (OGX-41D, OGX-44HP and OGX-45D), Pipeline (OGX-39HP, OGX-40D, OGX-42D and OGX-48D), Illimani (OGX-43D) and Fuji (OGX-54D and OGX-56D) accumulations located in the Campos Basin;
• Declaration of commerciality for the California and Fazenda São José accumulations in the Parnaíba Basin, for which the newly designations are Gavião Azul and Gavião Real Fields;
• Performance of drill-stem test for the first horizontal well (OGX-44HP) in the Waikiki accumulation, with excellent results;
• Important discoveries in the Parnaíba basin through the drilling of wells OGX-38 and OGX-46D;
• Significant discoveries in the Santos basin through the drilling of wells OGX-30 and OGX-47;
• Performance of a drill-stem test for the first horizontal well (OGX-39HP) in the Pipeline accumulation with very good results;
• Initiated drilling of well OGX-55HP, the second horizontal well in the Waimea accumulation;
• Raised US $2.563 billion through a bond issuance; and
• Announcement of the Company's business plan for discoveries in the Campos and Parnaíba Basins.

Campos Basin

Among the activities performed in the second quarter of 2011 in Campos Basin we can highlight the intensification of the successful appraisal campaign, the results of drill-stem tests in Waikiki and Pipeline accumulations, the drilling of wildcat wells, and the arrival and preparation of equipment for the start-up of production. On June 6, we formally announced our business plan relating to discoveries made in the basin.

During the quarter we intensified our appraisal campaign in the Waimea, Waikiki, Pipeline, Illimani and Fuji accumulations. In Waimea, we concluded the drilling of well OGX-50D encountering a hydrocarbon zone with 52 meters of net pay in the Albian section. In addition, we initiated the drilling of wells OGX-53D and OGX-55HP, which are still ongoing. In the Waikiki accumulation, we have concluded the OGX-41D, OGX-44HP and OGX-45D wells. The directional well OGX-41D found a net pay of 92 meters in the Albian section and was the pilot well for OGX-44HP, which was horizontally drilled for more than 1,000 meters in Albian-Cenomanian reservoirs. The well OGX-45D, which was intended to test the limits of the Waikiki accumulation, discovered hydrocarbons only in the Maastrichtian section, indicating an additional potential in sandstone reservoirs which extend towards the Ingá-Peró Complex. In the Pipeline accumulation, wells OGX-39HP, OGX-40D, OGX-42D and OGX-48 were drilled, identifying the presence of hydrocarbons in the Albian section with net pays of more than 1,000 (horizontal column), 107, 82 and 12 meters, respectively. In the Illimani accumulation, we have concluded well OGX-43D which confirmed the extent of the reservoirs in the Albian section and identified a net pay of 50 meters. Finally, we began the drilling of wells OGX-54D and OGX-56D in the Fuji accumulation, both of which are still in progress.

Additionally, we obtained the results of the drill-stem tests in horizontal wells OGX-39HP and OGX-44HP in the Pipeline and Waikiki accumulations, respectively. The test in well OGX-39HP, which is the first horizontal well in the Pipeline accumulation, indicated good reservoir conditions, implying a production capacity of around 10,000 barrels per day and oil of approximately 19° API. The test in well OGX-44HP identified oil of approximately 23° API and a production potential of 40,000 barrels per day, which will be limited to a flow rate of 15,000 to 20,000 barrels per day per well to optimize oil recovery from the reservoir.

Continuing with our wildcat drilling campaign, well OGX-33 was drilled in the Chimborazo accumulation and identified a net pay of 42 meters in the Albian section. We have also drilled well OGX-52 in the Tambora accumulation, which has identified a net pay of 96 meters in the Albian section and we have initiated OGX-58DP well also in this accumulation that is still ongoing.

The commencement of OGX's production is scheduled for October/November this year in the Campos Basin. The first project in the Waimea Complex will take place through an Extended Well Test (EWT) and will have an anticipated production of up to 20,000 barrels per day from well OGX-26HP.

All of the critical equipment for the start-up of production has been secured. The wet christmas tree and the electric submersible pumping system are already installed and other equipment such as flexible lines, moorings and piles (which are part of the FPSO mooring system) and the installation vessel have already been delivered. The FPSO OSX-1 is ready in the shipyard in Singapore and the turret (a buoy, part of the mooring system) is in the mobilization process to Brazil.

Parnaíba Basin

During this quarter, we made important discoveries in this basin and presented to the ANP declarations of commerciality for the Gavião Azul and Gavião Real fields. The development plans for these fields have already been submitted by OGX, who are still in the process of analyzing them.

We concluded the drilling of four wells, including two wildcat wells, OGX-34 and OGX-46D, and two appraisal wells, OGX-38 and OGX-51DP, which identified net pays of 23, 15, 43 and 8 meters, respectively, in the Devonian section. We also started the drilling of wildcat well, OGX-49, and appraisal well, OGX-57, which are still in progress.

Following the seismic campaign in this basin, we engaged a second seismic team during the quarter to focus on the southern blocks, while the first team remains focused on seismic in the northern blocks.

The Gavião Azul and Gavião Real fields will be the first natural gas fields developed by OGX. We expect that gas production in this basin will start in the second half of 2012, as announced in our business plan for the discoveries made in this basin. We estimate that these fields will reach a production level of 5.7 million m3/day in 2013, which corresponds to total production of 1.1 Tcf of gas. Natural gas produced in the region is expected to be the supply source for thermoelectric power plants to be built by MPX Energia SA, an EBX Group company, in association with Petra Energia SA, both of which are partners with OGX in this basin.

MPX has entered into a term sheet with Bertin Energia e Participações to acquire two projects, which are still awaiting ANEEL's approval, that have the authorization for the construction of thermoelectric power plants with a total capacity of 660 MW. MPX intends to transfer these licenses acquired in the A-5 auction in 2008 to the Parnaíba Thermoelectric Complex, where it already has a prior installation license to implement 3,722 MW. This acquisition represents an important step in the integration of natural gas production provided by OGX Maranhão, to power generation in the Parnaíba Basin.

We have recently approved the leasing agreement of two additional onshore drilling rigs for the production development plan in Parnaíba Basin.

Santos Basin

In the second quarter of 2011, we continued our exploratory campaign and achieved important results testing classic targets and new geological models. We have concluded the drilling of well OGX-30, which confirmed a new play in fractured carbonates in the Albian age, showing a significant gas column and a large structured area. This discovery enabled us to confirm this new geological model for the region so that we can begin the appraisal campaign.

The recent discovery in sandstones in the Santonian age in well OGX-47, in the Maceió accumulation, contributed significantly to the development of our assets in this region and, when combined with the discoveries already made in the basin, will generate greater economies of scale and cost-effectiveness. We intend to focus on the appraisal campaign and proceed with the development of the production model for the region.

OGX currently has nine rigs at its disposal, including six semi-submersible rigs, two onshore rigs and one jack-up for drilling in the Campos, Santos, Parnaíba and Pará-Maranhão basins. Eight rigs are in operation and one is currently being mobilized.

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ATP Sees Revenue Increase in 2Q 2011

- ATP Sees Revenue Increase in 2Q 2011

Tuesday, August 09, 2011
ATP O&G Corp.

ATP announced second quarter 2011 results.

Results of Operations

Revenues from oil and gas production were $172.9 million for the second quarter 2011, compared to $101.1 million for the second quarter 2010. Increased revenues from production were attributable to higher production volumes and higher oil prices. Oil and gas production for the second quarter 2011 was 2.1 MMBoe (23.6 MBoe/d) compared to 1.9 MMBoe (21.3 MBoe/d) for the second quarter 2010, an 11% increase. Average prices were up 68% over the same period a year ago. Oil represented 68% of total production for the second quarter 2011, compared to 48% of total production for the second quarter 2010.

ATP recorded a net loss attributable to common shareholders of $56.9 million or $(1.11) per basic and diluted share for the second quarter 2011, compared to $82.9 million or $(1.63) per basic and diluted share for the same 2010 period. The net loss attributable to common shareholders for the second quarter of 2011 was impacted by several items analysts often exclude from their published estimates. Those items include impairment expense of $45.7 million, workover expenses of $17.3 million and $1.2 million of drilling interruption costs associated with the Gulf of Mexico moratorium. Also, the items include $45.1 million related to the unrealized derivative income for the quarter. As a result of production increases and higher oil prices, ATP reduced its estimate of the time required to repay a dollar-denominated Override at Gomez. This change in estimate resulted in our recognizing $21.9 million in incremental interest expense related to this Override in the second quarter of 2011 compared to the first quarter of 2011.

The impairment expense of $45.7 million during the second quarter of 2011 related primarily to South Timbalier (“ST”) Block 77 (acquired in 2005), due to ATP's decision not to move forward with a capital expenditure on this property in the second half of 2011. The workover expense is related to the Gomez MC 711 #5 well, which was placed back on production late in the second quarter.

Capital Resources and Liquidity

In the second quarter 2011, ATP conveyed dollar-denominated Overrides and NPI's in the Gomez Hub and the Telemark Hub for net proceeds of $70.3 million. These Overrides and NPI's obligate ATP to deliver a percentage of the proceeds from the future sale of hydrocarbons in the specified proved properties until the purchasers achieve a specified return.

In June 2011 ATP closed a perpetual preferred equity offering that provided net proceeds of $123.3 million, net of discount, related option contract costs and issuance costs. Shares of the preferred are convertible into common shares at $22.20 per share.

During July 2011, ATP entered into a crude oil prepaid swap transaction for 274,500 barrels at a net price of $111.84 per barrel. ATP received $30.7 million at closing. A schedule summarizing ATP's outstanding oil and gas derivatives can be found near the end of this press release.

ATP incurred $220.5 million of capital expenditures ($209 million, excluding capitalized interest) on oil and gas properties during the first half of 2011, of which $34.8 million was funded through vendor deferral and net profit interest programs. These capital expenditures were predominantly related to the Gomez and Telemark Hubs, and the Octabuoy production platform. In the remainder of 2011, ATP anticipates incurring $250 million to $300 million in total capital expenditures, excluding capitalized interest, of which $150 million to $200 million will be contributed by vendors through existing NPI programs or deferral programs.

ATP had unrestricted cash of $185.9 million and restricted cash of $47.4 million at June 30, 2011.

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Broadwind Energy Missed Q2 Estimates

- Broadwind Energy Missed Q2 Estimates



Aug 5, 2011

Broadwind Energy (NASDAQ:BWEN) reported a Q2 loss of $0.04 per share, wider than consensus estimates for a loss of $0.01 per share. Revenues for the quarter rose 17% year-over-year to $39.3 million, missing consensus estimates of $46.7 million.

Peter C. Duprey, president and chief executive officer, said, "We are continuing to make progress with the business transformation. With three sequential EBITDA positive quarters behind us, we feel good about the operational momentum we have gained. Our Tower business had a 48% increase in revenue in a difficult market, and in our Gears business, sales to industrial customers exceeded wind customers. Our Gearing and Services businesses had new orders well in excess of sales; our enhanced focus on sales and diversification efforts are starting to have an impact. While we continue to face a challenging wind energy market, we remain focused on the diversification of our customer base and the expansion of our services business where we have strong core competencies."

Broadwind Energy has a potential upside of 150% based on a current price of $1.2 and an average consensus analyst price target of $3.

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PPL Corporation EPS In Line With Estimates, Beats Revenue For Q2

- PPL Corporation EPS In Line With Estimates, Beats Revenue For Q2



Aug 5, 2011

PPL Corporation (NYSE:PPL) reported Q2 adjusted EPS of $0.45 in line with analyst estimates. Revenues for the quarter were $2.49 billion, better than consensus estimates of $2.26 billion.

James H. Miller, PPL's chairman and chief executive officer said, "We're on track to achieve our forecasted 2011 earnings from ongoing operations despite extended unplanned outages to replace turbine blades at both of our Susquehanna nuclear units. We expect to mitigate the impact of the Susquehanna outages with strong performance from our U.K. business and positive results in other aspects of our competitive supply business."

PPL (NYSE:PPL) has a potential upside of 13.3% based on a current price of $26.53 and an average consensus analyst price target of $30.06.

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EOG 2Q Earnings Climb on Production Increase

- EOG 2Q Earnings Climb on Production Increase

Friday, August 05, 2011
EOG Resources Inc.

EOG Resources reported second quarter 2011 net income of $295.6 million, or $1.10 per share. This compares to second quarter 2010 net income of $59.9 million, or $0.24 per share.

Consistent with some analysts' practice of matching cash flow realizations to settlement months, and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the second quarter 2011 was $299.2 million, or $1.11 per share. Adjusted non-GAAP net income for the second quarter 2010 was $44.9 million, or $0.18 per share. The results for the second quarter 2011 included a $226.2 million, net of tax ($0.84 per share) impairment of certain non-core North American natural gas assets, gains on property dispositions, net of tax, of $105.2 million ($0.39 per share) and a previously disclosed non-cash net gain of $189.6 million ($121.4 million after tax, or $0.45 per share) on the mark-to-market of financial commodity contracts. During the quarter, the net cash inflow related to financial commodity contracts was $6.3 million ($4.0 million after tax, or $0.01 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

Operational Highlights

Total company production increased 13 percent in the first half of 2011 compared to the same period in 2010. Driven by a 60 percent rise in United States crude oil and condensate production during the second quarter, EOG delivered 46 percent total company crude oil, condensate and natural gas liquids production growth versus the second quarter 2010. Leading the crude oil production growth was the South Texas Eagle Ford followed by the Fort Worth Barnett Shale Combo. Also contributing to the increase were newer crude oil and liquids-rich plays such as the Colorado Niobrara, Oklahoma Marmaton, West Texas Wolfcamp and New Mexico Leonard.

"Demonstrating the depth and quality of our portfolio, EOG's crude oil and liquids-rich plays delivered strong, consistent second quarter production results, driving our overall first half 2011 production growth," said Mark G. Papa, Chairman and Chief Executive Officer. "Just as we had forecast, EOG's natural gas production is decreasing due to asset sales and the priority we have placed on developing our outstanding crude oil and liquids investment opportunities."

EOG is on track to achieve its targeted 9.5 percent total company organic production growth for 2011. Total company 2011 crude oil and condensate production is projected to increase by 52 percent, while total company crude oil, condensate and natural gas liquids production is forecast to rise 47 percent over 2010.

Crude Oil and Liquids Activity

Early in its transition to a liquids-focused company, EOG identified the rich oil potential of the South Texas Eagle Ford Shale and amassed a large acreage position in the sweet spot of the crude oil window.

"We are finding that well results across our 535,000 net acre position in the Eagle Ford oil window are remarkably similar. The wealth of drilling, completion and production data at our fingertips is reflected in the steadily rising momentum of our operations and success in achieving more predictable results," Papa said.

As EOG further defines geologic sub-trends and refines completion techniques, the majority of its Eagle Ford wells are being completed to sales at initial production rates in excess of 1,000 barrels of crude oil per day (Bopd). Leveraging this consistency, EOG ramped up its drilling activity from 10 rigs at the beginning of 2011 to its current intensive program of 22 rigs.

In Gonzales County where EOG is actively drilling, the King Fehner Unit #2H, #4H, #5H and #6H wells began initial production at maximum rates ranging from 1,238 to 1,487 Bopd with 1.2 to 1.6 million cubic feet per day (MMcfd) of rich natural gas.

"These are the first Eagle Ford wells that EOG has tested with a tighter spacing pattern. If downspacing proves economically viable, we have the potential to significantly increase our reserves in the Eagle Ford," Papa said.

EOG reported production rates from other successful wells in Gonzales County. The Merritt #4H had a peak initial production rate of 1,361 Bopd with 0.6 MMcfd of rich natural gas. The Steen Unit #1H, #2H, #4H and #6H came online with production rates ranging from 663 to 1,269 Bopd with 0.7 to 1.4 MMcfd of rich natural gas. In its far northeastern acreage where EOG announced success from a fault block earlier this year, the Hill Unit #1H and #3H were completed. They flowed to sales at peak rates of 1,461 and 1,734 Bopd with 1.0 and 1.3 MMcfd of rich natural gas, respectively.

In LaSalle County, the Naylor Jones A #2H, 99 #1H and 96 #1H provided additional confirmation of the consistent quality of EOG's 120-mile acreage trend. The wells, located in the southwestern part of EOG's block, had strong production rates ranging from 997 to 1,153 Bopd with 1.0 to 2.3 MMcfd of rich natural gas. In Karnes County, the heart of EOG's extensive acreage, the Max Unit #1H had a peak initial production rate of 1,591 Bopd with 1.5 MMcfd of rich natural gas. Also in Karnes County, the Braune Unit #1H was turned to sales at an initial rate of 1,611 Bopd with 1.0 MMcfd of rich natural gas. EOG has 100 percent working interest in all 16 of these Eagle Ford wells.

"With the 77 percent crude oil mix of our Eagle Ford acreage position, this large, highly rated resource play has become a significant contributor to fueling EOG's transition to an oil company in a short period of time," Papa said.

EOG announced positive drilling results from a new horizontal crude oil play, the Marmaton sandstone in the Oklahoma Panhandle. In Ellis County where EOG has drilled a series of wells, the Brown 18 #1VH and Opal 31 #1H were completed to sales at production rates of 620 and 1,312 Bopd with 0.7 and 2.6 MMcfd of natural gas, respectively. EOG has 58 and 49 percent working interest in the wells, respectively. EOG has 88 percent working interest in the Fischer 12 #1VH, which began initial production at 508 Bopd, with strong natural gas production. Encouraging well results provide the potential for additional development drilling locations on its 34,000 net acre position. To identify further exploration opportunities, EOG plans to acquire 3D seismic over this acreage.

EOG continues to post excellent drilling results from its 131,400 net acre position in the West Texas Wolfcamp and its 108,000 net acre position in the New Mexico Leonard Shale and Bone Spring Sands plays. The current moderate level of drilling activity is expected to ramp up in 2012 and beyond. Following refinements in completion techniques, recent well results show improvement in crude oil production flow rates.

Drilled and completed in the West Texas Wolfcamp, the University 40-A #0401H began flowing to sales at a maximum oil rate of 935 Bopd with 838 thousand cubic feet per day (Mcfd) of rich natural gas. EOG has 85 percent working interest in this Irion County well. Also in Irion County, the Linthicum M #1H and I #5H had production rates of 809 and 664 Bopd with 892 and 1,178 Mcfd of rich natural gas, respectively. EOG has 75 and 85 percent working interest in the wells, respectively. EOG has 100 percent working interest in the University 9 #2802H, drilled in Reagan County, northwest of its Irion County and Crockett County activity. The well had a peak production rate of 583 Bopd with 254 Mcfd of rich natural gas.

In Lea County, New Mexico where EOG is developing its Leonard Shale acreage, the Caballo 23 #1H was completed at a production rate of 665 Bopd with 1.2 MMcfd of rich natural gas. EOG has 86 percent working interest in the well. In Eddy County, the Elk Wallow 11 St. #4 had a maximum production rate of 735 Bopd with 2.0 MMcfd of rich natural gas. EOG has 75 percent working interest in this Leonard Shale well. Also in Eddy County, EOG drilled the Parkway 23 State #3H in the Bone Spring Sands, which is producing 511 Bopd with 726 Mcfd of natural gas. EOG holds 81 percent working interest in the well.

Since mid-2009, EOG's Denver-Julesburg Basin drilling activity has been concentrated on its 80,000 net acre Hereford Ranch Field in Weld County, Colorado. The Jake 2-01H discovery, which was drilled as a horizontal well targeting the Niobrara formation, began initial production in late 2009 at a first month average rate of 645 Bopd. Since the first quarter 2011, it has been producing at a relatively stable rate of 250 to 300 Bopd. Following the Jake well, the Elmer 8-31H, which was drilled in March 2010 with a short lateral, had an initial average 30-day production rate of 283 Bopd and is currently producing approximately 225 Bopd. Encouraging data from long-term stabilized crude oil production rates indicate that the Niobrara wells will be characterized by lower initial flow rates, but flatter decline curves than other crude oil resource plays.

Acreage outside EOG's Hereford Ranch Field was also proven productive during the quarter. Southeast of the Hereford Ranch Field, the Fiscus Mesa 9-10H was drilled and completed to sales at an initial controlled rate of 335 Bopd with 174 Mcfd of natural gas. EOG has 86 percent working interest in the well. West of the Fiscus Mesa well, EOG has 75 percent working interest in the Gravel Draw 9-09H that began production at an initial controlled rate of 277 Bopd with 146 Mcfd of natural gas. Based on long-term well production results from its Hereford Ranch Field and new drilling results and production data, EOG has established the economic potential for crude oil development on 169,000 of its 220,000 net acre Niobrara position.

In the Texas Fort Worth Barnett Combo, EOG's program in Montague County and western Cooke County continues to deliver successful production results with efficiency gains in both drilling and completion operations. In western Cooke County, the Gaedke A Unit #3H and #4H and B Unit #5H, #6H and #7H wells were brought to sales at rates ranging from 338 to 696 Bopd with 807 to 2,152 Mcfd of rich natural gas. EOG has 99 percent working interest in the wells. In Montague County, EOG has 100 percent working interest in the Stoddard A Unit #1H, B Unit #2H, C Unit #3H and D Unit #4H that came online at rates ranging from 777 to 918 Bopd with 1,262 to 2,677 Mcfd of rich natural gas. While EOG's efforts have focused on testing new completion techniques in the sweet spot of its core acreage, an inventory of several years of drilling locations has been identified in the play.

Despite weather challenges in the North Dakota Williston Basin over the last eight to nine months, EOG continued its drilling and production activities, as well as operating its proprietary crude-by-rail transportation system. Although EOG minimized the adverse impact of abnormally wet weather on production goals during the second quarter, completion operations were impacted and area flooding remains an issue.

Drilled with a 9,968 foot long-reach lateral, the Liberty LR #21-36H was completed to sales at a maximum rate of 1,201 Bopd with 1,147 Mcfd of natural gas. EOG has 95 percent working interest in the well. The Fertile #19-29H and #45-29H were both completed in the Bakken formation in Mountrail County. The wells, in which EOG has 38 and 75 percent working interest, respectively, came online at maximum rates of 1,008 and 1,223 Bopd, respectively. In Williams County, EOG has 67 percent working interest in the Hardscrabble 13-3526H, which began flowing to sales at 1,474 Bopd. EOG holds 85 percent working interest in the Clarks Creek 3-0805H, which was completed in the Three Forks formation in McKenzie County at a maximum production rate of 1,384 Bopd.

"EOG's early innovative crude-by-rail midstream investments in the Bakken and Eagle Ford have proven valuable in delivering our crude oil directly to major market hubs given the current lack of available pipeline capacity in these two prolific plays," Papa said. "Our Bakken crude oil rail transportation system was particularly beneficial during the recent North Dakota flooding because it enabled EOG to continue to make crude oil deliveries."

Natural Gas Activity

In North America, EOG's natural gas production decreased 1.6 percent in the second quarter compared to the same prior year period due to reduced drilling activity and natural gas asset sales. In the United States where EOG is employing drilling capital to maintain core leasehold positions, it posted strong operational results from its Marcellus Shale and Haynesville/Bossier Shale natural gas horizontal resource plays. In Canada, EOG's natural gas production decreased due to asset divestitures and the reallocation of capital toward liquids-rich reinvestment opportunities.

Capital Structure

During the second quarter, total cash proceeds from sales of acreage, producing natural gas properties and midstream assets were approximately $684 million. Through the first half of 2011, total cash proceeds from assets sales were $944 million. Based on negotiated purchase and sale agreements and other pending transactions, EOG anticipates property sales for the full year of approximately $1.6 billion, or $600 million higher than the original $1 billion target for 2011. Estimated exploration and production expenditures will range from $6.8 billion to $7.0 billion, including exploration, development and production facilities and midstream expenditures, an increase of approximately $400 million from EOG's previously stated targets.

At June 30, 2011, EOG's total debt outstanding was $5.2 billion for a debt-to-total capitalization ratio of 30 percent. Taking into account $1.6 billion of cash on the balance sheet at the end of the quarter, EOG's net debt was $3.6 billion for a net debt-to-total capitalization ratio of 23 percent. EOG is targeting a net debt-to-total capitalization ratio of 30 percent or less at both year-end 2011 and 2012. (Please refer to the attached tables for the reconciliation of net debt (non-GAAP) to current and long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

"Our well-timed efforts to recreate EOG as a high margin, crude oil-focused company are paying off," Papa said. "On the basis of both per share earnings and cash flow growth, EOG is positioned to be an industry leader for years to come."

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TGS 2Q Revenue Up 21%

- TGS 2Q Revenue Up 21%

Thursday, August 04, 2011
TGS-NOPEC Geophysical Co. ASA

TGS reported net revenues of USD 136 million in 2Q 2011, compared to USD 112 million in 2Q 2010. Investments and the corresponding pre-funding revenues were significantly lower in 2Q 2011 than in 2Q 2010 due to the expected back end loaded investment plan, as previously communicated to the market. Despite lower investments, TGS is pleased to report late sales of USD 98.0 million which is up 52% from 2Q 2010.

• 2nd QUARTER HIGHLIGHTS
  • Consolidated net revenues were USD 136.1 million, an increase of 21% compared to 2Q 2010.
  • Net late sales totaled USD 98.0 million, up 52% from 2Q 2010.
  • Net pre-funding revenues were USD 26.7 million, down 38% from 2Q 2010, funding 43% of the Company's operational multi-client investments during 2Q (investments of USD 61.7 million, down 36% from 2Q 2010).
  • Proprietary revenues were USD 11.4 million, up 142% from 2Q 2010.
  • Operating profit (EBIT) was USD 57.7 million (42% of net revenues), compared to USD 33.4 million (30% of net revenues) in 2Q 2010.
  • Cash flow from operations was USD 93.3 million, up from USD 74.1 million in 2Q 2010.
  • Earnings per share (fully diluted) were USD 0.41, compared to 0.18 in 2Q 2010.
• 6 MONTHS FINANCIAL HIGHLIGHTS
  • Consolidated net revenues were USD 268.1 million, an increase of 3% compared to H1 2010.
  • Net late sales from the multi-client library totaled USD 182.8 million, up 33% from USD 138.0 million in 2010.
  • Net pre-funding revenues were USD 63.4 million, down 44% from 2010, funding 60% of the Company's operational multi-client investments during H1 (investments of USD 105.2 million, down 46% from 2010).
  • Proprietary revenues were USD 21.9 million, up 118% from 2010.
  • Operating profit (EBIT) was USD 116.7 million (44% of net revenues), compared to USD 92.3 million (35% of net revenues) in 2010.
  • Cash flow from operations was USD 231.6 million, an increase of 28% from USD 180.4 million in 2010.
  • Earnings per share (fully diluted) were USD 0.81 compared to USD 0.58 for the same period in 2010.

"Another strong quarter with revenue growth of 21% from last year," TGS' CEO Robert Hobbs stated. "We continue to see great demand for our existing library data and all business areas experienced growth in late sales compared to one year ago. We maintain our guidance for 2011."

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PXP Sees Increase in 2Q Revenue

- PXP Sees Increase in 2Q Revenue

Thursday, August 04, 2011
Plains Exploration & Production Co.

Plains Exploration & Production (PXP) announced 2011 second-quarter financial and operating results.

• Revenues of $514.8 million and net income of $124.9 million, or $0.87 per diluted share.
• Adjusted net income of $77.1 million, or $0.54 per diluted share (a non-GAAP measure).
• Income from operations of $186.1 million.
• Net cash provided by operating activities of $287.5 million.
• Operating cash flow of $299.6 million (a non-GAAP measure).
• Average daily sales volumes of approximately 97.7 thousand barrels of oil equivalent (BOE), a 15% increase compared to second-quarter 2010 or 27% increase pro-forma for the 2010 asset sale.
• Average daily liquids sales volumes increased 7% compared to second-quarter 2010 or 12% pro-forma for the 2010 asset sale and are expected to increase ratably throughout the rest of the year.
• Crude oil price realization of 88%.
• Executed crude oil contracts significantly improving differentials.
• Total production costs per BOE of $16.09.
• Gross margin per BOE was $25.31 and cash margin per BOE was $39.92 (a non-GAAP measure).

FINANCIAL SUMMARY

PXP reports second-quarter revenues of $514.8 million and net income of $124.9 million, or $0.87 per diluted share, compared to revenues of $364.6 million and net income of $45.4 million, or $0.32 per diluted share, for the second-quarter 2010. These results include certain items affecting comparability of operating results. These items consist of realized and unrealized gains and losses on our mark-to-market derivative contracts, an unrealized gain on investment, and other items. When considering these items, net income for the second-quarter 2011 was $77.1 million, or $0.54 per diluted share (a non-GAAP measure), compared to $36.9 million, or $0.26 per diluted share, for the second-quarter 2010.

For the first six months of 2011, PXP reports revenues of $945.1 million and net income of $195.9 million, or $1.37 per diluted share, compared to revenues of $748.6 million and net income of $103.9 million, or $0.73 per diluted share, for the same period in 2010. These results include certain items affecting comparability of operating results. These items consist of realized and unrealized gains and losses on our mark-to-market derivative contracts, an unrealized gain on investment, and other items. When considering these items, net income for the first six months of 2011 was $129.6 million, or $0.90 per diluted share (a non-GAAP measure), compared to $80.5 million, or $0.57 per diluted share, for the same period in 2010.

A reconciliation of non-GAAP financial measures used in this release to comparable GAAP financial measures is included with the financial tables.

CRUDE OIL MARKETING UPDATE

In August, PXP executed a new marketing contract for its California crude production with ConocoPhillips (NYSE:COP - News). Currently PXP sells approximately 65% of its California crude oil to ConocoPhillips. The new contract covers approximately 90% of PXP's California production, extends the dedication from January 1, 2015 to January 1, 2023 and replaces the percent of NYMEX index pricing mechanism with a market-based pricing approach beginning in 2012.

Separately, PXP executed an agreement with a third party purchaser to sell a large portion of its Eagle Ford crude oil using a Light Louisiana Sweet (LLS) based pricing mechanism.

In 2012, using the current market price outlook and the new marketing contracts, PXP currently expects full-year oil price realization to be between 101% - 103% of NYMEX. PXP expects 2012 total company liquids price realization, which includes crude oil and natural gas liquids, to be between 93% - 95% of NYMEX compared to full-year 2011 total company liquids price realization guidance range of 84% - 86%.

MANAGEMENT COMMENT

James C. Flores, Chairman, President and CEO of PXP commented, "Today's announcement underscores the strength of our asset base and the skill of our dedicated employees as we continue to execute our plan to manage volume growth and strong margins. Compared to the second-quarter 2010 our total Company sales volumes increased 15% and liquids sales volumes increased 12%, pro-forma for the 2010 asset sale. In our Eagle Ford area, daily sales volumes are expected to more than double by year-end 2011 as operational momentum builds during the second half of the year. In each of our core asset areas, we remain focused on the execution of the onshore oil drilling and expansion plan and results continue to be positive. With higher crude volumes and stronger crude pricing, the business generated a 41% increase in operating cash flow and a 20% increase in cash margin per BOE over the second-quarter 2010. We expect these trends to continue supported by the accelerated Eagle Ford activity and the recently executed crude oil marketing contracts reflecting premium pricing to NYMEX."

GUIDANCE UPDATE

Due primarily to our accelerated drilling activity in the Eagle Ford and a higher than originally planned rig count in the Haynesville, PXP's Board of Directors approved an increase in 2011 capital spending which is estimated to be approximately $1.5 billion, excluding deepwater spending, up from $1.2 billion.

For the first six months, average daily sales volumes were 92.9 thousand BOE. With higher drilling activity year-to-date than originally planned in the Haynesville and the Eagle Ford, full-year 2011 average daily sales volumes are now expected to be near the upper end of a new guidance range of 97 – 100 thousand BOE per day.

PXP expects its oil price realization for the full-year 2011 to be above the guidance range due to continued strength of California crude oil pricing relative to NYMEX West Texas Intermediate.

PXP expects lease operating expense per BOE, a component of total production cost per BOE, to be at the high end of the $7.90 - $8.30 per BOE full-year 2011 guidance range due to the increased activity in the Eagle Ford.

OPERATIONAL UPDATE

In the Texas Panhandle asset area, PXP has 5 drilling rigs operating in the Granite Wash trend and expects to continue this level of activity through 2011. Second-quarter daily sales volumes averaged approximately 13,620 BOE per day net to PXP, or 52% higher than first-quarter 2011 and 139% higher than the second-quarter 2010. Average daily sales volumes are expected to increase to approximately 17,000 BOE net per day by year-end 2011. During 2010 and early 2011, PXP built 15 production handling facilities and related infrastructure in order to support the rapid growth in sales volumes that PXP is now reporting.

In the Eagle Ford asset area, PXP has 5.5 net drilling rigs operating, up from the 3 net rig program originally planned for 2011. Second-quarter daily sales volumes averaged approximately 2,330 BOE per day net to PXP, an increase of approximately 4% to first-quarter 2011 average daily sales volumes. For the month of July, daily sales volumes averaged approximately 4,400 BOE per day net to PXP; and PXP expects to exit the year above 10,000 BOE net per day for this asset area.

The two most recent initial production test rates are as follows: The Carmody Trust 1H and the Carmody Trust 2H, both located in Karnes County, Texas, achieved an initial production rate of approximately 1,745 gross and 1,396 net BOE per day and 1,904 gross and 1,523 net BOE per day, respectively.

During the first half of this year, PXP built 4 production handling facilities and related infrastructure out of the 12 facilities currently planned through 2012 to support future sales volume growth. Each facility has the capability of supporting multiple wells and construction continues on future production facilities. Timing of right-of-way approvals temporarily slowed construction during the second quarter which slowed the process of connecting completed wells to pipelines. With many of the initial logistics resolved, PXP anticipates a ramp up in sales volumes during the second half of 2011.

In the California asset area, PXP has 3 drilling rigs operating onshore where PXP continues its active development program in the Los Angeles and San Joaquin Basins. Daily sales volumes onshore and offshore averaged 40,500 BOE per day net to PXP, or 7% higher than first-quarter 2011 and slightly higher than the second-quarter 2010. Average daily sales volumes are expected to be above 41,000 BOE net per day by year-end 2011.

In the Haynesville Shale asset area, PXP's primary operator is currently operating 31 rigs and expects to reduce the rig count during the quarter. In addition, PXP expects 15 or more rigs run by other operators on its acreage. Second-quarter daily sales volumes averaged approximately 181.7 million cubic feet equivalent (MMcfe) per day net to PXP, or 12% higher than first-quarter 2011 and 71% higher than second-quarter 2010. The rate of increase in sales volumes is anticipated to slow as the rig count decreases later this year.

In the Wyoming Mowry Shale, PXP drilled and completed its first well in June 2011 and produced high-quality oil in small quantities. PXP drilled its second well and is in the process of completing this well. We will study the results of these initial wells and drill two additional wells in 2012 to further evaluate the project.

In the Gulf of Mexico asset area, the operator of the Lucius discovery, Anadarko Petroleum Corporation (NYSE:APC - News), recently announced the finalization of a unitization agreement with Exxon Mobil Corporation and co-owners to develop the Lucius field. Anadarko will operate the unit which includes portions of Keathley Canyon blocks 874, 875, 918 and 919 in the deepwater Gulf of Mexico. Following the unitization agreement, the Lucius interest owners entered into an agreement with the Hadrian South co-venturers whereby natural gas produced from the Hadrian South field will be processed through the Lucius facility in return for a production-handling fee and reimbursement for any required facility upgrades.

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Apache 2Q Earnings Buoyed by Record Production

- Apache 2Q Earnings Buoyed by Record Production

Thursday, August 04, 2011
Apache Corp.

Apache reported production of 749,000 barrels of oil equivalent (boe) per day and earnings of $1.2 billion, or $3.17 per diluted share, for the three-month period ending June 30, 2011. These compare with production of 647,000 boe per day and net income of $860 million, or $2.53 per diluted share, for the same period in the prior year.

"Apache had an outstanding quarter with record production in oil, gas, and natural gas liquids," said G. Steven Farris, chairman and chief executive officer. "This reflects the scale and balance of our portfolio, which comes from diversity across geographic regions, gas and liquids production, and a constant focus on rate of return. We're realizing additional value from last year's acquisitions and pursuing opportunities for future growth at both our legacy assets and in new areas."

The combination of higher oil prices and record production levels resulted in record quarterly revenues for second quarter 2011. Oil and gas revenues were $4.4 billion, a 47 percent increase from revenues of $3.0 billion for the same period last year. Cash from operations before changes in operating assets and liabilities* also were a quarterly record at $2.6 billion, up 44 percent from the prior year's $1.8 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.3 billion in second quarter 2011 compared with $834 million in the year-earlier period. On a per-share basis, adjusted earnings were $3.22 in the second quarter compared with $2.46 per diluted share in the prior-year period.

Liquid hydrocarbons represented 49 percent of production and 78 percent of revenues. Apache benefited from higher oil prices for its international production indexed to Dated Brent benchmarks, as well as sweet crudes from the Gulf of Mexico, which continue to receive a meaningful premium per barrel compared with production benchmarked to West Texas Intermediate prices.

On the operational and commercial front, the company has achieved several recent milestones. These include:

• Successful bidder on nearly 515,000 acres in onshore and offshore state leases at Alaska's Cook Inlet. The company now has approximately 800,000 acres of prospective land in the region, and a seismic survey for the area is planned over the next 12-18 months.
• Signing of a long-term sales and purchase agreement with Tokyo Electric Power (TEPCO) for liquefied natural gas (LNG) from the Wheatstone LNG project in Western Australia. The Wheatstone partners (Apache, Chevron and a subsidiary of Kuwait Foreign Petroleum Co.) will supply TEPCO with 3.1 million metric tons per annum when the facility comes online, which will be determined at project sanction forecasted for later this year. Apache's expected net share of LNG sales to TEPCO is equivalent to approximately 58 million cubic feet of natural gas per day.
• Unitization of portions from four leases at the Lucius deepwater oil and gas discovery in the Gulf of Mexico, where Apache and its partners also signed an agreement that allows for joint venture processing of gas from a nearby third-party discovery.
• Agreement to a 50-50 partnership to build additional gas processing infrastructure in the Permian Basin. A new gas processing plant will remove constraints to higher production at the Deadwood field, where Apache is currently running nearly half of its 24 rigs in the region.
• Commencement of production from Apache's most prolific development well in the Forties field (North Sea), which came online in excess of 12,500 barrels of oil per day. A second development well also completed in June came online at a daily rate of nearly 8,800 barrels of oil.
• Drilling of five new field discoveries in the Faghur basin of Egypt's Western Desert. In aggregate the wells tested at rates exceeding 12,000 barrels of oil per day and 19 million cubic feet of natural gas.

"Our regional business model is central to our value creation," Farris said. "It provides us with many ways to win -- we're not dependent on any single market or play. This results in more predictable, profitable long-term growth."

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Transocean Reports $2.33B in 2Q Revenue

- Transocean Reports $2.33B in 2Q Revenue

Thursday, August 04, 2011
Transocean Ltd.

Transocean reported net income attributable to controlling interest of $155 million, or $0.48 per diluted share, for the three months ended June 30, 2011. The results compare to net income attributable to controlling interest of $715 million, or $2.22 per diluted share, for the three months ended June 30, 2010.

• Revenues increased nine percent to $2.334 billion compared to $2.144 billion in the first quarter 2011
• Second quarter 2011 net income attributable to controlling interest was $155 million, which included $36 million of certain net unfavorable items, compared to $310 million in the first quarter 2011, which included $139 million of certain net favorable items noted in our first quarter earnings release
• Revenue efficiency improved to 92.1 percent, up from 90.0 percent in the first quarter 2011
• Fleet utilization was 55 percent, unchanged from the first quarter 2011
• Operating and maintenance expenses were $1.492 billion, up from $1.359 billion in the first quarter 2011
• The Annual Effective Tax Rate (4) for 2011 has increased to 22.6 percent from 19.3 percent in the first quarter 2011
• New contracts totaling $1.5 billion were secured in the Fleet Status Report period April 14, 2011 through July 13, 2011
• Non-core assets George H. Galloway and GSF Labrador were classified as assets held for sale, in addition to the previously announced GSF Britannia
• The first quarterly installment of the dividend was paid on June 15, 2011

Second quarter 2011 results included the following items, after tax, that resulted in a net unfavorable impact of approximately $36 million, or $0.11 per diluted share:

$25 million loss on impairment relating to the three Standard Jackups, George H. Galloway, GSF Labrador and GSF Britannia, classified as assets held for sale at June 30, 2011, and
$11 million of net charges related to discrete tax items and the effect of discontinued operations.

Second quarter 2011 results also included expenses associated with the Macondo well incident of approximately $26 million, $19 million after tax, or $0.06 per diluted share. These expenses were primarily related to legal costs and professional service fees.

Operations Quarterly Review

Revenues for the three months ended June 30, 2011 were $2.334 billion, compared to revenues of $2.144 billion during the three months ended March 31, 2011. Second quarter contract drilling revenues, which increased to $2.086 billion from $1.95 billion in the first quarter, were positively impacted by improved activity in the Gulf of Mexico, the commencement of operations of the newbuild Ultra-Deepwater Floater Deepwater Champion, the reactivation of previously idled rigs, and higher revenue efficiency for our Ultra-Deepwater and Deepwater Floaters, partially offset by the stacking of additional Deepwater and Midwater Floaters. Overall utilization was flat during the period compared to the first quarter.

Other revenues increased $54 million to $238 million, primarily due to additional drilling management services activity.

The company reported improved revenue efficiency for our Ultra-Deepwater and Deepwater Floaters compared to the first quarter, as our program to improve efficiency yielded results. Similar to the first quarter, compliance with new well control equipment certification requirements, higher standards for equipment condition and capacity constraints on our vendors continued to adversely impact revenue efficiency and out-of-service time compared to the prior year.

Operating and maintenance expenses totaled $1.492 billion for the second quarter 2011, up from $1.359 billion for the prior quarter. The increase was primarily due to higher maintenance expenses along with increased levels of contract drilling and drilling management services activity.

Net Interest Expense, Capital Expenditures and Cash Flow

Net Interest Expense was $142 million in the period compared to $130 million in the first quarter. The increase is due primarily to interest income associated with a tax refund recognized in the first quarter.

Capital expenditures increased to $293 million for the second quarter compared to $240 million in the first quarter 2011. The higher expenditures were primarily due to our newbuild construction program.

Cash flows from operating activities decreased to $340 million for the second quarter 2011 compared to $390 million for the first quarter 2011. The decrease in cash flows from operations resulted primarily from an increase in working capital.

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Petrohawk Bumps 2Q Production by 15%

- Petrohawk Bumps 2Q Production by 15%

Wednesday, August 03, 2011
Petrohawk Energy Corp.

Petrohawk announced its second quarter 2011 operational and financial results, including significant growth in production, revenues, and cash flows.

Production for second quarter averaged 943 Mmcfe/d, a 15% quarter-over-quarter increase. Second quarter total production was 85,803 Mmcfe, of which approximately 89% was natural gas, 7% was crude oil or condensate, and 4% was natural gas liquids. Revenues for the quarter were $595 million, a 21% increase over first quarter 2011 and a 69% increase compared to the same period one year ago. The Company realized 92% of the average NYMEX oil price, 97% of the average NYMEX natural gas price, and 47% of the NYMEX oil price for natural gas liquids during second quarter.

Cash flow from operations before changes in working capital was $302 million for the quarter, or $0.99 per fully diluted common share, compared to $246 million, or $0.81 per fully diluted common share for the first quarter 2011, and $163 million, or $0.54 per fully diluted common share for the same period one year ago. Net income for the quarter, after adjusting for selected items (primarily related to the non-cash impact of derivatives), was $57 million, or $0.19 per fully diluted common share (see Selected Item Review and Reconciliation table for additional information). Before excluding selected items, the Company reported net income of $104 million, or $0.34 per fully diluted common share for the quarter.

Cash operating costs (including lease operating expense, workover expense, taxes other than income, gathering and transportation expense, and general and administrative expense) were $1.69 per Mcfe for the quarter, compared to $1.56 per Mcfe for first quarter 2011 and $1.64 per Mcfe for the same period one year ago. General and administrative expense of $0.50 per Mcfe, compared to $0.45 per Mcfe in first quarter and $0.65 per Mcfe for the same period one year ago, reflected advisory fees associated with the Kinder Morgan Energy Partners L.P. transaction (discussed below) as well as a legal settlement paid during the quarter. Lease operating expense was $0.16 per Mcfe for the quarter, compared to $0.17 per Mcfe for the prior period and $0.29 per Mcfe during the second quarter of 2010. Taxes other than income increased from $0.16 per Mcfe for the first quarter 2011 to $0.20 per Mcfe for the second quarter. Gathering and transportation expense for oil and gas increased from $0.69 per Mcfe for the prior period to $0.75 per Mcfe, and depletion expense, a non-cash item, was $2.20 per Mcfe for the quarter compared to $2.06 per Mcfe for the first quarter of 2011.

During the second quarter, Petrohawk spent approximately $621 million on drilling and completions, $239 million on leasehold acquisitions, primarily in the Permian region, and $77 million on gathering and treating infrastructure, primarily in the Eagle Ford Shale. At June 30, the Company's revolving credit facility had an outstanding balance of approximately $559 million.

On July 1, Petrohawk completed the sale of its remaining interest in KinderHawk Field Services LLC and a 25% interest in EagleHawk Field Services LLC to affiliates of Kinder Morgan Energy Partners, L.P. This transaction netted pre-tax proceeds of approximately $836 million, which were used to pay down the Company's revolving credit facility and as working capital for general corporate purposes.

Haynesville Shale

During the quarter, the Company averaged 11 operated rigs and drilled 21 operated wells, with net production in the field averaging 684 Mmcfe/d. Sixty-seven non-operated Haynesville Shale wells and 3 Bossier Shale wells were drilled during the quarter. Non-operated activity exceeded expectations during the quarter, in terms of both activity level and capital expenditures, primarily due to the transition to full section development by some operators during the quarter. Petrohawk expects that lower rig counts publicly announced by many industry partners point to lower activity levels in the Haynesville Shale during the second half of the year. Petrohawk is currently operating six rigs and has two dedicated frac fleets in the Haynesville Shale.

The Company achieved an overall cost reduction trend in Haynesville Shale completions during the quarter. Savings of approximately $600,000 to $800,000 per well were accomplished largely as a result of changes in well design that require two fewer frac stages per well, lower overall sand requirements per well, and improved pricing for resin coated sand. During the quarter Petrohawk averaged slightly less than 45 days spud to spud, more than 5 fewer days than during the preceding quarter. Significant additional improvements are expected as the Company moves toward pad drilling and full section development toward the end of 2012.

Improvements in water handling and usage have contributed to more flexibility in water sourcing in the Haynesville Shale. Approximately half of all Petrohawk-operated wells in field have been completed with 20% recycled water. Year to date, the Company has pumped approximately over 2 million gallons of recycled waste water on well completions in the Haynesville Shale.

Eagle Ford Shale

The Black Hawk area (DeWitt County, Texas) continues to produce excellent results. A majority of Petrohawk-operated wells were produced on a constrained basis due to transportation infrastructure limitations. During the quarter, Petrohawk averaged nine operated rigs in the Black Hawk area, with 25 operated and one non-operated wells drilled. Net production from Black Hawk averaged 73 Mmcfe/d, comprised of 22% natural gas, 62% condensate and 16% natural gas liquids. Transportation infrastructure issues for the Company are moderating in the area with the addition of a dedicated truck fleet. Modifications to facilities at the Company's Point Comfort barge facility are nearly complete and the facility is expected to begin operating during the third quarter.

In Hawkville Field (LaSalle and McMullen Counties, Texas), Petrohawk averaged five operated rigs and drilled 15 operated wells and two non-operated wells during the quarter. Net production in the field averaged 129 Mmcfe/d, comprised of 67% natural gas, 14% condensate and 20% natural gas liquids. Well performance in Hawkville Field has continued to improve as a result of the expanded implementation of HiWAY frac technology, deployed by two dedicated Schlumberger hydraulic fracturing fleets. Petrohawk and Schlumberger are experimenting with variations in the HiWAY design, including higher sand volumes and fiber concentrations, in an attempt to optimize well performance for each area of the Eagle Ford trend. In addition, the Company is testing new frac designs in both the Hawkville Field and Black Hawk area with its Halliburton dedicated hydraulic fracturing fleet.

Results in the Red Hawk prospect in Zavala County, Texas, failed to meet minimum expectations during the quarter. As a result, capital spending at Red Hawk will be terminated and capital budgeted for 2011 will be reallocated to other operating areas.

Permian Region

Petrohawk is currently operating four rigs in the Permian region, all concentrated in the Delaware Basin where the majority of the Company's leasehold is located. An initial vertical well in Culberson County, Texas tested approximately 1.0 Mmcf/d of 1250 BTU gas from the Wolfcamp formation. Total depth was reached on the Company's first horizontal Bone Springs well in Reeves County, Texas. A completion date for this well has been set for early August. A commingled Wolfcamp and Bone Springs vertical completion in Reeves County is planned with a completion date expected in mid-August. The Company is also currently drilling the lateral portion of its first horizontal Wolfcamp well in Culberson County with a planned completion date of mid-August. In addition, the Company is undertaking necessary infrastructure construction in order to market all products with minimum delays as wells come online.

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Lundin Reports Strong 2Q Results, Boosts Output Forecast

- Lundin Reports Strong 2Q Results, Boosts Output Forecast

Wednesday, August 03, 2011
Lundin Petroleum AB

Lundin reported for the six month period ended June 30, 2011

Six months ended June 30, 2011

• Production of 32,300 boepd up 13% from the first six months 2010
• Profit after tax of MUSD 130.3 up 526% from the first six months 2010
• EBITDA of MUSD 505.3 up 96% from the first six months 2010
• Operating cash flow of MUSD 390.3 up 52% from the first six months 2010
• Net debt down to below MUSD 120 from MUSD 410 at year end
• Five exploration discoveries, four in Norway and one in Malaysia
• Ten Norwegian licenses awarded in the 2010 Norwegian licensing round, six as operator
• Operated license awarded in Barents Sea in the 21st Norwegian licensing round
• Operated Gurita block awarded in the Natuna Sea, offshore Indonesia

Second Quarter ended June 30, 2011

• Production of 31,100 boepd
• Profit after tax of MUSD 76.9
• EBITDA of MUSD 266.9
• Operating cash flow of MUSD 196.7
• Three exploration discoveries – Skalle and Earb South discoveries in Norway and Tarap discovery in Malaysia
• Appraisal well confirmed extension of the Avaldsnes discovery
• New operated block PM307 awarded in Malaysia
• Brynhild field plan of development (formerly called Nemo) submitted

Comments from C. Ashley Heppenstall, President and CEO

Lundin Petroleum achieved excellent results in the second quarter of 2011 with increased profitability and cash flow. What is extremely pleasing however, is the continued exploration success. I have always highlighted that the major valuation creation for our company will be achieved through increasing our oil and gas resources, and the best way to do that is through exploration.

Lundin Petroleum produced a net result for the first six months of MUSD 130.3. The strong production coupled with oil prices achieved of well over USD 100 per barrel resulted in operating cash flow of MUSD 390.3 and EBITDA of MUSD 505.3. Despite our significant exploration and development investment program net debt during the first half of the year has reduced from MUSD 410 to below MUSD 120.

The positive exploration news has continued during the second quarter with further discoveries at Skalle in PL438 in the Barents Sea, Earb South in PL505 in the northern Norwegian north Sea and Tarap in Block SB303 offshore East Malaysia. In addition the results of the first Avaldsnes appraisal well were extremely encouraging confirming the extension of the Avaldsnes field to the south east. We have now achieved five discoveries from our first five exploration wells this year following the Tellus and Caterpillar discoveries during the first quarter.

Our business is continuing to grow and I am confident we will continue to increase shareholder value. We are generating strong cash flow and profitability from our existing production which is outperforming, our development projects are proceeding well and our exploration success continues.

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Gazprom Neft 2Q Earnings Soar to $1.17B

- Gazprom Neft 2Q Earnings Soar to $1.17B

Wednesday, August 03, 2011
OAO Gazprom Neft

Gazprom Neft published on its website its consolidated financial results in accordance with US GAAP for 1H 2011.

Increased sales volumes and higher crude and petroleum prices drove the Company's revenue up by 39% to $21.341B in 1H 2011 compared to 1H 2010 (2Q 2011 revenue of $11.476B is 43% higher than in 2Q 2010).

Earnings before interest, income tax, depreciation and amortization (EBITDA) in 1H 2011 comprised $4.945B or 58% higher than in H1 2010 due to an increase in refining throughput, product mix optimization and improved market conditions. In 2Q 2011 EBITDA increased by 60% to $2.478B compared to 2Q 2010.

Net income in 1H 2011 increased by 74% to $2.604B versus 1H 2010 driven primarily by growth in EBITDA. 2Q 2011 resulted in $1.167B in net income (56% higher than in 2Q 2010).

The increase in net income resulted in a 6% growth in net cash provided by operating activities 1H 2011 compared to the same period of 2010 or $2.512B. Net cash provided by operating activities reached $1.891B in 2Q 2011 or 28% higher than in 2Q 2010.

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