Keppel Lands OGX Deals

- Keppel Lands OGX Deals

Friday, August 05, 2011
Keppel Corp. Ltd.

Keppel Shipyard has secured two contracts worth a total of S$146 million to convert a Floating Production Storage and Offloading (FPSO) unit as well as to fabricate and integrate an external turret mooring system for an existing FPSO unit.

The first contract is from Single Buoy Moorings Inc (SBM) for the conversion of the Very Large Crude Carrier (VLCC) M/T Concorde Spirit into a FPSO facility, to be named FPSO OSX-2. SBM had been engaged by OSX Brasil to supply the FPSO, which is expected to be completed in the second quarter of 2013 and will be deployed in the OGX Petroleo e Gas Participacoes S.A. (OGX) field in Campos Basin, offshore Brazil.

Keppel Shipyard's work scope on FPSO OSX-2 comprises refurbishment and life extension works, accommodation block extensions for 80 personnel, a new flare tower, a new internal turret mooring system and topside module supports, as well as the installation and integration of topside modules. Work on the vessel is expected to commence in September 2011.

Mr. Tony Mace, Chief Executive Officer of SBM Offshore said "Since 2001, Keppel has been our preferred partner and we are pleased to award another FPSO conversion to them. I look forward to continue with this partnership as we build up our FPSO fleet."

Mr. Nelson Yeo, Managing Director of Keppel Shipyard, said, "We are glad for another opportunity to collaborate with our long-time customer SBM and to support OSX. Committed to safe and value-added services, we will work closely with all stakeholders of FPSO OSX-2 towards a successful conversion project."

Other ongoing projects between Keppel Shipyard and SBM include the fast-track modification and upgrading of the FPSO Cidade de Anchieta and the conversion of the FPSO Cidade de Paraty, which will subsequently proceed to Keppel FELS Brasil's BrasFELS for installation and integration of topsides. Keppel Shipyard is also undertaking modification and upgrading work on OSX's first vessel, FPSO OSX-1.

Keppel Shipyard's second contract is for the fast-track fabrication and integration of an external turret mooring system for Rubicon Offshore International Pte Ltd (Rubicon Offshore).

FPSO Rubicon Intrepid is currently engaged in the production of Galoc Field, west of Palawan Island, the Philippines. Fabrication of the turret is expected to be completed and integrated to the FPSO in the fourth quarter of this year.

The above contracts are not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.

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Landowners Lose Cash, Rights in Some Drilling Deals

- Landowners Lose Cash, Rights in Some Drilling Deals

Tuesday, June 21, 2011
Vindicator, Youngstown, Ohio
by Karl Henkel

Gas and oil drilling is a quickly growing industry, but Mahoning Valley landowners looking to capitalize should proceed with caution, according to a local lawyer and a nonprofit oil and gas leasing organization.

Many oil businesses, including Oklahoma City-based Chesapeake Energy Corp., one of the largest oil companies in the U.S., are using a newer tactic which, while perfectly legal, potentially could cost landowners thousands of dollars.

The most popular oil or gas drilling agreements -- the kind signed with Columbiana County residents -- are giving way to a new strategy: mineral-rights purchases.

Instead of lease agreements, which could net landowners thousands of dollars a month plus royalties, a mineral-rights purchase would forfeit land rights and any royalties, said Alan D. Wenger, an attorney for the Youngstown law firm of Harrington, Hoppe & Mitchell.

Wenger helped draft an April contract between Chesapeake and the Associated Landowners of the Ohio Valley, a nonprofit organization that seeks to educate and protect landowner rights.

Potential royalties are as high as 15 percent to 20 percent in the Mahoning Valley.

Wenger said the difference between signing leases, which under Chesapeake are often five-year deals with a potential three-year extension, and a mineral-rights purchase amounts to thousands of dollars per acre, per month.

The mineral-rights purchases are generally one-time payments of $2,500 an acre.

"Deciding how to benefit from potential mineral development is a personal decision," said Scott Rotruck, vice president of corporate development for Chesapeake. "Some risk-tolerant mineral owners prefer to lease their minerals, potentially receiving a bonus payment and then royalty payments over time, while others who are more risk-averse prefer to sell their mineral rights outright and receive their compensation up front."

Wenger said oftentimes it won't be a large oil company that tries to purchase mineral rights; a smaller company such as Oklahoma City-based MC Mineral Co. LLC, which is actually a subsidiary of Chesapeake, would be the purchaser.

By acquiring mineral rights, the oil company becomes the beneficiary of any royalties negotiated under a previously-signed lease, which equates to about 12.5 percent.

"Given the shale developments of the last year around here, the companies that are actively exploring for shale development or speculating and trying to get rights are trying to take advantage of existing leases," Wenger said.

MC Mineral, in a letter to a Mahoning County resident that was acquired by The Vindicator, clearly states it "is interested in purchasing, not leasing" oil and gas minerals.

One problem though, said Bob Rea, president of ALOV, is that landowners will lose control of their property.

"They can put a drill wherever they want and they have no recourse," Rea said. "If you sell mineral rights, they have full access to your property."

And selling mineral rights potentially could decrease land and property value.

Patti Mika, Real Living real-estate agent, says it may be too early to tell the true impact on values. Mika said she recently sold about 50 acres to owners who think the land will eventually net a large reward, but that normally homeowners aren't interested in owning mineral rights.

"People that want that house, it's an extra bonus if they have the mineral rights because they get a royalty," she said.

Landowners who know they have current leases with other oil companies have a couple of options.

They can try to get a dormant lease legally terminated. It's not easy and the process can vary depending on the terms of the lease. Some agreements state that if an oil well becomes dry, the lease terminates, but others state that as long as oil companies continue to pay the amount outlined in the agreement, the contract remains valid. A lease can even continue beyond its current term. It's called "held by production," Wenger said.

In the case of mineral-rights ownership, if it's been more than 20 years and a landowner gives a 30-day public notice, an affidavit can be filed to take back mineral rights. If the gas or oil company responds within 30 days, the next step is likely a lawsuit.

In either scenario, Wenger said most landowners don't understand the differences between leasing and selling, the latter of which is significantly more beneficial to the gas or oil company.

"They're really kind of playing into the greed or the need for cash," Wenger said. "Or they're trying to get the folks that have acreage around here to sell it for what looks like a nice piece of cash."

Copyright (c) 2011, Vindicator, Youngstown, Ohio

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Envoy: S. Sudan to Respect India's Oil Deals After Independence

Envoy: S. Sudan to Respect India's Oil Deals After Independence

Thursday, May 05, 2011
Knight Ridder/Tribune Business News
by Julius N. Uma, Sudan Tribune

All contracts for Indian stakes in south Sudan's oil wells and their entities within the semi-autonomous region will be honored after the latter's independence, a special envoy revealed last week.

Priscilla Joseph Kuch, according Indo-Asia News Service (IANS), made these assurances during a meeting she held with S.M Krishna, the Indian external affairs minister in the capital, Delhi.

South Sudan is due to become independent in July after its population overwhelmingly voted for separation during the January self-determination referendum. The plebiscite was a key part of Sudan's 2005 Comprehensive Peace Agreement (CPA), which ended over two decades of war between north and south of the country.

Also discussed, according to Vishnu Prakash, the ministry spokesperson, was India's hydrocarbon interests in the oil-rich South Sudan which, he added, was reportedly "consolidating" and taking stock of agreements in the sector. "Our understanding is that the agreements pertaining to India will be honored," Prakash reportedly told reporters.

Currently, according to IANS, India's ONGC Videsh Limited is said to have stakes in several wells in Sudan, with production reportedly standing at 160,000 barrels per day. Out of this, 100,000 barrels per day of production is reportedly from oil wells in South Sudan.

"OVL has already offered training and to go beyond the current level of engagement," Rajiv Shahare, the Indian external affairs ministry secretary reportedly revealed.

OVL is a company began operating in Sudan in 2003. It built the pipeline from Khartoum to Port Sudan. It has a 25% stake in Sudan's Greater Nile Oil Project, which produces 280,000 barrels of oil per day. It is looking to expand its reach in South Sudan.

Regarded as being among the biggest players in Sudan's oil sector, along with China and Malaysia, India reportedly made an initial investment of US$1 billion in the sector, which is said to have increased to US$2.5 billion.

Over the years India has reportedly extended a US$566 million line of credit, which includes building a 500 megawatt power plant. Bilateral trade between India and Sudan was about $1 billion in 2010.

In March this year, the Energy and Mining ministry in the Government of South Sudan and Petroliam Nasional Berhad (PETRONAS), a Malaysian-owned oil and gas company signed a two-year memorandum of understanding aimed at boosting mutual cooperation between the two parties.

The document, signed in South Sudan's capital, Juba, outlines the overall principles of cooperation in the oil and gas sector between the government and the Malaysian oil giants, creating an avenue exploiting existing business opportunities in the two regions.

Founded on August 14, 1974, PETRONAS is owned by the Malaysian government. Since its incorporation, the company has reportedly grown to be an integrated international oil and gas company with business interests in 35 countries.

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