East Texas, Haynesville Production Stable Despite Wildfires

- East Texas, Haynesville Production Stable Despite Wildfires

Friday, September 09, 2011
Rigzone Staff
by Karen Boman

The wildfires plaguing East Texas have not impacted natural gas production volumes in the region, including Haynesville shale play production, but evacuations and fire-related damage have negatively impacted demand, BENTEK Energy reports.

Over the last three days, evacuations and fire-related damage in Texas have led to a near 1.0 Bcf total demand loss. BENTEK expects demand recovery to be gradual, though some demand should return due to rising temperatures. The Texas gas demand forecast, based on temperatures, shows power burn increasing by nearly 1.0 Bcf in the coming week, BENTEK said.

The Haynesville shale, one of the largest gas shale plays in the U.S., straddles the Texas and Louisiana border. Haynesville shale production from both states totals just above 5.0 Bcf/d, with about half of that production coming from the Texas side, BENTEK reports.

“BENTEK’s sample of production receipts from East Texas and Haynesville has not yet shown a distinct decline in production receipts that could be directly attributable to the fires,” BENTEK said in a report today. However, some of the fires have erupted around the perimeter of Haynesville shale counties, raising concerns about safety and disruptions in the fields.

Wildfires have burned acres in Harrison County, Texas, a core Haynesville production area in the state, and four non-core Haynesville production counties in Texas, Gregg, Marion, Nacogdoches and Rusk.

“If fires were to erupt in more developed areas of the shale, operations would undoubtedly have to be shut in, restricting production,” BENTEK said. “Even without a fire, downed power lines or disruptions in power transmission could also impact operations of pump jacks and compressor stations.”

To date, 26 large fires have burned nearly 114,000 acres in Texas, and are threatening oil and gas operations in the East Texas region as well as Louisiana and Oklahoma. An estimated 1,700 homes were either evacuated or lost, and more are threatened by fires.

“Much of East Texas is experiencing the highest level of drought conditions, and the fire danger in the East Texas Basin remains high to very high,” BENTEK said. Tropical Storm Nate will likely spare Texas from high winds but also withhold chances for rain.

Louisiana’s Department of Natural Resources (DNR) on Sept. 6 issued an advisory calling on oil and gas operators to monitor conditions closely and take necessary steps in case of fire, including shutting in wells, production facilities and pipelines if necessary.

“As drought conditions persist in many areas of our state, so does the risk of wildfire and the potential for wildfires to grow quickly out of control once they start,” said DNR’s Commissioner of Conservation Jim Welsh. He reminded operators that state regulations require combustible vegetation, trash and debris should always be kept at least 100 feet away from wellheads, production equipment, storage tanks and other exploration and production site structures.

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TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

- TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

Friday, September 02, 2011
TAG Oil Ltd.

TAG Oil reported that it has entered into a farmout agreement with Apache to explore and potentially develop oil and natural gas resources in the East Coast Basin of New Zealand.

Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940. The Permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island. TAG currently holds a 100% working interest in the properties.

Apache has agreed to pay for a portion of TAG's direct costs incurred to date, as well as providing TAG a full carry on three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the Agreement.

Each phase of operations will include an aggressive program of both 2D / 3D seismic and drilling with Apache earning an increasing interest in the Permits as follows:

• Phase 1: Apache will earn a 50% interest in 5,120 acres of the Permits after operations are conducted and by committing to Phase 2.
• Phase 2: Apache will earn a 25% interest in the Permits after operations are conducted and by committing to Phase 3.
• Phase 3: Apache will earn a 50% interest in the Permits after operations are conducted and by committing to Phase 4 operations.

Subject to certain conditions, the planned exploration work program will be conducted over the next four years. Seismic operations will start in 2011 with drilling to commence in 2012.

Apache will be the Operator for all activities undertaken pursuant to the Agreement, excluding the initial four vertical wells of the work program that TAG will operate with Apache's assistance. Apache will spend up to $100 million upon completion of Phase 3 to earn a 50% interest in the Permits. At the end of Phase 3 operations TAG will remain as operator of the Permits. If Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and TAG going forward.

TAG Oil CEO, Garth Johnson, commented, "TAG Oil is excited and honored to partner with Apache in the East Coast Basin to achieve a common goal of converting the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner. We are planning an aggressive exploration program with Apache with a starting date of September 2011 to initiate seismic acquisition with drilling to begin in early 2012"

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EGPI Negotiating for East Texas, La. Properties

- EGPI Negotiating for East Texas, La. Properties

Tuesday, August 30, 2011
EGPI Firecreek Inc.

EGPI Firecreek, Inc. (EGPI) is in the final stages of negotiations for a binding agreement to acquire multiple leases for oil and gas production currently servicing East Texas and Louisiana through the current leaseholder (The company).

The company has been in business for over 15 years as an oil and gas production company with approximately 10 to 12 producing wells at depths of 2,200 to 2,400 feet. They currently employ approximately 18 people and own all servicing equipment to maintain its well operations.

Negotiations for the acquisition have been ongoing and are estimated to include acquiring 100% working interests and 80% of the corresponding net revenues of the properties which encompass approximately 2000 acres in East Texas and Louisiana.

EGPI’s Board of Directors have given permission to move into the final stages of negotiations in order to execute a formal binding agreement.

Dennis Alexander, EGPI's CEO, stated, "We believe this target acquisition meets our criteria in assisting EGPI’s continued growth plans for the integration of assets and revenue stream for our Oil & Gas division. We are working diligently in order to finalize this agreement within a reasonably short period of time.”

About EGPI Firecreek, Inc.

EGPI Firecreek, Inc.'s business and acquisition strategy is focused on oil and gas production with an emphasis on acquiring existing fields with proven reserves, the rehabilitation of potentially high throughput oilfields, resource properties and inventories, through its wholly owned subsidiary Energy Producers, Inc. (Energy Producers) and for oil and gas servicing business through its wholly owned subsidiary Chanwest Resources, LLC. EGPI Firecreek, Inc. is also looking to expand into alternative energy sources as well as industries in the energy field.

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Seadrill Strengthens Mid East Presence with KJO Deal

- Seadrill Strengthens Mid East Presence with KJO Deal

Tuesday, August 09, 2011
Seadrill Ltd.

Seadrill has been awarded two new contracts by KJO (AL-Khafji Joint Operations) in the joint development zone between the Kingdom of Saudi Arabia and Kuwait for the jackup rigs West Triton and Offshore Resolute. The assignments which will commence in direct continuation of their current contracts in Southeast Asia are each for a firm period of 3 years plus the time required to mobilize to the Arabian Gulf. Each contract also includes an option for KJO to extend the term for a further 1 year.

Alf C. Thorkildsen, Chief Executive Officer in Seadrill Management AS said, "These new contracts will strengthen the relationship with KJO, one of the key customers in the Arabian Gulf. In addition, relocating two rigs for term work and at attractive market rates serves our strategic desire to increase our long term presence in this active oil and gas region."

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Gulfsands Flows Rate of 5516 bopd at Khurbet East Well

- Gulfsands Flows Rate of 5516 bopd at Khurbet East Well

Monday, August 08, 2011
Gulfsands Petroleum plc

Gulfsands provided an update on operations in Syria.

Flow Testing of Khurbet East 19H ("KHE-19H")

The Khurbet East 19H ("KHE-19H") well has achieved a flow rate of 5516 barrels of oil per day ("bopd") on production test with an oil gravity of approximately 26 degrees API, similar in quality to the oil produced in the central portion of the Khurbet East Field. This production rate was obtained during a 2 hour main flow period under a 48/64th inch choke size and with an average wellhead pressure of 132 psi and with no associated production of formation water. The choke size was subsequently reduced to 32/64th inch, after which the well was flowed for a further 3 hours at an average rate of 3828 bopd, at an average wellhead pressure of 210 psi and with no production of water. The test was then terminated due to all available oil storage tank capacity being filled. The 67 meter horizontal productive section of this well is located in a sidetrack drilled in a south-southeasterly direction from the original KHE-19 vertical hole.

The oil flow rate of 5516 bopd from KHE-19H is the highest yet measured from any well within the Khurbet East field. This well has demonstrated that excellent reservoir quality exists from the central portion of the field all the way to the northern limit of the field.

Commissioning of Khurbet East Sub-station Production Facility

The oil processing capacity for the Khurbet East Field has been increased by approximately 3000 bopd after the construction and commissioning of a new oil processing sub-station ("EFP 2") with a design capacity of approximately 3000 bopd and located approximately 1.8 kilometers west of the Khurbet East Early Production Facility ("EPF"). At this new facility, gas is separated from the produced oil and the stabilized crude is pumped into storage tanks located within the EPF complex followed by subsequent delivery into the Khurbet East export pipeline. Well KHE-19H has been tied into the new sub-station and is estimated to be producing at a rate of more than 2900 bopd on a restricted choke.

As a result of these operational and construction activities, Block 26 oil production facility capacity is now more than 24,000 bopd. The reconciled production rate achieved at the expanded facilities as of 6th August, 2011 was 24,054 bopd, comfortably achieving and exceeding the Company's previously announced year-end 2011 production target of 24,000 bopd.

Block 26 Drilling Operations

Gulfsands drilling operations in Syria Block 26, using the Crosco E-401 and E-501 drilling rigs, are continuing as planned on the Yousefieh East and Safa exploration prospects. The results of these exploration drilling operations will be the subject of a future news release.

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Max Petroleum Discovers Oil in East Kyzylzhar

- Max Petroleum Discovers Oil in East Kyzylzhar

Monday, August 08, 2011
Max Petroleum plc

Max Petroleum announced that the KZIE-1 exploration well in the East Kyzylzhar I prospect has reached a total depth of 1,620 meters, with electric logs indicating 17 meters of net oil pay in two Jurassic sandstone reservoirs at depths ranging between 987 and 1,251 meters. Reservoir quality appears excellent with porosities ranging from 20% to 30%. The Company is running production casing in the well, which is expected to be completed and placed on test production in approximately 60-90 days.

Robert B. Holland, Executive Co-Chairman, commented, "We have now made five field discoveries since we renewed our post-salt exploration program in January 2010, with another three post-salt prospects to test this quarter alone. We are well positioned to execute on our exploration program regardless of macro market conditions and look forward to continue generating significant value for our shareholders in the very near-term."

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China North East Petroleum Briefs Preliminary Results for 2Q11

- China North East Petroleum Briefs Preliminary Results for 2Q11

Friday, July 22, 2011
China North East Petroleum Holdings Ltd.

China North East Petroleum Holdings announced preliminary second quarter 2011 oil production results and second quarter 2011 drilling results for its oil drilling and service subsidiary, Tiancheng.

The Company's crude oil production for the 2011 second quarter was 160,600 barrels, a 1.5% decrease sequentially from 162,990 barrels in the 2011 first quarter. The total number of wells in production as of June 30, 2011 was 295 compared to 295 wells in production as of March 31, 2011.

Additionally, the Company's oil drilling and service subsidiary, Tiancheng, completed drilling contracts for 40 wells with a total drilling depth of 60,817 meters (199,531 feet) in the second quarter of 2011 compared to 26 wells drilled with a total drilling depth of 45,327 meters (148,711 feet) in the first quarter of 2011.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "We were pleased that our oil production results for the second quarter were within our quarterly production guidance range of 160-180 thousand barrels. There was a slight decrease in our sequential quarterly production results due to the short-term closure of approximately twenty wells in the second quarter to conduct fracture work which, after completion, typically results in greater oil production yields.

"Tiancheng's drilling activity improved considerably in the second quarter compared with the first quarter 2011. The 54% sequential improvement in wells drilled at our Tiancheng subsidiary was due to increased drilling activity by PetroChina ('PTR') Jilin and the return to a more consistent work schedule by our drilling crew. We are encouraged to observe increased drilling activity for PTR Jilin and hope to continue to benefit from expanded drilling initiatives at PTR as well as with private operators in the second half of 2011. We look forward to updating investors on our initiatives when we officially report our second quarter 2011 results in August."

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Far East Energy Notes 66% Increase in Shouyang Block

- Far East Energy Notes 66% Increase in Shouyang Block

Friday, July 22, 2011
Far East Energy Corp.

Far East Energy announced the results of an independent report prepared by Netherland, Sewell & Associates, Inc. ("NSAI") evaluating, as of June 30, 2011, the net contingent gas resources and Net Present Value at 10% Discount ("NPV10") of the net contingent cash flow for the three target coal seams in Far East Energy's 485,000 acre (1960 square kilometers) Shouyang Block, situated in Shanxi Province, China.

The report, which is subject to certain limitations and assumptions described therein, gives a Best Estimate of NPV10 of $1.23 billion, which reflects a 66% increase over the previously prepared NSAI report as of December 2010; a High Estimate of $2.11 billion, which reflects a 44% increase; and a Low Estimate of $319.30 million, which reflects a 143% increase.

"Obviously, this is an exhilarating report. It reflects the great potential of the Shouyang Block project," said Michael R. McElwrath, CEO and President of Far East. "These estimates not only reinforce the belief we have had in this project since the beginning, but it also better defines the economic potential of the Shouyang Block. As you may recall when we released the December 2010 NSAI report we stated that it was our hope and belief that the numbers then reported by NSAI, were just the beginning indicators of the Shouyang Block's vast resource potential. Now, with the receipt of the latest NSAI report, a mere six months later, this is being borne out. As the Company continues its development of the Shouyang Block project, with operations now under the oversight of David Minor, Executive Director of Operations, we believe we are well positioned to enter the next development phase and expect to see increased well-by-well gas rates coupled with sustainability."

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Max Petroleum Starts Drilling at East Kyzylzhar Prospect

- Max Petroleum Starts Drilling at East Kyzylzhar Prospect

Tuesday, July 12, 2011
Max Petroleum plc

Max Petroleum has commenced drilling the KZIE-1 exploration well on the East Kyzylzhar I prospect in Block E. Total depth of the well will be approximately 1,500 meters, targeting potential Jurassic and Triassic reservoirs.

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SeaBird Secures LOI for 2D/3D Surveys in Far East

- SeaBird Secures LOI for 2D/3D Surveys in Far East

Tuesday, July 05, 2011
SeaBird Exploration plc

SeaBird provided a contract update regarding its business activities.

After completing half of her multi client survey in the Gulf of Mexico mid April, Osprey Explorer, will from mid July continue her multi-client survey following dry dock and standby waiting on environmental and other governmental approvals. This survey will be completed end August. Management expects cost recovery during the survey period including standby time with potential uplift following sales of survey data in the second half of 2011. She will then immediately mobilize for her previously reported survey in South America until early December 2011.

After completion of her current survey in South Africa around mid July, Northern Explorer will immediately mobilize for West Africa following an award for a survey with expected completion end September 2011 and thereafter commence a short survey through to end October.

SeaBird has received Letter of Awards for 2 further contracts for 2D/3D surveys in Far East, with expected completion January 2012.

These contracts have a combined value of about US $25-30 million. In addition, the harrier Explorer is continuing on her long term charter with PGS to mid September 2011.

CEO, Tim Isden, commented, "We are encouraged by the increase in volume and continuity in the 2D and low end 3D market. In addition we experience slightly firmer rates. SeaBird has a high quality fleet and an excellent reputation with clients, and this brings a higher expectation of awards. To date in 2011, SeaBird has reported contracts worth around US $70 million with potential MC sales uplift above that figure."

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Chevron Exec: East Europe Shale Development Slower Than In US

- Chevron Exec: East Europe Shale Development Slower Than In US

Wednesday, June 29, 2011
Dow Jones Newswires
MOSCOW
by Jacob Gronholt-Pedersen

U.S. oil major Chevron is optimistic about the geological potential at recently acquired shale acreage in Eastern Europe, but says lack of infrastructure and a poor regulatory environment will slow down the development.

Unconventional gas sources such as shale gas, which has shaken up the U.S. gas market in the past two years, have also caught the interest of major players in Eastern Europe.

"It's not easy to replicate the shale gas developments we saw in the U.S.," Jay Pryor, Chevron Vice President in charge of global business development, told Dow Jones Newswires in an interview.

The U.S. oil major has acquired shale gas acreage in Poland, Bulgaria and Romania.

"We certainly think the reservoir potential is there, but it will take a little longer to develop," Pryor said.

"The regulatory environment as well as the infrastructure, including pipelines and service work necessary to drill the wells, just isn't as developed (as in the U.S.)," he added.

Shale gas and oil are being produced using relatively new technologies such as hydraulic fracturing, which involves injecting a mixture of water, sand and chemicals underground at high pressures to release oil from hydrocarbon deposits.

In recent years, these technologies have unlocked shale oil and gas that weren't previously accessible, leading to a boom in new wells across the U.S. and flooding the market with natural gas. In 2009, the U.S. surpassed Russia as the world's biggest gas producer in 2009.

Most of the attention is in the U.S. around accomplished shale basins in North Dakota and Texas. Following a $3.2 billion acquisition of gas producer Atlas Energy in the beginning of the year, Chevron last month acquired the rights to 228,000 acres in the Marcellus Shale.

"We expect others are to be found around the world, and we are certainly looking for them," said Pryor.

However, there are significant hurdles to further development of shale deposits both in the U.S. and globally. After years of rapid growth, shale gas producers have begun to bump into cost constraints and particularly environmental concerns about water contamination during the drilling process.

Copyright (c) 2011 Dow Jones & Company, Inc.

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EOG Resources Contracts Seafox Rig for East Irish Sea Work

- EOG Resources Contracts Seafox Rig for East Irish Sea Work

Monday, June 20, 2011
Seafox Contractors B.V.

EOG Resources United Kingdom Limited, a subsidiary of EOG Resources, Inc., has signed a contract with Seafox Contractors for the use of accommodation and multi-support jackup Seafox 1 at the Conwy field in the East Irish Sea.

Seafox Contractors will provide EOG with one of her jackups to assist with piling works and the hook-up and commissioning of an offshore structure at the Conwy field. Besides the installation works, Seafox 1 will be re-positioned to the Douglas platform to perform accommodation and crane services.

"We are very pleased to work on EOG's first oil project in the East Irish Sea and we are confident to deliver a successful project to EOG Resources," said Keesjan Cordia, Managing Director of Seafox Contractors BV.

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Salamander Begins Drilling at East Kalimantan

- Salamander Begins Drilling at East Kalimantan

Monday, June 20, 2011
Salamander Energy plc

Salamander announced the spud of the South Sebuku-2 ("SS-2") appraisal well, Bengara-1 PSC, East Kalimantan. The onshore South Sebuku gas discovery was made in 2009 and is thought to contain gross mean contingent resources of circa 80 Bcf. Salamander has a 41% interest in the Bengara-1 PSC.

SS-2 will target gas-bearing sandstones in the Tabul, Meliat and Naintupo formations and be drilled to approximately 1,370 metres total vertical depth sub-sea. It will be drilled using the HPS-1 land rig and is expected to take approximately 30 days to complete on a dry hole basis.

In the event of appraisal success, the Bengara-I partners will look to tie the South Sebuku discovery into the South Sembakung gas field, located within the neighboring Simengarris PSC. The South Sembakung development is currently on-going with a view to coming on-stream in 4Q 2012, in order to supply the Bunyu Island Methanol plant with 25 MMscfd.

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Foreign Scientists in East Java to Study Lapindo Mudflow

- Foreign Scientists in East Java to Study Lapindo Mudflow

Thursday, May 26, 2011
Asia Pulse Pte Ltd.

Scientists from a few foreign countries including Germany and Britain have arrived in Sidoarjo to observe and study the center of the 5-year-old Lapindo mudflow in the Porong area.

"We have come here to observe from close quarters the conditions of the Lapindo mudflow," Jeffrey Richard, executive director of Humanitus, said on Wednesday.

The center of the mudflow is located near the Banjar Panji I well drilled by Lapindo Brantas oil and gas company in Porong.

The scientists would study the hot mud that has been surging from a hole in the ground for the past five years without any sign of abating.

"We have assembled scientists from several countries who will try to determine what had created the continuing mudflow considered to be the biggest of its kind in the world," Jeffrey said.

He said it had been estimated the phenomenon could last for up to 25 to 30 more years.

All the members of the scientists team would each do their individual observations on the mudflow`s center and later meet to discuss their findings.

There had so far been a difference of views among geologists about what caused the mudflow. Some of them had said the mudflow came into being by a drilling mistake but others attributed it to a natural development.

British geologist Richard Davies was "99 percent" convinced the mudflow had been caused by a drilling mistake.

"We will also conduct a further study on what impacts the mudflow will have in the future," Davies said.

Meanwhile, Russian geologist Sergey Kadurin said the mudflow was a result of a natural occurrence, as had been the case in similar phenomena in other countries.

"It could have been related to the existence of an underground volcano in the past that had been forgotten by the local populace," he said.

The results of the studies of the foreign scientists would eventually be written down and published in a book.

(C) 2011 Asia Pulse Pte Ltd.

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East West Petroleum Enters MOU to Develop Romania Blocks

- East West Petroleum Enters MOU to Develop Romania Blocks

Wednesday, May 25, 2011
East West Petroleum Corp.

East West Petroleum and Naftna Industrija Srbije j.s.c. Novi Sad ("NIS") announced the final stage of conclusion of agreements for upstream cooperation which is to rapidly advance the development of its four Romanian onshore blocks EX-2 (Tria), EX-3 (Baile Felix), EX-7 (Periam) and EX-8 (Biled). The joint exploration programs planned will include the collection and processing of approximately 900 km of 2D and 600 sq km of 3D seismic data with a minimum of 12 wells to be drilled on the four blocks in Romania. The terms of the agreement are: NIS will fully fund all environmental work, 2D and 3D seismic acquisition and processing, and the drilling of 12 wells, to earn an 85% participation interest. NIS will also refund 100% of EWP's sunk costs which total C$525,000 and EWP will retain a 15% carried interest to commercial production on all four blocks.

In an earlier agreement the Company signed Concession Agreements for four onshore exploration blocks EX-2 (Tria) EX-3 (Baile Felix), EX-7 (Periam) and EX-8 (Biled) with the Romanian National Agency of Mineral Resources.

The new petroleum licenses are located in the western region of Romania within the prolific Pannonian Basin. The blocks have a combined area of approximately 1,000,000 acres. The blocks, which contain multiple exploration targets, lie within a major producing region of western Romania. The blocks have been only moderately explored, with previous exploration on the acreage generally limited to shallow structural traps. The Company has identified a number of structural and stratigraphic leads in the deeper section and plans to focus its exploration activities on the conventional oil and gas potential in addition to unconventional shale gas potential.

EWP and NIS plan to cooperate extensively to explore for and produce oil and gas from the four concession areas. Both conventional and unconventional resource potential has been identified on the acreage, which is situated close to numerous oil and gas fields. The joint work programs planned will include the acquisition and processing of approximately 900 km of 2D and 600 sq km of 3D seismic data during the first two years of operations. The new seismic data will be used to high-grade a number of prospective conventional oil and gas leads already identified on the acreage, to further study the unconventional shale potential and select drilling sites. Under the terms of the agreement East West will retain a 15% carried interest through Phase 1 (compulsory) and Phase 2 (optional) exploration periods as well as a carried interest on any discovery through to the declaration of commerciality. EWP will retain a 15% share of all production realized from the four concessions.

NIS is a leading explorer in this sector of the Pannonian Basin. NIS is currently carrying out extensive E&P operation in the Vojvodina region of northern Serbia, immediately adjacent to the Romanian Periam and Biled Concessions. NIS's operational capabilities and knowledge of regional geology are expected to contribute significantly to the success of the Romanian exploration programs.

The exploration programs are subject to final ratification of the Concession Agreements by the Government. The farmout to NIS will be subject to further agreements and approval of NAMR, which is expected to take place soon after the Government of Romanian ratifies the Concessions.

"The cooperation agreement with East West will allow NIS to expand its presence outside Serbia and to implement NIS's strategy of becoming an active player in the Balkan energy market. Participation of NIS in the project as operator will allow us to further our experience in the region and to apply innovative technologies for developing conventional and unconventional resources," commented Kiril Kravchenko, NIS Chairman of the Management Board.

Denis Sugaipov, the COO of NIS Company said, "The deal with East West Petroleum has several operational synergies for both companies and benefits for the Romanian energy sector. NIS's geological knowledge of Pannonian basin and its success in development can be applied to an area which is analogous to the Serbian North Banat region. In addition, EWP can contribute its technical expertise in unconventional resources. I hope that this deal will show results in the near future and contribute to the development of the Romanian energy sector, enabling the sustainable development of the entire region."

David Sidoo, Chairman of East West commented, "These agreements are the culmination of many months of hard work and we are confident that in Naftna Industrija Srbije, a subsidiary of Gazprom Neft, we have sourced a key and strategic partner, with substantial operating experience and the necessary financial and operating capabilities which can be applied to the Romanian concessions and can very quickly advance with the development of the Romanian concessions."

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Indonesian Govt to Hunt for More Oil in The East

- Indonesian Govt to Hunt for More Oil in The East

Friday, May 20, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia

Unexplored oil and gas reserves in eastern Indonesia will play a vital role in securing the country's energy needs in the future, therefore more investment is necessary to develop the area, a minister said.

"As many oil and gas fields are maturing -- continuing their natural decline -- we're optimistic that frontier and deep water areas, which are mostly located in the eastern part of Indonesia, will contribute significantly to future production," Energy and Mineral Resources Minister Darwin Zahedy Saleh said in a speech at the opening ceremony of "The 35th Indonesian Petroleum Association (IPA) Annual Convention and Exhibition" at the Jakarta Convention Center.

The government has launched several initiatives to encourage investment in the area, such as increasing the number of offered working acreages for oil, gas, coal bed methane (CBM) and geothermal sources, he said.

"We are upbeat seeing the positive responses to new blocks offered in deep water and frontier areas such as Semai, Halmahera, West Aru, Southwest Timor and South Java," Darwin said.

Vice President Boediono, who officially opened the event, reaffirmed the government's commitment to promoting natural gas as the main energy source to fuel Indonesia's robust economic growth following the country's failure to boost oil production.

"Last year, I mentioned that gas was our future. That remains our basic policy. The government obviously has a strong interest in keeping them on track and will continue to closely monitor their progress," Boediono said.

He said the government would continue to facilitate "gradual moves toward economic pricing for domestic gas use" and direct negotiations between gas producers and consumers to tackle pricing problems.

"However, we know that the key issue is greater than this. The critical step is how to accelerate the development of gas infrastructure," Boediono said.

He promised that the government would speed up the completion of gas pipelines in Java and the construction of floating storage and re-gasification units in Sumatra and Java.

"One unit in the Jakarta area is expected to be ready as early as 2012," he said.

Commenting on declining oil production in the country, Boediono expressed his disappointment, saying that it was bad for the country's energy security and state revenues.

He personally requested upstream oil and gas regulator BPMigas and the Energy and Mineral Resources Ministry to work harder to solve the problems of unplanned shutdowns and to encourage oil companies to conduct enhanced oil recovery measures to increase production.

"I will be asking BPMigas and the Energy and Mineral Resources Ministry to pay more serious attention to these issues," he said.

IPA president Ron Aston, who is also the general manager of Australia-based oil and gas firm Talisman, supported the government's vision to prioritize natural gas as the main energy source in the future.

But, he said boosting gas production might be very challenging, particularly when sources were found in remote areas like the eastern part of the country.

"Industries fully support this idea, but it can only be achieved with the installation of much needed domestic infrastructure like transmission pipelines, liquefaction plants and receiving terminals," he said.

Aston also urged oil and gas companies operating in Indonesia to explore the country's extensive unconventional gas resources like CBM and shale gas.

"Around the world we see the growing importance of CBM and shale gas and they can play a vital role for Indonesia. But, the effort needs to be supported by appropriate regulations, incentives and partnerships to ensure that the necessary investment is forthcoming," he said.

Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network

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Far East Energy Reports Shouyang Production Testing Results

- Far East Energy Reports Shouyang Production Testing Results

Monday, May 16, 2011
Far East Energy Corp.

Far East Energy announced the preliminary results of production testing on the SYS02, P8 and P12 pilot development test wells in the Shouyang Block. The SYS02 well is located midway between the northern and southern boundaries of the block and is approximately 20 kilometers south of the 1H production area. It is producing from a depth of 1274 meters which is several hundred meters deeper than the Company's wells in the northern portion of the block. Initial calculations indicate the Company has again found high permeability in the #15 coal seam, and that the high permeability observed at shallower depths also exists well down-structure at much greater depths.

The P8 is 12 kilometers due east of the 1H area. Preliminary production tests at the P8 also indicate high permeability. The P12 pilot development test well is located approximately 22 kilometers southeast of the 1H area and is producing between 35 and 60 Mcfpd, with indications of high permeability. If these preliminary high permeability results are maintained in the SYS02, P8, and P12, then this will indicate that the entire upper half of the block (approximately 980 square kilometers or 242,500 acres) may have high permeability and be potentially commercial.

In addition, drilling activities of pilot development test wells P18, and SYS05 are proceeding. These wells represent test wells reaching out as far to the east and south as the Company has drilled to date. The SYS05 well is located well into in the lower half of the block, approximately 14 kilometers south and 22 kilometers east of the SYS02 and 35 kilometers south of the producing 1H area. Pilot development test well P18 well is located 26 kilometers southeast of the 1H area, in the far eastern area of the block. These wells will give the Company an expanded look at the permeability of the #15 coal seam at a significant distance from the present producing area and well beyond the recently drilled SYS02 and P12 wells. These test wells will provide valuable information regarding the prevailing permeability in a previously-untested significant portion of the Shouyang Block.

As announced on May 4th, the Company is connecting 14 previously drilled wells to its gathering system. In addition, 3 wells currently being drilled, and 9 wells with locations prepared for drilling, will be connected. This will add a total of 26 additional wells to our original gathering system, bringing the total number of wells tied to the gathering system to 56.

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Minor to Lead Ops at Far East Energy

Minor to Lead Ops at Far East Energy

Monday, May 09, 2011
Far East Energy Corp.

Far East Energy Corp. announced Monday that the Company welcomes David J. Minor as Executive Director of Operations reporting directly to Michael R. McElwrath, CEO and President.

"We are very pleased to have Dave Minor join our team," said Michael McElwrath. He continued, "With his excellent credentials, Dave brings extensive coalbed methane experience to the table, with direct and comprehensive involvement in Alabama's Black Warrior Basin. As we move into the development stage of our operations at Shouyang, it is appropriate that we add advanced skill sets to our management capacity and Dave certainly advances our collective competencies for our CBM projects in China."

In his role as Executive Director of Operations for the Company, Minor will utilize his expertise to provide guidance and advice on all operational aspects of its Coalbed Methane Projects in China. His near term goals are to implement a series of operations objectives aimed at increasing the CBM production for currently existing wells and maximizing production for newly drilled wells.

With over thirty years of engineering and management experience, including project planning, drilling, completion and production, Minor has spent the majority of his career in management and technical supervisory roles; and most recently, a transition role as President and General Manager of Walter Black Warrior Basin LLC, a Walter Energy subsidiary, operator of approximately 1,400 coalbed methane wells in Alabama's Black Warrior Basin.

Minor served as Chairman of the Coalbed Methane Association of Alabama (CMAA) from 1996-1997 and again from 1999-2002. He has also served on the Environmental, Tax and Safety Committees. Minor is a member of the Society of Petroleum Engineers and served on numerous Committees. Other professional affiliations include the National Society of Professional Engineers, The University of Alabama Capstone Engineering Society, and The Order of the Engineer. He is a Registered Professional Engineer in Alabama, Mississippi, Oklahoma, Arkansas and Texas. Minor graduated from the University of Alabama with a BS Biology; a BS Civil Engineering; and, a MS Mineral Engineering (Petroleum).

"We look forward to the technical focus that Dave will bring to Far East," said Donald A. Juckett, Chairman of Far East. "We anticipate excellent results from his tenure at Far East as he brings a wide range of technical experience to bear on the exciting Shouyang Block."

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corp. is focused on coalbed methane exploration and development in China.

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China North East Petroleum Wraps Up Shengyuan Acquisition

China North East Petroleum Wraps Up Shengyuan Acquisition

Monday, April 25, 2011
China North East Petroleum Holdings Ltd.

China North East Petroleum has completed its acquisition of Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd. ("Shengyuan"). As a result of the Acquisition, Shengyuan is now a wholly-owned subsidiary of Songyuan. Pursuant to a 25 year lease signed in 2010, Shengyuan has exclusive oilfield exploration and drilling rights to the Durimu oilfield in Inner Mongolia.

As is common among all private, independently-owned and operated oil companies in China, NEP does not directly own its oil fields in China and is only allowed to obtain exploration and drilling rights from qualified state-owned-enterprises ("SOE's"). The Durimu oilfield belongs to Yanchang Petroleum Group ("Yanchang"), the fourth largest SOE for oil and gas exploration in China. Yanchang has assigned management over oil exploration and production activities in the Durimu oilfield to Sunite Right Banner Jianyuan Mining Co. Ltd. ("Jianyuan"), a local SOE. In turn, Jianyuan has entered into an agreement with Shengyuan, granting Shengyuan exclusive oilfield exploration and drilling rights in the Durimu oilfield (the "Lease"). Yanchang has qualified Shengyuan to operate in the Durimu oilfield subject to the supervision of Jianyuan. The Company will benefit from the 24 years remaining under the Lease and Shengyuan has the first right of refusal to renew the Lease at the end of its term.

Ralph E. Davis, an independent worldwide petroleum consultant based in Houston, Texas, conducted a proven reserve study of the portion of the Durimu oilfield subject to the Lease in accordance with generally accepted petroleum engineering and evaluation principles and in conformity with SEC definitions and guidelines. The Ralph E. Davis study was based on the performance of the three existing exploration wells. The Ralph E. Davis study estimated total proven reserves ("total P1") in the Durimu oilfield at 1.54MM Barrels and the PV10 at approximately $46.4MM. The PV10 includes the estimated future gross revenue to be generated from the production of the proven reserves, net of estimated production and development costs, and with an annual discount rate of 10%. The PV10 also excludes the 25% royalty to the SOE.

According to a geological study conducted by PetroChina's North Center Branch Exploration and Development Research Institute, the Durimu oilfield has geological reserves of 77.5MM tons (approximately 573.5MM barrels), and a recoverable reserve of approximately 19.38MM tons (approximately 143.4MM barrels). PRC geologists have also suggested that the optimal number of wells that can be drilled in the Durimu oilfield is in excess of 2,000.

Pursuant to the terms of the Share Transfer Agreement and the Share Issuance Agreement, the final acquisition price is approximately $43.4 million payable in cash and shares of the Company's common stock. No later than May 16th ("or within the next 15 business days"), the Company's subsidiary Songyuan Yu Qiao Oil and Gas Development Co., Ltd. will pay the former Shengyuan shareholders RMB70 million (approximately US$10.6 million) in cash. In addition, the Company will issue to Bellini 5.8 million shares of the Company's restricted Common Stock (the "Acquisition Shares"), which carries a value of $32.8 million based on the 30 day trading average from December 6, 2010-January 7, 2011. The cash portion of the purchase price will be paid utilizing cash on hand. In addition, Bellini has entered into a lock-up agreement pursuant to which Bellini is prohibited from disposing of any Acquisition Shares for a period of six months after the closing date of the Acquisition and is prohibited from disposing of 50% of the Acquisition Shares for a period of 12 months after the closing date of the Acquisition.

Mr. Jingfu Li, CEO of China North East Petroleum commented, "This acquisition will allow NEP to expand its operations and secure additional oil reserves that can provide better overall returns on our investment. The Durimu oilfield is nearly three times larger than the four oilfields we currently lease in PetroChina's Jilin oilfield with much larger oil extraction and drilling opportunities. We have the knowledge and experience to scale production in the Durimu oilfield aggressively in the coming years and further establish NEP as a major independent, regional oil producing and oilfield services company in China."

Additional Acquisition Details

According to the terms of the Lease, Shengyuan is entitled to 75% of all production revenue while 25% is allocated to Yanchang. Shengyuan will only be subject to income tax on its 75% portion of the oil production revenue. All oil produced by Shengyuan is required to be sold to refineries/buyers already qualified by Yanchang.

Over time, the Company intends to shift the focus of its oil production segment from its four fields within the Jilin oilfield to the Durimu oilfield. The Company has already issued requests for bids from qualified independent geological consulting firms in China for the preparation of the survey plan and seismic test program for the Durimu oilfield. The Company expects to complete the bidding process and select the winning firm by the end of the second quarter, and to begin seismic testing by the beginning of July. After seismic testing begins, the Company expects the initial survey results to be completed within 30 working days. The Company's in-house engineering team will then work with the geological consulting firm to develop a preliminary production plan. The Company expects initial test drilling to commence by the end of the third quarter.

The Company currently plans to utilize two or three drilling rigs that belong to its subsidiary Song Yuan Tiancheng Drilling Engineering Co., Ltd. ("Tiancheng") to conduct the initial test drilling. The Company intends to charge Shengyuan for such drilling services at market rates. This initial stage is expected to last approximately 12-18 months, and during such period, any oil produced will be sold to qualified buyers which will generate revenue and cash flow to support the Durimu oilfield exploration program. After this initial stage is complete, the Company intends to begin drilling in Durimu with an expected overall increase in production, which will in turn generate greater revenues and more stable cash flows. The Company believes its activities in the Durimu oilfield will not affect current production levels and operating cash flow from the Company's four existing Jilin oilfields.

Crude For May Delivery Approaches $112 A Barrel

Crude For May Delivery Approaches $112 A Barrel



Light crude for May delivery approached the $112 a barrel level, while Brent crude futures rose $1.74 to $124 a barrel.

Buying momentum has continued as hopes fade for a quick resolution of conflicts in Libya. Last week, crude-oil futures traded at $106 a barrel and prices have only climbed since then.

The weakening of the U.S. dollar and uncertainty over a possible U.S. government shutdown helped crude-oil prices increase.

Tudor Pickering Holt analysts said, "Middle East tensions driving further crude-oil gains from these elevated levels will make us incrementally more nervous about energy demand, the economy and inflation."