Magnum Hunter: Proposed Acquisition in Williston Basin Did Not Close

- Magnum Hunter: Proposed Acquisition in Williston Basin Did Not Close

Friday, August 19, 2011
Magnum Hunter Resources Corp.

Magnum Hunter announced that the previously announced proposed acquisition by its wholly owned subsidiary, Williston Hunter ND, LLC, of oil and gas properties in the Williston Basin in North Dakota from Eagle Operating, Inc. ("Eagle") did not close yesterday due to unresolved issues between the parties resulting from what Magnum Hunter considers to be Eagle's intentional and bad faith breach of its obligations under the Purchase and Sale Agreement ("PSA"). In the proposed acquisition, Magnum Hunter would have acquired from Eagle for total consideration of $57 million ($55 million in cash and $2 million in Magnum Hunter restricted common stock), the remaining approximate 48% working ownership interest in the Williston Basin properties owned by Eagle, subject to Eagle's retention of a variable overriding royalty interest not exceeding 2% on certain properties.

The acquisition would also have resulted in the settlement of two pending lawsuits between the Company and Eagle currently filed in the United States District Court for the District of North Dakota (Northwestern Division), which litigation is now expected to continue. Management of Magnum Hunter does not consider this pending litigation to be of any material nature to the Company.

Magnum Hunter has today filed a new lawsuit against Eagle in the United States District Court for the District of North Dakota (Northwestern Division) asking the court to order Eagle to comply with its obligations under the PSA and complete the sale of the properties to the Company on the specific terms outlined in the PSA. Magnum Hunter is also seeking monetary damages, including compensatory, consequential and general damages, for Eagle's material default under the PSA. The Company intends to vigorously pursue all available remedies against Eagle.

As of August 18, 2011, Magnum Hunter had total liquidity including cash and availability under its various credit facilities of approximately $75 million, of which approximately $55 million is currently available to continue to fund its upstream capital program focused on the Company's high growth unconventional resource plays. In addition, Magnum Hunter has a commitment from its bank group to provide an additional $42.5 million in borrowing capacity for the purchase of the Eagle properties referenced above. Moreover, Magnum Hunter continues to pursue various non-dilutive alternatives to provide access to capital in order to fund capital budget needs later in fiscal year 2012.

Additional information regarding the Company's lawsuit against Eagle, including a copy of the complaint filed by the Company Friday in the United States District Court for the District of North Dakota (Northwestern Division), is contained in a Report on Form 8-K also filed today by the Company with the Securities and Exchange Commission.

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GE Acquires Commtest, Terms Not Disclosed

- GE Acquires Commtest, Terms Not Disclosed



Aug 19, 2011

General Electric (NYSE:GE) announced the acquisition of Commtest, a provider and designer of machinery health information systems.

GE Energy's Bently Nevada product line, a global leader in condition monitoring will incorporate Commtest products into its portfolio and enhance an already robust line up.

Art Eunson, general manager for GE's Bently Nevada product line said, "The acquisition of Commtest allows us to significantly upgrade our portable vibration data collection and analysis capabilities. Bently has an extensive portfolio of continuous monitoring solutions, sensors and transducers, software and supporting diagnostic instillation services, but the Commtest acquisition will help us bring our customers a more integrated offering that takes into account the health of the entire plant."

General Electric (NYSE:GE) has a potential upside of 47.2% based on a current price of $15.34 and an average consensus analyst price target of $22.58.

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Gas Boom Or Not, More Oil Rigs Now

- Gas Boom Or Not, More Oil Rigs Now

Thursday, August 18, 2011
Houston Chronicle
by Tom Fowler

Natural gas drilling has been the dominant energy story in the U.S. for the past few years, but oil is back with a vengeance.

For the first time in 18 years, the number of oil rigs working in the U.S. has exceeded the number of natural gas rigs, according to July rig data compiled by IHS-CERA, covering both land and offshore rigs.

By 2020 this surge in oil drilling could increase U.S. oil production by as much as 3 million barrels per day, Peter Stark, head of IHS-CERA's industry relations said Wednesday during a session launching the start of Summer NAPE, the semi-annual oil and gas prospects expo being held in Houston.

Two factors are spurring the surge in oil production.

The combination of horizontal drilling and hydraulic fracturing, which has unlocked previously inaccessible gas, also has opened up new possibilities for oil production.

Relatively low natural gas prices have prompted companies to focus exploration efforts on more valuable oil and natural gas liquids.

Oil actually may have returned to the top of the heap among U.S. drilling rigs earlier this year, according to another data set. Baker Hughes' rig count for onshore and offshore rigs has oil surpassing natural gas on April 21, (913 oil rigs vs. 878 gas rigs) for the first time since April 28, 1995 (343 oil rigs vs. 321 gas rigs).

And on June 24 the number of rigs drilling for oil surpassed the 1,000 mark for the first time since 1987.

IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.

The oil boom is showing up in well-known U.S. oil fields, like Texas' Permian Basin, and in newer fields like North Dakota's Bakken shale and the Utica shale in Ohio.

The surge could slow if natural gas prices continue to rise and make gas projects more attractive -- which many analysts expect in the next year.

Benchmark crude rose 93 cents Wednesday to $87.58 per barrel in trading on the New York Mercantile Exchange. Natural gas rose a penny to $3.93 per million British thermal units.

But at least for now, producers have reasons beyond crude and gas prices for renewed interest in oil.

In some cases drilling for oil can cost less than for gas. Tom Ward, CEO of SandRidge Energy, said his company is spending as little as $760,000 per well in the Central Basin field in the Permian, compared to several million per well in most shale gas fields.

John Christmann, head of Apache Corp.'s Permian Basin operations, said his company has acquired acreage in the Empire ABO field in the Permian, a field where no new wells have been drilled since 1984.

"In some cases you have million-barrel wells that have never had an offset drilled near them," Christmann said, seeing strong potential for large quantities of oil.

Oil shales will be a big topic on the floor of NAPE this year, as attendees assess potential oil and gas drilling and production projects.

Started in 1993 as the North American Prospect Expo with 80 booths and about 800 attendees, NAPE is now held twice a year, and the winter 2011 gathering in Houston had 1,600 booths and drew 16,000 attendees.

This week's Summer NAPE is expected to draw about 5,600 attendees and 600 booths.

Scott Wilmoth, a vice president at Houston investment bank Simmons & Co., said NAPE gives big firms and small a chance to see a lot of different deals in one place.

"Deals get done across the board," Wilmoth said.

NAPE is also a networking opportunity, said Charles Cusack, Petrohawk's Vice President of Exploration.

"The main benefit has been the multitude of contacts made at NAPE that have indirectly led to deals," Cusack said. "The most significant NAPE transaction was my first meeting Dick Stoneburner (Petrohawk's chief operating officer) at NAPE in 2000 that led to my working with him for over a decade."

Wilmoth expects a lot of discussion at NAPE about tight oil plays, including the Utica, the Lower Smackover Brown Dense in Arkansas and Louisiana, the Tuscaloosa Marine Shale and horizontal Wolfcamp in the Permian basin, among others.

The shale gas plays will still get attention, however -- including the areas in the Eagle Ford that yield oil and natural gas liquids, and the Marcellus shale in the northeast U.S., Wilmoth said. Internationally, unconventional oil and gas opportunities in Argentina may be a big draw at NAPE as well.

While the business is famously cyclical, the recent oil boom surprised some in the industry.

During a recent meeting of the National Petroleum Council in The Woodlands, the group discussed an upcoming report on U.S. natural gas reserves. Not surprising, the group said, the study would report that North American natural gas resource potential was enormous.

"Secondly, and perhaps surprisingly to some of us and certainly to many Americans, our Canadian and American oil resource base is also very big news," said NPC member Susan Tierney.

Copyright (c) 2011, Houston Chronicle

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BP: N Sea Valhall Oil Platform Restart Not Seen Before Mid-Aug

- BP: N Sea Valhall Oil Platform Restart Not Seen Before Mid-Aug

Thursday, July 28, 2011
Dow Jones Newswires
LONDON
by Konstantin Rozhnov

Production at the BP-operated Valhall oil platform in the Norwegian sector of the North Sea is unlikely to resume before mid-August as the company needs to complete a review into a fire at the facility, a BP spokesman said Thursday.

Damage to the platform was modest and caused mostly by water used to spray on the fire, BP spokesman Matt Taylor said.

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

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Niobrara's Slow Start Not Cause for Worry

- Niobrara's Slow Start Not Cause for Worry

Tuesday, July 19, 2011
Knight Ridder/Tribune Business News
by Trevor Brown, Wyoming Tribune-Eagle, Cheyenne

The Niobrara oil play is off to a slow start, but state and industry officials say that is not unexpected or a reason for concern.

No oil rigs were operating in southeast Wyoming as of last Wednesday. This is down from about six in the area two months ago.

Wyoming Oil and Gas Conservation Commission Supervisor Tom Doll said many oil companies are waiting for updated seismic maps that show the underground Niobrara formation before they commit to expensive drilling operations.

"You want to get as much data as possible so you don't drill a $3 million to $4 million dry hole," he said. "My expectation is (the companies) want to have another tool of using that additional science to have a better opportunity to drill a productive well."

Texas-based Global Geophysical Services spent much of the spring using trucks and other seismic equipment to map areas beneath the surface of 831 square miles of land in Laramie County.

John Robitaille, vice president of the Petroleum Association of Wyoming, said it can take some time before the 3-D seismic maps are analyzed and sold to the oil companies.

"I can tell you it is some pretty technical data that they receive back," he said. "It then needs to be plotted and made into a format that is readable for the various geologists so they can get their plans made and know where they want to drill.

"And, of course, getting everything in place and lining up a rig takes all sorts of time as well."

Robitaille said he expects the activity to pick up in the fourth quarter of this year. In addition, up to three rigs are expected to return to Laramie County later this month.

According to the Oil and Gas Conservation Commission, 21 wells have been drilled to date in southeast Wyoming for the oil play -- 18 in Laramie County, two in Goshen County and one in Platte County.

Doll said although the companies are currently hesitant to drill, they are moving forward with other preparations, including obtaining drilling permits.

The Oil and Gas Conservation Commission issued 73 permits for drilling in Laramie County for the first quarter of 2011 and 60 in the second quarter.

In the second, third and fourth quarters of 2010, a combined 64 permits were issued here. Data from the first quarter of 2010 are not available.

Laramie County planner Gary Kranse said he estimates 1,500 drilling permits will be issued during the next five years here.

Both Doll and Robitaille said the relatively low number of wells that have been drilled so far is not a sign the oil play is a bust -- at least not yet.

"I wouldn't be too concerned because this is a slow-moving play," Robitaille said. "It is still very much in the exploratory phase of knowing where to drill."

A representative for Chesapeake Energy, which has announced a large stake in the oil play, would not comment on the specifics of why there has not been more drilling.

But John Dill, director of corporate development and government affairs for the company, agreed this exploratory phase can take some time before increased activity begins.

"It is also a very complex geology, and Chesapeake is only just beginning the process of exploring this vast, complicated play," Dill said in an email. "What may appear to be slow development of this extraordinary resource is primarily due to its size, complexity and the early stages of this effort."

Doll said there is too little information yet to determine how successful the play will be in the end.

This is because of the low number of commercial wells and rules that allow companies to keep their results confidential for up to six months.

"We just haven't seen enough drilling rigs and enough activity to really know if there is a play yet," he said.

Another reason for the oil play's slowdown could be because of increased activity in North Dakota, Doll said.

He said the Bakken oil play is gearing up to have 170 active drilling rigs and up to 290 by the end of the year. That could leave a shortage of equipment and workers for activity here.

"They claim that they are using many new rigs, so that may not be a problem," Doll said. "But my concern is: Where are you going to get the drillers, roughnecks and (fracking) crews who are trained to do the sophisticated work?"

Kranse added that companies could be taking time to develop the right formula for fracking the Niobrara shale.

Hydraulic fracturing, known as fracking, involves injecting a mixture chemicals and water into the earth to extract oil.

Copyright (c) 2011, Wyoming Tribune-Eagle, Cheyenne

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Petrofac Elects Not to Acquire Tassie Shoal Stake

- Petrofac Elects Not to Acquire Tassie Shoal Stake

Friday, July 01, 2011
MEO Australia Ltd.

MEO advised that Petrofac Energy Developments has elected not to exercise its option to acquire 5% interest in NT/P68 & Tassie Shoal Projects.

The option, which expired on June 30, 2011, was granted to Petrofac in October 2009. At this time Petrofac agreed to withdraw from the NT/P68 Permit and terminate the partially fulfilled farm-in agreement.

As a result of Petrofac's election, MEO has retained its undiluted interest in NT/P68 for which binding agreements were executed with Eni Australia Ltd (Eni) on May 17, 2011.

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Ahmadinejad Will Not Attend OPEC Meeting in Vienna

- Ahmadinejad Will Not Attend OPEC Meeting in Vienna

Tuesday, May 24, 2011
Knight Ridder/Tribune Business News
by Farshid Motahari, dpa, Berlin

President Mahmoud Ahmadinejad will not attend the next OPEC meeting scheduled for June 8 in Vienna, an Iranian oil ministry official said Monday.

Shojaeddin Bazargani told the official news agency IRNA that in a recent meeting, the president said that a minister would be assigned to represent the country both in the Vienna meeting and OPEC's joint session with the European Union.

Ahmadinejad last week dismissed oil minister Massoud Mirkazemi and took over the ministry himself, which would have also made him rotating chairman at the OPEC meeting in Vienna.

But Iran's constitutional watchdog, the Guardian Council, rejected the plan as illegal and said that Ahmadinejad could not run the oil ministry as caretaker.

The president's legal deputy, Fatemeh Bodaghi, said however that Ahmadinejad would remain caretaker of the ministry since the Guardian Council can only intervene on future decisions but not on those already made.

Ahmadinejad had argued that he planned to trim the cabinet, and one of his decisions was to abolish the oil ministry and merge it with the energy ministry. The plan led to wide-spread criticism in Parliament.

Ahmadinejad is involved in a row with Iran's clergy and conservative factions over his reform plans, which include reducing the cabinet from 21 to 17 ministries.

As caretaker of the oil ministry, Ahmadinejad would have been obliged to chair as well the OPEC meeting next month in Vienna, where protests against the Iranian president are reportedly being planned.

Copyright (c) 2011, dpa, Berlin

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EDITORIAL: Indonesia's Geological Prospects Not Enough

- EDITORIAL: Indonesia's Geological Prospects Not Enough

Friday, May 20, 2011
Knight Ridder/Tribune Business News

Most oil executives and hydrocarbon analysts agree Indonesia still has basins with large reserves and its geological prospect is quite attractive with the success ratio of oil prospecting among the highest in the world.

But that seems far from sufficient to woo new investors, as the steady fall in the country's oil and gas production and its decline from a major exporter into a net oil importer have proven. The upstream oil and gas regulatory body (BP Migas) itself acknowledged last week the average daily oil output during the first quarter was less than 900,000 barrels, far below the target of 970,000 bbl.

Last year, Indonesia also failed to achieve its output target of 965,00 bbl, lifting only 954,000 bbl.

Another piece of discouraging news, as purveyed by BP Migas executive Iwan Ratman, is that the implementation of 10 percent of exploration and production development projects this year fell behind schedule due to overlapping concession areas, arduous licensing procedures within regional administrations and land acquisition problems.

Even state oil company Pertamina suffered many delays in exploration works: It planned to drill 147 new wells this year but managed to complete only 25 wells in the first quarter. Worse still many producing fields suffered from unscheduled shutdowns, power-supply disruptions and damages to pipelines.

The three-day 35th annual oil and gas industry convention and exhibition of the Indonesian Petroleum Association which opened on Wednesday should be a great opportunity for the government and oil executives to thrash out the most pressing problems that stand between investors and the geological prospect.

The theme of the convention "Indonesia energy, growth, security and sustainability" fits well with the current situation Indonesia is facing within the hydrocarbon industry.

President Susilo Bambang Yudhoyono pledged at the opening of the 33rd IPA convention in 2009 to resolve regulatory, bureaucratic problems and lack of legal uncertainty that had affected the petroleum industry.

But there remained big concerns about uncertainty over cost-recovery regulations, corruption, interference by government agencies, the sanctity of contracts and the general regulatory structure of the upstream and downstream oil and gas industry. Legal and regulatory uncertainty and inefficient bureaucracy are especially inimical to investors in the upstream segment of the industry as this business involves high risks and requires big capital.

The hydrocarbon industry requires an even better investment climate now because most of the undiscovered, prospective basins are located in frontier, eastern areas.

The eastern regions have potentially big reserves that are not proven yet, but their prospecting requires sophisticated technology and huge investment, estimated at 10 times as large as those in Java and Sumatra, thereby involving bigger risks. Only by increasing proven oil and gas reserves will Indonesia be able to make its production sustainable and sufficient to meet its steadily rising consumption along with the constant expansion of its economy.

But the only way to enlarge its proven hydrocarbon reserves is to increase investment in exploration.

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

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Justice Dept Claims EPA Did Not Violate Range's Due Process Rights

Justice Dept Claims EPA Did Not Violate Range's Due Process Rights

Tuesday, May 10, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

The Justice Departments contends in court papers filed Monday that the Environmental Protection Agency did not violate Range Resources' constitutional right of due process when it issued a Dec. 7 emergency order against the company related to methane contamination of two residential water wells in Parker County.

Range's due-process argument is "without merit," the department said, arguing that the Fort Worth-based natural gas producer "seeks to curtail the EPA's emergency powers" under the federal Safe Drinking Water Act "in a manner that would seriously harm EPA's ability ... to address risks to underground sources of drinking water and public water systems."

The department filed a 31-page brief in a Dallas federal court where Senior Judge Royal Furgeson is considering a Justice Department complaint, filed Jan. 20, contending that Range failed to comply with three of six provisions in the EPA order. The department is asking Furgeson to deny Range's motion to dismiss the complaint.

Range has also filed an appeal with the 5th U.S. Circuit Court of Appeals in New Orleans.

The department said Range is entitled only to a hearing on whether it complied with the emergency order and "whether any civil penalties should be assessed." Fines could be $16,500 per day per violation.

In its Dec. 7 order, EPA said Range "caused or contributed" to the methane contamination of the water wells, likely from two nearby Range gas wells. Methane is the chief component of natural gas.

Range's wells were drilled more than a mile deep into the Barnett Shale, far below the water wells, which are roughly 200 feet deep.

Range spokesman Matt Pitzarella said late Monday that the company is reviewing the Justice Department's brief and that its "position remains the same": that it did not cause the water wells' contamination.

Range argues that the EPA's findings represent "sheer guesswork" based on "threadbare-thin" reasoning. It noted that EPA enforcement official John Blevins, who signed the emergency order, later backtracked somewhat, saying in a sworn deposition that Range "may" have caused or contributed to the wells' contamination.

Range argues that "there is 5,500 feet of the earth's strata separating the bottom of the private water wells from the subsurface horizontal sections" of its gas wells. The company contends that the EPA "does not even set forth a theory how gas could migrate from Range's wells to the aquifer."

The Texas Railroad Commission found March 29 that the Range gas wells did not cause the contamination. Its members said they agreed with its staff hearing examiners, as well as with Range and its consultants, that the gas in the water wells likely migrated from the shallow Strawn geological formation, into which some gas wells were drilled in the early 1980s.

Copyright (c) 2011, Fort Worth Star-Telegram, Texas. Distributed by McClatchy-Tribune Information Services.

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