Sevan Marine: Cost Increase for FPSO Sevan Voyageur

- Sevan Marine: Cost Increase for FPSO Sevan Voyageur

Friday, August 26, 2011
Sevan Marine ASA

Sevan Marine informed that the results for the second quarter of 2011 will be postponed until August 31, 2011. There will be no public presentation for 2Q-2011.

Following detailed project reviews and assessments on the FPSO Sevan Voyageur upgrade project, there has been identified additional costs to be incurred by the Company, resulting in a current cost estimate for the project in the range of USD 170-190 million. The increase from the previously announced cost estimate of USD 160-170 million is mainly a result of time related costs due to additional delays, in part as a result of the Company's challenging liquidity situation, as well as certain increased procurement costs for equipment and yard services. First oil is currently expected to take place during the second quarter of 2012. FPSO Sevan Voyageur is contracted to E.ON Ruhrgas UK E&P for the Huntington field in the UK North Sea. Estimated contract value is USD 535 million for the fixed term of five years. The contract has extension options.

The Board of Directors continues to hold constructive dialogue with bondholders and other relevant parties regarding a global restructuring of the Company's balance sheet.

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Exxon Mobil Estimates Oil spill in Yellowstone River will Cost Over $42 Million

- Exxon Mobil Estimates Oil spill in Yellowstone River will Cost Over $42 Million



Aug 22, 2011

Exxon Mobil (NYSE:XOM) Pipeline told federal regulators that its oil pipeline spill into Montana's Yellowstone River will cost an estimated $42.6 million.

The July 1 pipeline break near Laurel spilled about 42,000 gallons, or 1,000 barrels, of crude oil into the scenic waterway.

Exxon Mobil's cost estimate includes $40 million for emergency response work and $2.5 million for damage to public and private property. The company valued the lost oil at $100,000.

The company announced last week that the clean up might continue for several more months.

Exxon Mobil (NYSE:XOM) has a potential upside of 30.6% based on a current price of $70.78 and an average consensus analyst price target of $92.46.

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SBM Offshore CEO to Step Down after Cost Over-runs Hit Profits

- SBM Offshore CEO to Step Down after Cost Over-runs Hit Profits

Thursday, August 18, 2011
Dow Jones Newswires
AMSTERDAM
by Robin van Daalen & Patrick Buis

SBM Offshore Thursday reported semi-annual results that bested analyst expectations, but announced plans to replace its chief executive after a large cost-overrun pushed its results into the red.

SBM, which owns and operates offshore units for the oil and gas industry, reported a net loss of $265.3 million, a big drop from the $77.6 million net profit a year ago, but somewhat higher than analyst expectations. SBM pointed to record orders and cited heavy interest for additional work from Brazil, Angola and other petroleum centers.

But company results have been tarnished by a $450 million impairment charge related to two problem projects that has weighed on shares since it was announced in July. SBM announced that "in light of recent events," Chief Executive Tony Mace would step down and it would recommend Chief Operating Officer Bruno Chabas for the top spot.

"Stepping down is a matter of taking responsibility," Mace said at a meeting without giving further detail.

SBM shares opened higher Thursday following the disclosure, but later gave up their gains following a broader market retreat. At 11:52 GMT, SBM shares were down 3.2% to EUR13.50, while the Amsterdam index was down about 2.6%.

SBM Offshore booked a $450 million impairment charge after it was unable to reach a settlement for additional compensation for cost overruns on SBM Offshore's Yme and Deep Panuke platforms which have been installed on their respective offshore locations in Norway and Canada. Legal action in the case of the Deep Panuke platform has been initiated in April against EnCana and arbitration proceedings were initiated in January for the Yme platform against Talisman But SBM said the outcome is uncertain.

Neither EnCana nor Talisman were available for comment Thursday. Talisman Chief Executive John Manzoni has publicly complained that a "poorly executed fabrication contract" has hindered the project.

ING said SBM's underlying results were "reasonable" and praised the decision to replace Mace as "a valuable step" that could spur a "fresh look" at the firm. But ING said it wanted more details on the "huge" $450 charge.

Turnover for the first six months of 2011 rose 6% to $1.46 billion, driven by fleet operations, where SBM operates Floating Production Storage Offloading (FPSO) units for its clients on a leasing basis.

Earnings before interest and taxes, or Ebit, excluding the impairment charge was $236 million, compared to $146 million a year ago. The increase was mainly driven by the solid performance of the Turnkey Systems segment, the company said.

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

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GOM Regulatory Regime Delays Cost Revenue, Jobs, Oil Supplies - Study

- GOM Regulatory Regime Delays Cost Revenue, Jobs, Oil Supplies - Study

Friday, July 22, 2011
Rigzone Staff
by Barbara Saunders

Bottlenecks in oil and gas plan and permit approval activity in the Gulf of Mexico (GOM) since 2010's Macondo well disaster are costing some $44 billion in U.S. gross domestic product and 230,000 jobs, according to a new IHS CERA/IHS Global Insight study.

The study, Restarting "the Engine" — Securing American Jobs, Investment and Energy Security, examined the "activity gap," or the difference between the investment capacity of oil and gas companies and the regulatory capacity to process and oversee this activity. Based on data from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), the study identified a growing backlog of exploration and development plan applications awaiting approval and a significant reduction in plan and drill permit approvals.

The costs of delays in the regulatory "new regime" are "economically significant and not just in Gulf states" such as Texas and Louisiana, said Daniel Yergin, chairman of IHS CERA and author of the Pulitzer prize-winning book on the oil industry, The Prize, during a press conference on the new study.

Daniel Yergin – Regulatory delays take "economically significant" toll outside Gulf States

The leading states outside of the GOM to benefit from oilfield supply, service and software jobs would be California, followed by New York, Florida, Illinois and Georgia, the study found. Other manufacturing-dependent economies such as Pennsylvania and Ohio also would receive significant benefits.

"There is a need to better align the new regulatory environment with industry capacity, as the current pace of plan and permit approval is congested," said Jim Burkhard, IHS CERA managing director for global oil. "With that alignment, then the country can realize the economic and energy security benefits of a restarted Gulf of Mexico."

Among the study's key findings, the lost opportunity from an inability to close the activity gap would amount to:

• 150 million barrels of oil next year, or 411,000 barrels of oil per day (bopd) from the deepwater Gulf of Mexico alone– five times the amount recently released from the U.S. Strategic Petroleum Reserve.
• $44 billion of U.S. gross domestic product growth in 2012
• 230,000 additional jobs in 2012
• $22 billion improvement in 2012 wages and compensation
• Realizing $19 billion in pent-up capital investment over a three-year period
• $18.6 billion more of federal, state and local, royalties, bonuses and rents tax payments over the next three years

The study also found that one billion barrels of oil reserves that the Gulf of Mexico in the form of new discoveries were not realized in the past 12 months. This could affect the future production outlook, IHS CERA noted.

Federal agencies that regulate energy exploration were restructured last year and the regulatory approval process has not returned to previous levels, IHS CERA reported. "Each month that passes without closing the gap reduces the potential economic benefits," the company said in a statement.

The study examined plan and permit activity levels in the six months since the lifting of the moratorium in the GOM in October, 2010. The analysis found:

• 86 percent decline in the pace of regulatory approvals for plans
• 38 percent increase in the time to reach each regulatory approval for plans
• 250 percent increase in the backlog of deepwater plans pending approval (from an average of 18 per year to a current pace of 67 per year)
• 60 percent decline in drill permits (combined shallow water and deepwater)

"An increase in oil and gas activity reverberates throughout the broader economy," said James Diffley, senior director of IHS Global Insight's U.S. Regional Economic Group. "Each new hire of a platform worker, machinist or other specialist to work in the Gulf's oil and gas industry results, on average, in more than three additional jobs in an array of industries around the country, whether it be in the Gulf region or a subsea power cable provider in Ohio, a steel manufacturer in Pittsburgh or a software firm in California's Silicon Valley."

The report also noted that the increased activity in the upstream oil and gas sector of the Gulf of Mexico will have substantial impact on income and would lead to increased consumer spending since oil and gas jobs are higher paying, on average, than wages paid to workers in many other sectors. In turn, more offshore development and the jobs it creates would lead to the enhancement of federal, state and local tax revenues by some $12 billion in 2012 and $20 billion through 2013, IHS CERA projected.

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Increasing volume of legislation costs businesses £2bn

23 March 2011 Last updated at 06:33 GMT

By Eddie O'Gorman BBC NI business reporter

Businesses have lost out on more than £2bn in the last decade due to an increasing volume of legislation, according to business lobby group the CBI.

Nigel Smyth's comments come ahead of the Chancellor, George Osborne's first annual Budget statement on Wednesday.

Mr Smyth said additional support for growth and job creation, and less red tape, particularly relating to employment were the main preoccupations for Northern Ireland business.

Nigel Smyth of the CBI says businesses are having to deal with an increase in legislation

He said that business organisations had been lobbying hard to encourage government to reduce barriers to high-growth companies in order to create employment.

"This includes doing something to relieve the regulatory burden," he said.

"But they are also having to cope with increasing costs such as the carbon reduction commitment, which from being an incentive, has now turned into a carbon tax."

Mr Smyth said that Northern Ireland companies were competing in global markets now, and many of their competitors were not having to deal with the same level of regulation.

As a result they had a lower cost base than companies based in the UK, he said

He said: "The danger is that some of these highly successful, highly productive companies will simply move to locations where the cost base is not so high."

Dr Esmond Birnie, the chief economist for PricewaterhouseCoopers in Northern Ireland, believes that any tax increases in the Budget would have a serious effect on the local economy.

"February's unemployment is up 6.3% year-on-year," Dr Birnie said.

"That is the highest increase of all 12 UK regions, and we are forecasting that local economic growth will not exceed one per cent in 2011.

"It means that further tax increases could have a disproportionate impact on economic growth and business confidence."

On the bright side, it is thought that the 1p rise in fuel duty due on 1st April might be postponed because of the recent steep increase in oil prices, while personal tax allowances are set to go up by £1,000 to £7,475 for 2011/12.

It is estimated that this should reduce the tax liability of 23 million taxpayers by an average of £200 a year.
The Chancellor has already promised to increase personal allowances to £10,000 by 2015.

An announcement is also expected on the subject of corporation tax, or company profits.

Many economists and Northern Ireland business people have been arguing strongly that a reduction from the current rate of 28% closer to the rate of 12.5% which exists in the Republic, would do much to encourage inward investment.

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