OIL & GAS UPDATES - Aug 2011

Keppel to build repeat jack-up rig for Transocean at US$195 million Keppel FELS Limited (Keppel FELS) has secured a repeat order from Transocean Offshore Deepwater Holdings Ltd, a subsidiary of Transocean Ltd. (Transocean) for US$195 million. Following its order of two jack-up rigs from Keppel FELS on 17 February 2011, Transocean is exercising its option to build another high specification jack-up rig based on the KFELS Super B Class Bigfoot design for delivery in 3Q2013.

Keppel secures contracts worth S$146 million Keppel Shipyard 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 S.A. (OSX) 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.

Profits swelled at Parker Drilling as the company saw improved results from its tool rental and barge rig market. The Houston-based service and rental company on Thursday reported net income of $14.1 million on revenue of $172.8 million in the quarter ended in June. That compared with a mere $507,000 profit recorded on revenue of $156.5 million during the same period last year. "Our continued investment in Parker's rental tools business has allowed us to participate in the growing demand in the U.S. land market,� chief executive David Mannon said in a statement. �With our stores strategically located to service the leading shale plays, we have maintained high utilisation of our growing inventory of premium drill pipe and related products.�

Shell has hit back at �wildly inaccurate� reports of the scale of two oil spills it caused in Nigeria and described estimates of resulting compensation as �misguided� and �massively� exaggerated. The Anglo-Dutch supermajor�s Nigerian joint venture has also sought to distance itself from the perceived complicity of oil companies in Nigerian spills by claiming that the illegal oil refining trade is the major cause of pollution in the country. Shell�s comments, issued in an open letter from Shell Petroleum Development Company on Thursday, come on the same day at the UN released a report claiming the clean-up of environmental damage caused by Nigeria�s oil industry could take three decades and cost $1 billion in the next five years alone.

Profits edged higher in the second quarter at Pioneer Drilling, which turned around a loss from a year ago on higher equipment utilisation and a hot West Texas market.The San Antonio-based service company on Thursday reported profits of $3.6 million on revenue of $171.2 million in the three months ending in June. That compared with a $10.1 million loss on $117 million in revenue during the same period last year. "We continue to see strong demand for our drilling rigs in the West Texas drilling division,� chief executive Wm. Stacy Locke wrote in a news release. Diluted earnings were 7 cents per share. The company provides onshore services to major and independent oil companies in Texas, Louisiana, Appalachia, the Rocky Mountains and Colombia

Federal drilling regulators have signed off on Shell's exploration plan in Alaska�s Beaufort Sea, Reuters reported Thursday. Shell is still waiting for other approvals, including its air quality permit from the EPA. The project�s progress will be closely scrutinized, Michael Bromwich, director of the Bureau of Ocean Energy Management, told the AP. "The conditional approval of our Revised Beaufort Sea Plan of Exploration is welcome news and adds to our cautious optimism that we will be drilling our Alaska leases this time next year," Shell spokeswoman Kelly op de Weegh told Reuters

Net profit slumped at rig owner powerhouse Transocean in the second quarter as revenues were slashed and fleet utilisation remained low. The NYSE-listed company was also hit by rising costs and had to absorb a $25 million impairment charge in the period. Net profit for the three months to the end of June was $164 million, a significant drop on the $720 million booked in the comparable period last year. Much of the damage was done at the top line where revenues tumbled from $2.27 billion to $2.09 billion. Transocean also saw costs go in the opposite direction with operating and maintenance expenses soaring from $1.35 billion to $1.49 billion. Fleet utilisation stood at 55% in the period, which was the same as in the first quarter this year.

US driller Atwood Oceanics is counting on a reduced tax bill to boost year-on-year net profit in the third quarterThe Houston-based company had moderately decreased sales figures in the three months to the end of June but saw its operating result rise slightly. Net profit for the period has risen from $58.99 million to $75.29 million as Atwood has made a provision for incomes taxes of $11.92 million as against $25.85 million in the comparable period last year. Revenues sank from $166.64 million to $162.15 million indicating that there may have been a drop in operating costs, a breakdown of which was not provided in Atwood�s announcement to the NYSE on Wednesday. Atwood announced later in the day that it had won a one-year contract extension from an affiliate of Coastal Energy for its jack-up rig Vicksburg.

Swedish independent Lundin Petroleum has made a second gas discovery on Block SB 303 off Sabah, East Malaysia. The Cempulut-1 was drilled in a water depth of 75 metres using the Seadrill jack-up rig Offshore Courageous to a depth of 1095 metres and encountered a large Late Miocene carbonate reef with a total pay thickness of about 50 metres. Lundin said data recovered from the Cempulut-1 well would be analysed further to determine a range of resource estimates "This is the second gas discovery made by Lundin Petroleum in SB303 and the third in the contract area which also contains the Titik Terang discovery,� Lundin chief executive Ashley Heppenstall said.

Sydney-based Australian Oil Company has spudded the Archer-Whitney F1 Sidetrack well at its Hood-Franklin gas project in the Sacramento basin, in California.The company expects to take seven days to drill a sidetrack from its existing cased hole at 8300 feet to about 10,350 feet. Australian said existing pipelines, gas contracts and production facilities in the area would enable a successful side track to start production without delay. The original Archer-Whitney F1 well was drilled in 2006 as an updip play to gas shows in Wurster-2 well two miles south west, encountering 235 feet of gas shows before high pressure and hole condition concerns forced the operator to abandon the well before wirelogs or testing could be done.

Australia-listed Tangiers Petroleum said two new large gas prospects had been identified in exploration permits WA-442-P and NT/P81 in the Southern Bonaparte basin, off north-west Australia. Tangiers said two horizons were mapped by Schlumberger during the phase-1 seismic interpretation program which showed the presence of �very large anticlinal structures� below the top Bonaparte horizon which resulted in two new prospects, Nova and Super Nova. It said the Nova structure had a crest at about 3425 metres and encompassed a closure area of 240 square kilometres. It added the Super Nova structure was deeper with a crest at about 6085 metres and a closure area of 232 square kilometres

London-listed PetroNeft has made a new oilfield discovery with the Sibkrayevskaya-372 well on its licence 61 Block in Russia�s Tomsk Oblast regionThe well was a follow-up to the Sibkrayevskaya-370 which was drilled in 1972. Based on its re-interpretation of the vintage well logs and drilling data PetroNeft identified potential "missed pay" in the Upper Jurassic J1 interval. PetroNeft said the Sibkrayevskaya-372 well intersected the Upper Jurassic J1 oil reservoir at a depth of about 2350 metres. Preliminary logs indicated the interval consisted of 12.6 metres of net pay with good reservoir properties and oil saturation throughout. The company carried out an open-hole test over the interval which tested at a pro-rated inflow of 170 barrels of oil per day without stimulation

One dead in Colombia bomb blast A roadside bomb killed one oil worker and wounded six people including a passer-by in the southern Caqueta region of Colombia, according to reports. Colombian police blamed the attack on Farc rebels. The bomb exploded after a jeep entered an active mine field near the town of Puerto Rico, Dow Jones reported. Reuters said the workers were headed to an oil exploration field and were employed by a seismic company. Local media identified the company as Geoenergy, which reportedly employed five of the victims

Damage to two pipelines has forced Shell to shut-in a flowstation in Nigeria with no word yet on the extent of any possible spill.A probe is underway after the leaks were discovered on the pipelines which feed into the Adibawa flowstation in onshore Niger Delta. A Shell spokesperson confirmed the shut-in but said it was too early to determine the cause of the disruption although sabotage cannot be ruled out. Reuters reported on Wednesday that local youths have claimed responsibility, citing retribution for Shell�s alleged refusal to continue paying them for surveillance work on the facility. The news wire cited a witness as claiming that crude oil is currently gushing out of the damaged pipelines into a creek. The Shell spokesperson could not confirm the size of the spill, if any, but said that Shell would be committed to cleaning up any resultant pollution

BP shifts Forties pipeline bomb An unexploded World War II mine which threatened a crucial BP-operated crude oil pipeline in the North Sea has been safely removed, the UK supermajor said on Wednesday.The mine, which caused disruption to the Forties pipeline off the UK, is now being towed to an undisclosed safe location for disposal, news wire Dow Jones reported BP as stating. Following its discovery in March, the mine was one reason behind BP�s decision to shut the pipeline for almost a week this month.

Brazil will bar Falklands-flagged shipping vessels from its waters, a show of support for neighboring Argentina in a dispute over oil leasing off the coast of the British territory, UPI reported Wednesday. The decision came after a meeting between the countries� two presidents, Dilma Rousseff of Brazil and Cristina Fernandez de Kirchner of Argentina. A joint statement asserted Brazil�s support for "the legitimate rights of the Argentine republic in the sovereignty dispute relative to the Malvinas, South Georgia and South Sandwich islands and its adjoining maritime spaces.

UK explorer Cairn Energy said Wednesday it has not hit oil during drilling of its latest well off Greenland but insisted indications of oil-prone rocks are encouraging. Drilling of the LF-7-1 in the Lady Franklin Block off the west coast of Greenland, did not hit oil but initial analysis indicates the presence of pre-Tertiary oil prone source rocks in the basin, said Cairn. �By no means is this the end of the story, it�s just the beginning,� said chief executive Simon Thomson. �This will have no impact on this year�s drilling campaign. What we are doing is trying to make the right pin pricks in vast enexplored areas. At this stage we need a lot of luck so we will just continue. �From an exploration point of view we are encouraged, certainly not discouraged by this.�

Japan Drilling Company (JDC) has signed a contract to drill wells in deep-water off the coast of western Japan as part of a methane hydrate test production programme. Japan Petroleum Exploration (Japex) awarded the 1 billion yen ($13 million) contract to JDC, in which Japex has a 30.75% stake, Reuters reported. Since 2001, resource-poor Japan has invested several hundred million dollars in developing technology to tap methane hydrate, believed to be plentiful under the seabed near the country, and it hopes to complete development of technology for commercial production by 2018/19.

Canada�s Simba Energy is eyeing �significant oil and gas discoveries� as it snaps up an exploration block in Kenya. The Vancouver-based independent has been handed a production sharing contract for Block 2A in the north-east of the country, it revealed on Wednesday. The contract, penned with Kenya�s Ministry of Energy, gives Simba access to a 7801-square kilometre area which touches on the Mandera and Anza basins. �Block 2A also has excellent potential for significant oil and gas discoveries,� Simba wrote in a statement

US Natural Gas has picked up a second mature well in Allen County, Kentucky in hopes of revitalizing production there. The site was originally drilled and completed to 450 feet in 1990, but in the next few weeks will get upgrades including a new wellhead and completion components, the company wrote Wednesday in a news release. "The addition of the Reynolds No. 2 well adds to our goal of increased daily production without excessive costs," president Wayne Anderson said.

Anglo-Dutch supermajor Shell is likely to face �tens of millions� of dollars in bills as it prepares for settlement talks after accepting liability for two oil spills in Nigeria in 2008. The case against Shell and its Nigerian subsidiary, Shell Petroleum Development Company (SPDC), results from two massive oil leaks in 2008 caused from a double rupture of the Bodo-Bonny Trans-Niger pipeline that pumps around 120,000 barrels of oil per day. Lawyers representing some 69,000 Nigerians living in the Bodo community, who started court proceedings against the two companies in April, said Wednesday that Shell has formally accepted responsibility for the two leaks.

Australia to post YouTube film to curb people-smugglingThe Australian government is to post on YouTube images of so-called boatpeople being turned away and sent to Malaysia, in an effort to deter asylum seekers. The video will show arrivals at Australia's offshore detention centre on Christmas Island being expelled and boarding aircraft. Canberra recently signed a deal with Malaysia to accept 800 boatpeople intercepted in Australia. Asylum seekers remain a politically sensitive issue in Australia. Australia currently has more than 6,000 asylum seekers in detention, originating from countries including Iran, Iraq, Vietnam, Sri Lanka and Afghanistan

BLM seeks comments on Dejour's proposed Colorado gas project The US Bureau of Land Management is seeking public comments on Dejour Energy (USA) Corp.�s proposed natural gas project in northwestern Colorado.BLM said the Denver-based subsidiary of Dejour Energy Inc. of Vancouver, BC, proposes drilling up to 68 new wells over 5 years from four new well pads on federal leases 3 miles south of Newcastle, Colo., later this year.

Vietnam has launched its 2011 licensing round which will cover nine offshore blocks through state-run Petrovietnam, the nation�s first offer in four years and its biggest in recent times.The nation aims to ramp up domestic and overseas production to meet growing demand in the face of falling output from ageing fields, Reuters reported. The licensing round lasting between 1 August and 5 January 2012 covers blocks 43, 03, 10/11, 41, 11-2/11, 05-3/11, 50, 22/03 and 12/11 in the Nam Con Son, Phu Quoc and Malay-Thochu basins, Petrovietnam said in a statement.

Sydney-based Planet Gas has spudded the Mead�s Crossing-1 exploration core hole on PEL 468 in New South Wales. Planet Gas said the core hole would be drilled to a depth of between 600 and 800 metres, over about 21 days, and target coalbed methane (CBM) resources in the Illawaara coal measures in the north-west of the licence. It added Mead�s Crossing-1 was the first of two planned core holes to confirm the presence, thickness and quality of the coals and analyse any gas that was present and its concentration

Major oil producers in the Gulf of Mexico have redeployed workers and most have resumed production after evacuating and shutting in platforms that were threatened by Tropical Storm Don last week.The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) said in a daily update on Monday that none of the 617 manned production platforms in the US Gulf remain evacuated. All four drilling rigs that were evacuated have also been re-manned, BOEMRE said.

Australia�s Texon Petroleum has spudded its fourth Eagle Ford well on its acreage in McMullen County, Texas. The Hoskins EFS-1H well will be drilled to a total depth of 16,000 feet and have a 4500 foot horizontal section, similar to Texon�s first three Eagle Ford wells. Texon added the well was being drilled from north-west to south-east with the total depth being near the previously drilled MR-1 well.

Australia-listed Metgasco has raised A$15.3 million (US$16.8 million) under a share purchase plan to help fund its coalbed methane (CBM) operations in New South Wales. Metgasco launched the share purchase plan in June offering eligible shareholders the ability to buy up to A$15,000 worth of shares at a discount price of A$0.26 per share, which at the time represented a 11.5% discount to the volume weighted average of the company�s shares over the five days prior to the launch. The funds will be added to the A$6 million the company had already raised from its recent non-underwritten placement.

Muammar Gaddafi is exploiting close relations with Venezuelan President, Hugo Chavez, in an effort to bust international sanctions on the sale of oil by his Libyan regime, according to a report. The embattled leader of the North African nation has sent a delegation to Venezuela�s capital, Caracas, with the intention of bolstering his country�s coffers through oil sales and getting the country�s fleet of oil tankers trading once again. Chavez confirmed that a delegation sent by Gaddafi has reached Caracas but would not disclose the precise nature of their visit. "Gaddafi has sent some emissaries and a letter. There's Gaddafi, resisting the aggressions of NATO - they bombed a media outlet - and the world remains quiet with its arms crossed,� news wire Bloomberg quoted Chavez as saying on national television

Crimestoppers hunts UK's most-wanted fraudsters Anyone with information should call Crimestoppers on 0800 555 111 An appeal has been launched to track down the UK's 10 most-wanted fraudsters.The charity Crimestoppers says the suspects are responsible for at least �200m of fraud between them. They include a man who allegedly posed as the brother of comedian Peter Kay and claimed to be raising money for a young cancer victim. A live-in carer suspected of stealing �35,000 from a vulnerable woman in her 80s also features on the list.

Noble orders two more jackups US rig player Noble Corporation said today it has exercised options to build two additional high-specification jackups, and is mulling a further option to order its eighth newbuild ultra deep-water drillship. The order for the jackups, with Sembcorp Marine's subsidiary Jurong Shipyard, will tally up the number of jackup units Noble has on order from the yard to six. Estimated costs for the two latest units are around $245 million per rig, said Noble. The price tag includes project management, spares and start up costs but excludes capitalized interest. Like the first four rigs, Noble will pay for the units through installments.

Nigeria's onshore reserves 'declining' Nigeria's onshore oil reserves are declining by 10% to 12% per year as ageing fields pass peak production and investment in new projects slows, the country's oil minister said today. "Investment flow cannot be taken for granted ... we need to have a pragmatic approach to our oil assets, which have a 10-12% decline rate," Diezani Alison-Madueke told an industry conference in the capital Abuja, according to a Reuters report. A spokesman for the national oil company said the oil minister was referring only to onshore oil reserves. The stalling of oil reforms is shackling progress in Nigeria's energy sector, because foreign investors do not want to put money into an industry without a clear tax framework and with an undefined role for Nigeria's state oil company.

Singapore-based Sembcorp Marine said today it has exercised its option to increase its share in Sembmarine Kakinada (SK) to become the largest single shareholder of the proposed joint venture yard. Sembcorp, through its subsidiary Sembawang Shipyard, will increase its current 19.9% stake to 40%, while the technical management and services agreement to operate the yard will be extended from five years to 10 years. Sembcorp first entered the agreement in 2009 with Kakinda Seaports in a bid to establish a hub in India for the growing South Asian market

Occidental Petroleum and South Korea'sKogas have received their first cargo of crude oil as payment for helping to develop Iraq's Zubair oilfield, according to shipping sources. The vessel Hellespont Trooper left Basra on Sunday carrying 1 million barrels of Basra light. Occidental received 600,000 barrels and KOGAS 400,000 barrels, shippers told Reuters. The average selling price for Iraqi crude for July was around $108, a source at the Iraqi state oil company Somo said to Reuters. The vessel Olympic Legend also left on Sunday from the Basra oil port carrying 2 million barrels of Basra light crude for China's CNPC, one shipper said. The SOMO source said it was the second payment to CNPC for developing the Rumaila oilfield.

Gazprom Neft, the oil arm of Russian giant Gazprom, said today it has signed a product-sharing contract on four blocks in the Gulf of Mexico off Cuba with Malaysian state-owned player Petronas and Cubapetroleo (Cupet), the Cuban national oil company. Following the signing, Gazprom Neft becomes a party in the contract and acquires 30% stake in the project, while Petronas retains 70% in the project. Prior to the agreement Petronas had a 100% stake in the project. The parties signed the initial farm-out agreement in October last year. "This partnership with Petronas will help Gazprom Neft to enforce its competence in the sphere of deep-water development and expand its expertise in projects outside of Russia," Reuters quoted Alexander Dyukov, chairman of Gazprom Neft management board as saying

The Kenyan government has awarded London-listed Dominion Petroleum Block L15, in the offshore Lamu basin. Dominion said the award of the deep-water block was still subject to the signing of a production sharing contract by the company and Kenya�s Minister for Energy which was expected take place in the next few weeks. The initial exploration period for Block L15 will last two years, during which time Dominion will be required to undertake a minimum $2.8 million work commitment which includes the acquisition of 250 square kilometres of 3D seismic. Following the initial exploration period the company will have the option to relinquish the PSC or commit to another two year program with the obligation to drill at least one well.

Saboteurs using rocket-propelled grenades have attacked a cooling system linked to an Egyptian pipeline in Sinai that supplied gas to Israel until it was blown up earlier this month, according to security sources.It was the fifth assault this year on energy infrastructure providing Egyptian natural gas to Israel, Reuters reported. Saturday's attack punctured a hole in a pipeline that had been empty since it was blown up, halting its pumping operations. The saboteurs, who were in two trucks, initially tried to storm the area's main gas station but fled when confronted by army officers. But they then targeted the pipeline from a distance using rocket-propelled grenades, witnesses said

Mexico's state oil monopoly Pemex on Friday named the list of companies qualified to bid on the country's first-ever oil field operating contracts in a historic auction to be held in mid-August. The list of 17 companies includes global players like Halliburton , Schlumberger, Repsol and Pacific Rubiales as well as some smaller operators, Reuters reported. Pemex wants private industry to help reactivate three small oil fields in southern Mexico, the first step toward opening up the nationalised energy sector. The company hopes outside expertise and capital will help Mexico reverse a dramatic drop in oil output. Mexico, the world's No. 7 oil producer, lost nearly a quarter of its production capacity between 2004 and 2009 because of aging oil fields and a lack of exploration.

Croatian oil and gas group INA posted a half-year net profit of 1.9 billion kuna ($363.6 million), compared with a loss in 2010, mainly thanks to its strong upstream segment, the company has announced. The net profit compares to a half-year loss of 108 million kuna in 2010, INA said in a statement reported by Reuters. After two years of significant losses, INA reverted to profit later in 2010, posting a full-year profit of 958 million kuna. INA Chief Executive Zoltan Aldott said the results showed the company had generated strong results from oil and gas research and production.

Five contractors for US-based Occidental Petroleum who were kidnapped Friday in northeastern Colombia have been freed and are now safe, an army official has announced. Reuters reported guerrillas from the Revolutionary Armed Forces of Colombia (FARC) � Latin America's longest running insurgency � snatched the five workers on Friday night in the eastern Arauca province, one of Colombia's most violent border states. Colombian Army 18th brigade commander Jaime Reyes told Reuters the contractors were safe. "We started an operation with three battalions in the area where the guerrillas fled with the hostages to secure the release of these people while trying to avoid combat so as not to hurt the workers. We did it," he said.

London-listed Nostra Terra Oil and Gas has announced that a well has spudded at the Verde prospect in south-eastern Colorado. The company acquired a 16.25% stake in the prospect, which covers about 257.4 hectares, from US-based Plainsmen Partners in June. The well will be drilled to a depth of about 5300 feet into the Mississippian formation at a total estimated cost of $1.2 million. Nostra Terra will have a net revenue interest of 13.41% in the well. Drilling of the well is expected to be completed by the end of August, depending on operations and possible formation tests, with Nostra Terra to follow the drilling by completion and initial production testing

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