www.upstreamonline.com http://www.upstreamonline.com/ www.upstreamonline.com Chesapeake settles Michigan leasing case http://www.upstreamonline.com/live/1398044/chesapeake-settles-michigan-leasing-case US shale giant says it inherited the problems from "past management" Noah.Brenner@nhst.no (Noah Brenner) http://www.upstreamonline.com/live/1398044/chesapeake-settles-michigan-leasing-case Fri, 24 Apr 2015 20:27:06 +0000 live Oklahoma City-based Chesapeake has agreed to plead guilty to one charge of attempted anti-trust violations and one count of false pretenses.

The company will pay $25 million total to establish a compensation fund for landowners harmed by the leasing scheme, of which $5 million will go to the state as a penalty for charges that it tried to depress prices at state lease sales.

“This is a victory for Michigan taxpayers and a victory for all the Michigan land-owners who took deep hits to their pocketbooks following the October 2010 private land auction,” Michigan attorney general Bill Schuette said when announcing the deal. “This settlement will achieve recovery for every one of the more than 700 affected victims who come forward and make a valid claim.”

Schuette had charged Chesapeake with more than 21 counts in relation to the company’s leasing practices during a land rush into the Collingwood Shale play in 2010.

Schuette first claimed that Chesapeake colluded with Canadian independent Encana to depress lease prices at a series of state auctions by agreeing to stake out respective development areas and not compete for leases.

The $5 million penalty is the same as that paid by Encana, which chose t o plead no contest to one count of conspiracy to commit anti-trust violations last year.

Schuette later added claims that Chesapeake leased private land and then rejected those leases for minor title defects when the company was no longer interested in the play, a move the attorney general said amounted to taking an option to lease the land without paying the landowner for such an arrangement.

A Chesapeake representative seemed to lay blame for the legal issues in Michigan with company founder and ex-chief executive Aubrey McClendon.

“We are pleased to have reached a mutually acceptable agreement with the Michigan Attorney General and to move past these legacy issues inherited from past management,” spokesman Gordon Pennoyer said. “The current management team is focused on delivering top quartile performance and driving shareholder returns.”

Earlier this year, Chesapeake filed suit against McClendon, claiming that he stole trade secrets from the company and used them to establish a new company focused on the Utica Shale play in Ohio called American Energy – Utica (AEU).

Financial backers of AEU recently settled with Chesapeake by giving the company drilling rights to 6000 acres of land in Ohio and paying up to $25 million cash but McClendon was not part of the settlement and has vowed to fight the suit.

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Cabot boosts gas, liquids output http://www.upstreamonline.com/live/1398047/cabot-boosts-gas-liquids-production US operator beats earnings estimates on higher production caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1398047/cabot-boosts-gas-liquids-production Fri, 24 Apr 2015 22:59:51 +0000 live Cabot said the beat was driven by higher than expected production and lower lease-operating expenses.

The company increased its gas production over last year by 43% to 171.4 billion cubic feet equivalent. Liquids production, which includes crude, condensate and natural gas liquids (NGLs), increased by 132% to 1.6 million barrels.

Production levels were driven by higher base-load volumes in the Marcellus region during the winter, Cabot chief Dan Dinges said in a release.

"However, as we have communicated in the past, our plan is to reduce production levels beginning in the second quarter in response to the current environment throughout Appalachia," he said.

The Houston-based company plans to reduce its average gross operated Marcellus volumes to between 1.55 and 1.6 Bcf per day as the company monitors the supply and demand balance in Appalachia.

Earlier this year, Cabot slashed its capex from a projected range between $1.53 billion and $1.6 billion to just $900 million.

It said it will maintain that lowered capex through the year.

Cash flow from operations in the first quarter of 2015 was $267.4 million, compared to $255.4 million in the first quarter of 2014. Net income, at $49.2 million, or $0.12 per share, was less than half what it was in the first quarter of 2014 ($109.7 million, or $0.26 per share). This was still better than the consensus, which was $0.03 per share, according to Stifel.

"Significant reductions in realised prices for both natural gas and oil were the primary drivers for the lower results in the quarter, partially offset by higher equivalent production," Cabot said.

Year-to-date, the company's Marcellus shale programme has seen a 15% to 20% decrease in drilling and completion costs as compared to the 2014. Meanwhile, Cabot’s Eagle Ford shale programme has seen a 20% to 30% decrease in drilling and completion costs.

Cabot is currently operating three rigs in the Marcellus and plans to keep them for the rest of the year. In the Eagle Ford, the company plans to cut one its two rigs by May.

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Connacher wins recapitalisation nod http://www.upstreamonline.com/live/1398024/connacher-wins-recapitalisation-nod Canadian player given go-ahead by court for financial plans on second attempt Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1398024/connacher-wins-recapitalisation-nod Fri, 24 Apr 2015 15:28:23 +0000 live Garnering support from shareholders, noteholders and lenders for its amended plan of arrangement – approved by the Court of Queen's Bench of Alberta on Thursday – the company will convert about C$1 billion (US$822 million) of bonds into shares and save about C$80 million a year on interest.

It will also issue about C$35 million in new convertible notes and add a C$30 million increase to its term loan.

Upon receipt of consent from the court Credit Suisse Group AG – representing first-lien lenders – agreed to stop pressuring the Calgary junior to repay a C$128 million loan.

This was Connacher's second attempt to garner approval to recapitalise. Its first attempt at the end of March was denied due to concerns related to company solvency.

Connacher is the operator of two steam-assisted gravity drainage projects in the Athabasca oil sands region – Pod One and Algar on its Great Divide leases.

The restructuring is expected to be completed by 8 May.

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Southwestern grows Marcellus production http://www.upstreamonline.com/live/1398043/southwestern-grows-marcellus-production US gas producer sees output increase by 28% in first quarter caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/live/1398043/southwestern-grows-marcellus-production Fri, 24 Apr 2015 20:23:44 +0000 live The Houston-based independent saw record production of 233 billion cubic feet equivalent, including 4 Bcfe associated with conventional East Texas and Arkoma basin assets sold in a $218 million deal expected to close in the second quarter.

While Southwestern's north-east Appalachia production rose from 58 Bcf last year to 83 Bcf this year, Fayetteville production decreased from 119 Bcf to 115 Bcf. The company also added 30 Bcf from its newly acquired south-west Appalachia assets.

While the production was enough to beat analyst expectations, most viewed the update as neutral to the company's stock.

"While execution remains strong, the leverage outlook does not." Tim Rezvan at Sterne Agee said in a note. "Despite over $700 million of asset sales expected to close in 2Q, we still see the company hamstrung by a light hedge book and persistently weak gas prices."

Net cash provided by operating activities was $493 million for the first quarter of 2015, compared to $617 million for the same period in 2014.

"Operating income from the company's E&P segment was $78 million for the first quarter of 2015, compared to $352 million for the same period in 2014," the company said. "The decrease was primarily due to lower realised natural gas prices and increased operating costs and expenses from higher activity levels, partially offset by the revenue impacts of higher production volumes.”

In the newly acquired south-west Appalachia assets, located in West Virginia and south-west Pennsylvania, the company had 300 wells on production and 35 wells in progress, 14 of which were waiting on completions. Of the 95 wells awaiting completion in the north-east Appalachia asset, 35 were awaiting completion.

In addition to the East Texas/Arkoma basin sale, the company closed the sale of its north-east Pennsylvania gathering system on 10 April for $488 million.

"This gathering system generated operating income and net cash provided by operating activities of approximately $12 million and $14 million, respectively, for the first quarter of 2015," the company reported. "For the same period of 2014, this gathering system generated operating income and net cash provided by operating activities of approximately $9 million and $10 million, respectively."

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Isobel Deep suspended on BOP fault http://www.upstreamonline.com/incoming/1397979/isobel-deep-suspended-on-bop-fault Premier temporarily halts drilling of latest wildcat off Falklands for repairs to rig’s BOP (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1397979/isobel-deep-suspended-on-bop-fault Fri, 24 Apr 2015 12:10:15 +0000 live FOGL said in a statement “a problem was detected with the blowout preventer” after setting casing at a depth of 1273.9 metres at the 14/20-1 well, which was spudded earlier this month by Ocean Rig semi-submersible Eirik Raude.

"The well has been temporarily suspended and the BOP has been brought to surface for inspection and repairs,” the company stated.

The co-venturer added that repairs to the BOP are expected to take between 10 and 14 days.

The rig will be used to drill top-hole sections and set conductors on the Chatham and/or Jayne East well locations while the BOP is being repaired, according to FOGL.

The semisub will return to the Isobel Deep location to continue drilling the well once the repairs have been completed and a further operational update will be issued at that time, FOGL said.

It will be the first exploration well to test the Elaine-Isobel fan complex in Premier-operated PL004a.

Premier has estimated the complex holds mid-case unrisked gross prospective resources of 243 million barrels.

The UK player recently made an oil and gas discovery at the Zebedee prospect in nearby PL004b with the first well drilled by the rig in a six-well exploration campaign off the South Atlantic archipelago.

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Rig owners in limbo off Mexico http://www.upstreamonline.com/incoming/1398032/rig-owners-in-limbo-off-mexico Pemex has rig-owners on tenterhooks after proposal to cut day rates Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/incoming/1398032/rig-owners-in-limbo-off-mexico Fri, 24 Apr 2015 17:12:00 +0000 live For the full story, read Friday's issue of Upstream.

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NPD warns of Sverdrup 'cost overrun' http://www.upstreamonline.com/live/1398014/npd-warns-of-sverdrup-cost-overrun Delays expected on giant project as proposal for field development submitted to parliament for approval Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1398014/npd-warns-of-sverdrup-cost-overrun Fri, 24 Apr 2015 14:44:54 +0000 live Production start-up on Sverdrup is currently scheduled for the end of 2019 with investments under the first development phase, involving construction of a four-platform field hub, targeted at Nkr117 billion ($15 billion).

However, the Norwegian Petroleum Directorate (NPD) said in an assessment of the scheme it “believes the schedule is ambitious compared to comparable projects in the petroleum industry”.

The agency said its own cost estimate for the first phase was about Nkr10 billion higher than the figure presented in the field development plan due to its expectation that start-up of production could be delayed by around six months.

In a proposal for development of the field submitted by the government to parliament for approval on Friday, the NPD said it based its assumption on the fact the period of early-phase work on the scheme had been too short compared with similar projects.

The agency has earlier published a report that showed projects that had allowed too little time for early-phase engineering and preparatory work ran a greater risk of cost overruns and delays.

However, it added the expected higher cost on the first phase was still within the acceptable 20% margin of uncertainty for such projects.

The document also revealed Statoil, together with partners Lundin Petroleum, Det Norske, Petoro and Maersk Oil, have also carried out studies for the second phase of development that will require increased processing capacity and drilling of more production wells.

Four main alternative concepts are under evaluation:

  • A new processing platform at the field centre with a pure subsea solution covering the remainder of the field;
  • A new processing platform with wellhead facility on the eastern flank and subsea infrastructure;
  • A new integrated drilling, process and production platform to the east with subsea infrastructure;
  • A new processing platform with multiple wellhead facilities covering the rest of the field.

A final concept selection on the second phase is due to make in the fourth quarter, with a final investment decision and submission of the development plan due by the end of 2017.

Start-up of production under the second phase is scheduled for 2022.

Meanwhile, Statoil has disclosed the first phase has a break-even price as low as $32 per barrel – around half of the current Brent crude price – and has a net present value before tax of around Nkr270 billion.

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'More capex cuts on way' http://www.upstreamonline.com/live/1397998/more-capex-cuts-on-way Industry likely to face further belt-tightening in 2016 as oil companies cut spending but oil price rebound 'in sight': analysts Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1397998/more-capex-cuts-on-way Fri, 24 Apr 2015 13:19:49 +0000 live Majors, national oil companies and independents have already announced swingeing capex cutbacks of an average of 20% this year as they seek to boost cash flow and profitability after seeing their margins eroded by historically high costs and oil prices plunge as much as 60% from a peak of more than $110 per barrel for Brent crude last summer.

The cuts in exploration and production spending have led to greenfield project postponements and reduced investment in brownfield schemes, as well as a drop in drilling activity, as oil companies exercise greater capital discipline.

This has put increasing pressure on drilling and oilfield services contractors as revenue has dropped due to lower activity levels.

However, analyst Oddvar Bjorgan of Nordea Markets warned further capex cutbacks of an average of 10% or more are likely in 2016 unless there is a rebound in the oil price - currently at around $64 for Brent – and a substantial cut in costs on the supply side in terms of oilfield facilities and services.

“Oil companies have done what they can with their 2015 budgets but there is more flexibility in capex further out in time. If there is no improvement in the oil price or supplier costs, then things could get worse,” he told an oil market conference in Oslo arranged by Rystad Energy this week.

Norway’s state-owned Statoil, for example, revealed at a recent capital markets day presentation that it has further flexibility to cut capex by between $5 billion and $7 billion - or 28% to 39% of its capex guidance for this year of $18 billion, down 8% from 2014.

Other majors have made much bigger spending cuts this year, such as the UK’s BG Group that has slashed its budget by 38% to $6.5 billion, while supermajor ConocoPhillips has reduced capex by 32% to $11.5 billion.

Average spending cuts have been much higher among independents, with US players Apache and Occidental wiping 55% and 42%, respectively, off their projected capex in 2015, while national oil companies have seen cuts as high as 31% at China National Offshore Oil Corporation.

Some oil companies have put greenfield projects on hold as they hold out for lower prices from contractors on field facilities, with Premier Oil recently announcing it was postponing submission of a development plan for its Vette field off Norway “to capture cost advantages in the supply chain”.

Similarly, Statoil has revealed it has decided to delay a concept decision on the Trestakk scheme off Norway, due last month, to take advantage of lower costs in a weaker supplier market, with the aim of achieving a lower break-even price of less than $50 per barrel.

Analyst Teodor Sveen Nilsen of Swedbank said there is likely to be a further drop in oil company capex next year, though mainly due to lower prices on the supply side.

However, the two analysts agreed the average oil price is likely to bounce back to an average of $75 next year as a drastic drop in the US rig count is set to hit output going forward, though there is a near-term risk of reduced oil prices in the second half of this year due to a build-up of US crude stocks amid an export ban.

Bjorgan said: “The main reason why we expect the oil price to rise is that we see the US rig count continuing to collapse even though the oil price is improving.”

He sees the Brent price rising further to $80 in 2017, $85 in 2018 and $90 in 2019, while also expecting oil companies’ capex to start rising by an average of 5% in 2018 and 10% in 2019.

“In the future, we will see costs come down, production up, an increase in oil prices and higher cash flow. The indications are better for oil companies, but it will get worse before it gets better for oilfield services contractors,” he added.

Analyst Thina Saltvedt of Nordea Markets believes the oil price will bottom out in the second quarter before starting to rise later this year, stating the earlier lower price of $50 was “not sustainable in the long term” as projects being put on hold will cut supply amid rising demand.

Future demand is expected to be driven in particular by Asian economies, mainly China and India, on expanding populations that will result in increased consumption of hydrocarbon-based fuels as they develop their industrial and transport sectors , according to Statoil’s chief economist Eirik Waerness.

He predicted the world is likely to see a 35% to 40% growth in energy demand by 2040, with much of this being met by fossil fuels such as oil and gas that currently account for about 80% of the energy mix.

“The sum of oil and gas demand by 2040 will be about 90% of the current level,” Waerness told the conference.

Despite increased use of renewable sources such as wind, solar and biofuels, the Statoil sage does not see these growing sufficiently to make substantial inroads on the supply side, adding “fossil fuels are here to stay in all scenarios”.

“The move to a low-carbon society does not mean we will not need oil and gas. Quite the opposite: , there is no way we can rapidly meet this energy demand with renewables,” he said.

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Petrobras eyes Q1 results date http://www.upstreamonline.com/live/1398001/petrobras-eyes-q1-results-date Beleaguered Brazilian giant plans to soon follow up reporting of fourth quarter with latest figures Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1398001/petrobras-eyes-q1-results-date Fri, 24 Apr 2015 13:34:19 +0000 live The Brazilian state-owned player’s board will meet on 15 May to examine the financials for the three months to the end of March, it said on Friday.

“The company expects to disclose these financial statements after the decision of the board,” a brief statement read.

The expected expediency of the results’ release is in marked contrast to the prolonged process of stating its fourth-quarter results, which Petrobras only managed on Wednesday.

This was because the company had to adequately quantify write-downs associated with historical corrupt practices and other impairments.

In the end the company posted a quarterly loss of 21.6 billion reais ($7.2 billion), with write-downs linked to the corruption scandal that has rocked the company and country put at 6.19 billion reais.

The remained came from cost overruns at refineries, the falling oil price and other missed goals.

It also booked an impairment charge of 44.6 billion reais following the revaluation of a number of its assets which it had deemed to be overvalued.

Petrobras on Thursday outlined plans to invest $29 billion this year and another $25 billion in 2016, down from $35 billion it invested last year.

The company will concentrate the bulk of investments in the upstream department, where about 82% of the projected capital expenditure in 2016 will be allocated.

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'Fatality risk' after MOB on Saipem rig http://www.upstreamonline.com/live/1397966/fatality-risk-after-mob-on-saipem-rig Norway's safety agency pulls up Italian contractor for violations after worker plunges into Barents Sea Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1397966/fatality-risk-after-mob-on-saipem-rig Fri, 24 Apr 2015 08:45:44 +0000 live The incident occurred in the early hours on 20 February when two subsea engineers were preparing to bring the semi-submersible unit’s blowout preventer back into service after about four weeks of maintenance.

While working in the moonpool area, one of the engineers plunged 13.5 metres into the sea in a gap in the grating after descending a ladder to a small access platform on the carrier being used to move the BOP into position, according to an investigation report by the Petroleum Safety Authority (PSA).

The other engineer threw out a lifebuoy to the man overboard who was subsequently picked up by a boat mobilised from standby vessel Esvagt Aurora before being airlifted to hospital, where checks showed he did not sustain any serious injuries.

The PSA said the cause of the incident was a missing grating on the BOP carrier platform, probably as a result of high seas.

“Under slightly different circumstances, the senior subsea engineer could have suffered serious injuries or been killed,” it stated.

Saipem has now been pulled up by the agency for several regulatory violations covering maintenance of gratings, barrier management, maintenance management, and expertise and training.

The Italian rig contractor has been given a 29 May deadline to give its response to the findings of the PSA’s report and how it intends to tackle the issues raised.

Scarabeo 8 is carrying out development drilling work at the Eni-operated Goliat oilfield that is due to be brought on stream this summer after the recent delivery of the cylindrical floating production, storage and offloading vessel.

It is the latest mishap on the rig following an earlier listing incident in the Barents, as well a fatality when a worker was killed during outfitting work at Norway’s Westcon yard in 2011.

 

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MOL bags Norway assets http://www.upstreamonline.com/live/1397960/mol-bags-norway-assets Hungarian player to enter country through acqusition of Ithaca's licence interests in up to $90m deal Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1397960/mol-bags-norway-assets Fri, 24 Apr 2015 07:35:35 +0000 live The buyer is set to gain Ithaca’s stakes in 14 licences in the North and Norwegian seas that host a number of prospects, including Talisman-operated Snomus that is currently being drilled, as well as Statoil’s recent Roald Rygg discovery near the under-development Aasta Hansteen gas field.

MOL will pay an initial consideration of $60 million and an additional bonus payment of up to $30 million contingent on exploration success in the licence portfolio over the next two years, with payments to be based on a sliding scale depending on discovery size.'

It marks a further expansion by MOL in the North Sea after it acquired Wintershall’s interests in 14 UK licences for $375 million last year to enter the British sector where its operations are run by local subsidiary MOL Energy UK.

MOL will acquire outright country subsidiary Ithaca Petroleum Norge, including the latter’s exploration team.

The Norway licences, of which three are operated by Ithaca, have net unrisked best estimate prospective resources of more than 600 million barrels of oil equivalent, with three exploration wells planned across the portfolio in 2015 and 2016, according to MOL.

The company said in a statement the deal offered synergy potential with its UK interests and that it aims “to further extend its portfolio in Norway” by gaining additional licences and assets.

Given Ithaca is pre-qualified as an operator off Norway, MOL said this would help it to "achieve its ultimate goal to become a well-reputed operator in the region”.

Executive vice president for upstream Alexander Dodds said: “It enhances our positions in the lower-risk offshore North Sea area where we are in the process of building a new production hub and know-how center along the whole E&P value chain that should serve as a solid basis to our long-term goals in the region.”

Ithaca said in a statement it aims to net initial proceeds of $30 million from the deal that will be used to offset debt drawdowns on a bank facility.

The company stated the transaction, subject to official approval and due to close in the third quarter, completes the restructuring and monetisation of its non-core Norwegian assets gained through the acquisition of Valiant Petroleum in 2013.

Chief executive Les Thomas said:“The sale provides Ithaca with the right opportunity to now monetise the value of this non-core part of the company while retaining upside exposure to the anticipated drilling programme over the next two years."

FirstEnergy Capital analyst Stephane Foucaud stated in a note it represented “a very good deal for Ithaca”, which is listed on the London, Oslo and Toronto stock exchanges.

Ithaca’s share price rose 4.54% in early London trading on Friday to around 51.75pence.

The analyst said proceeds from the sale were “well above our thoughts” and that the company’s stockmarket valuation was “relatively resilient” on the Brent crude price forward curve.

“We also believe that Ithaca could be a target for acquisition given its cash-flow profile,” Foucaud added.

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KrisEnergy spuds Rayrai-1 well http://www.upstreamonline.com/incoming/1397978/krisenergy-spuds-rayrai-1-well Singapore-listed company begins drilling at new Gulf of Thailand probe (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1397978/krisenergy-spuds-rayrai-1-well Fri, 24 Apr 2015 09:44:09 +0000 live Rayrai-1 is located in water depths of 52 metres and lies 2.25 kilometres north of the Niramai oil discovery, drilled in 2009.

The well - to be drilled by Key Gibraltar jack-up rig - is planned to reach total depth at 1945 metres and will test Early Miocene stacked fluvial sandstones on a north-south trending faulted basement high, KrisEnergy said.

The G10/48 licence, which holds three oil discoveries - Wassana, Niramai and Mayura - covers 4696 square kilometres over the southern section of the Pattani basin.

KrisEnergy is developing the Wassana oilfield via a mobile offshore production unit producing to a floating storage offloading vessel.

Production at Wassana is expected to commence in the second half of 2015 and plateau at 10,000 barrels of oil per day.

The group holds an effective 89% working interest in, and is the operator of, the G10/48 licence. Palang Sophon Offshore holds an effective 11% working interest.

The Key Gibraltar jack-up rig will begin drilling up to 15 Wassana development wells once it has completed the Rayrai-1 exploration well, according to KrisEnergy.

The company recently increased its Rossukon discovery in Block G6/48 off Thailand with drilling of a successful sidetrack, where it struck 45 metres of oil and gas pay.

The Rossukon-3ST sidetrack was also drilled by jack-up Key Gibraltar.

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CNOOC Ltd revenues drop http://www.upstreamonline.com/incoming/1397975/cnooc-ltd-revenues-drop Hong Kong-listed company to lower costs and enhance efficiency (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1397975/cnooc-ltd-revenues-drop Fri, 24 Apr 2015 09:20:06 +0000 live The Hong Kong-listed company’s revenues for the first three months of the year fell to 35.54 billion yuan ($5.74 billion), from 59.15 billion yuan a year earlier, “due to the sharp decline in international oil prices,” CNOOC said.

Total net production increased by 9.4% year-on-year to 118.3 million barrels of oil equivalent, “due to contribution from new projects that came on stream in offshore China since 2014,” it said.

State-controlled CNOOC did not release first-quarter a net profit figure.

However, CNOOC continued to adjust its operating strategy by decreasing capital expenditure. In the first quarter, the company's capex decreased by 15.7% year-on-year to approximately 15.94 billion yuan, compared to 18.9 billion yuan in 2014.

“We will continue to strengthen our internal operations management, exercise strict cost control and enhance efficiency to proactively respond to the impact of low oil prices and to effectively promote various production and operational plans," chief executive Li Fanrong said.

CNOOC made three new discoveries in the first quarter of the year. In offshore China, the Penglai 20-2 discovery is expected to drive the joint development with the adjacent Penglai 20-3 oilfield, the group said.

The Bozhong 34-9 structure is also expected to be developed into a mid-sized oil and gas field, CNOOC added.

Meanwhile, the Jinzhou 9-3 comprehensive adjustment project and Kenli 10-1 oilfield commenced production as scheduled in 2015.

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Metgasco wins NSW court action http://www.upstreamonline.com/live/1397956/metgasco-wins-nsw-court-action Supreme Court rules that the New South Wales action to suspend drilling programme was unlawful Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1397956/metgasco-wins-nsw-court-action Fri, 24 Apr 2015 07:00:10 +0000 live Justice Richard Button found the NSW Office of Coal Seam Gas did not observe procedural fairness and "confused consultation with persuasion".

“Effective consultation to my mind focuses on the quality of the process of consultation, rather than on any outcome whereby the persons who are the focus of the consultation are persuaded by it,” he said in his ruling on Friday.

He added the Office of Coal Seam Gas had “focused unlawfully on the results of the consultation, rather than its inherent characteristics.”

The New South Wales government ordered Metgasco to suspend all work on the conventional Rosella-1 well, in PEL 16, last year until it could demonstrate it had complied with certain conditions of the licence regarding community consultation.

At the time, Metgasco disputed the decision, stating it believed it had lived up to its community consultation obligations and has said previously it was looking into potential for a claim for damages to compensate for losses resulting from the suspension.

Botton said Friday that the decision to suspend Metgasco's drilling campaign had “come as a bolt from the blue” despite legislation requiring the company be given a reasonable chance to respond before it was implemented.

He also said the decision to suspend Metgasco's drilling programme had “undoubtedly damaged Metgasco substantially, as well as exposing it to criminal sanction.”

Following the court's ruling, Metgasco managing director Peter Henderson confirmed the company would be seeking compensation from the government.

“We believe that our decision to pursue legal action has been vindicated,” he said.

“We will be seeking compensation for the damage that has been inflicted on Metgasco and its 5000 shareholders by the NSW government's unlawful decision.”

While the ruling clears the way for Metgasco to resume drilling at Rosella-1, Henderson said the company would appreciate the opportunity to talk to the government before resuming its drilling activities in the state's Northern Rivers region.

The primary objective of the Rosella-1 well was to test the conventional gas potential in the Greater Mackellar structure in PEL 16 and also had secondary tight gas exploration targets

The court's decision was welcomed by upstream industry body the Australian Petroleum Production & Exploration Association (APPEA) which said protest action should not be considered as an indicator of ineffective consultation and grounds to suspend previously approved operations.

“Industry has always recognised there are people with genuine concerns regarding resource development who are open to consultation, science-based evidence, and reasonable negotiation; and that there are others who are not,” APPEA said in a statement on Friday.

“Last year’s suspension decision only served to encourage the actions of protesters intent on stopping natural gas production. It had also raised serious concerns for any resource project in NSW and undermined certainty for shareholders and employees.”

Henderson said the court's ruling was a landmark decision for the resources industry in New South Wales.

“Had we lost, future investors in NSW would have had to consider the real threat of sovereign risk and NSW’s image would have been tarnished,” he said.

 

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Four yards eye Edison's Vega platform http://www.upstreamonline.com/live/1397958/four-yards-eye-edisons-vega-platform A clutch of European builders chasing contract for 6000-tonne wellhead platform Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1397958/four-yards-eye-edisons-vega-platform Fri, 24 Apr 2015 07:29:30 +0000 live Read the full story in this week's issue of Upstream.

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Sound Oil spuds new Nervesa well http://www.upstreamonline.com/incoming/1397962/sound-oil-spuds-new-nervesa-well London-listed player starts works on second probe at onshore Italy play (Anamaria Deduleasa) http://www.upstreamonline.com/incoming/1397962/sound-oil-spuds-new-nervesa-well Fri, 24 Apr 2015 07:50:33 +0000 live The London-listed explorer said the well was spudded on Thursday, after site preparations were completed earlier this month.

The rig-up of the hydraulic HH220 rig, contracted from Hydrodrilling, commenced work soon after, Sound Oil said.

Drilling is expected to reach a total measured depth of 2054 metres and the programme is expected to be completed in approximately 40 days, the company said.

Results will be announced after well testing is complete, it added.

Sound Oil received final approvals for drilling the appraisal well in December last year.

The group previously estimated the Nervesa gas discovery to hold best estimate contingent resources of 21 billion standard cubic feet of gas.

The first appraisal well at the Nervesa discovery was spudded in June 2013.

Logs confirmed 476 metres of gross pay and 239 metres of gross reservoir with 46 metres of net gas pay in 13 separate zones, results which encouraged the company to drill the second well.

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Trapoil in insolvency warning http://www.upstreamonline.com/live/1397970/trapoil-in-insolvency-warning UK North Sea player only has enough cash until about July as asset sales and funding options mulled Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1397970/trapoil-in-insolvency-warning Fri, 24 Apr 2015 09:08:16 +0000 live The UK continental shelf explorer’s board is “urgently assessing a number of potential funding alternatives”, which may include asset sales, it said this week.

Trapoil has been battered by low oil prices and problems at its only producing asset, its 15% stake in the Athena oilfield on Block 14/18b in the UK North Sea.

Production at the Ithaca Energy-operated field was hit by adverse weather at the start of last year and also a pump failure in one of the wells. The loss of some production was compounded by costs for a workover and well intervention work, as well as costly amendments to the terms of the partner’s contract for the BW Offshore Athena floating production, storage & offloading unit.

“In light of this lower flow rate, the significant drop in global oil prices and the fixed nature of certain of the field's key operating costs, at the then prevailing Brent oil price of approximately $58 per barrel, the field was significantly loss making and incurring a cash outflow of approximately £380,000 ($574,000) per month net to Trapoil,” the company said.

Trapoil took a resultant £15.1 million impairment hit last year on its Athena stake and also ran up impairment charges of £12.5 million for relinquishing licence interests declared uneconomic.

As a result, the company is currently “under capitalised” and has “insufficient financial resources to continue in operation other than in the short term in the absence of additional funding”, it said.

The board believes the company only has enough cash to support activities until about July, but it considering asset sales, while it is also hoping for success at the Niobe well on production licence 1889.

“In the event that further funding is not secured in the short term, the board believes that it is highly likely that the company will become insolvent, and appropriate insolvency proceedings, such as administration or liquidation, will consequently need to be commenced,” Trapoil said.

The net loss for the year hit £44.41 million as against a loss of £10.26 million a year earlier. Revenues slumped from £30.31 million to £13.42 million.

Trapoil saw a mass exodus of executives in the second half of the year as it attempted to cut costs, while it also axed a farm-in option with Total.

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Petrobras to concentrate on upstream investments http://www.upstreamonline.com/live/1397948/petrobras-to-concentrate-on-upstream-investments Brazilian company putting in efforts to keep output on the rise fabio.palmigiani@upstreamonline.com (Fabio Palmigiani) http://www.upstreamonline.com/live/1397948/petrobras-to-concentrate-on-upstream-investments Fri, 24 Apr 2015 04:01:10 +0000 live Petrobras has outlined plans to invest $29 billion this year and another $25 billion in 2016, down from $35 billion it invested last year.

Petrobras will concentrate the bulk of investments in the upstream department, where about 82% of the projected capital expenditure in 2016 will be allocated.

The oil giant did not provide a breakdown of its planned investments for this year, but it is understood that the downstream and gas and energy sectors will suffer most of the cuts.

In a presentation to investors this Thursday, Petrobras exploration and production director Solange Guedes said the company is putting a lot of effort to keep output on the rise.

Petrobras ended 2014 with a domestic production of 2.034 million barrels per day of oil, up 5.3% from the previous year.

The company estimates production will rise 4.5% this year to 2.125 million bpd, and then increase 2.8% in 2016 to 2.185 million bpd.

Petrobras has only one production unit eyed to start operations this year – the Cidade de Itaguai floating production, storage and offloading vessel at the Iracema North pre-salt field.

"We will rely most on the ramp-up of FPSOs that produced first oil in 2014 to achieve our target, but we are also dedicating resources to compensate the natural decline of our fields," said Guedes in a conference call.

"The average decline rate of our fields is about 10% per year, or roughly 200,000 bpd, so a lot of work is required there."

She also admitted that four FPSOs ordered at Brazilian shipyards that were originally scheduled to enter operations in 2016 will be postponed due to delays in construction.

The four units – P-66, P-67, P-74 and P-75 – have a combined processing capacity of 600,000 bpd.

However, Guedes confirmed that four other floaters chartered with international contractors are expected to make the deadline and begin operations next year.

In a bid to raise money to strengthen its cash reserves, Petrobras has announced a divestment plan to sell as much as $13.7 billion in assets by 2016.

The company expects to sell $3 billion in assets in 2015 and another $10 billion next year. Even though no pre-salt production fields will make the list, Guedes said assets in the pre-salt fairway may be included in farm-out transactions.

“We are not going to make divestments in pre-salt production assets, but we are looking closely at some assets - and it does not matter if the are pre-salt or post-salt - to see if we can share risks... There are a lot of companies that would like to partner us in exploration," she added.

Petrobras started the year out with $26 billion in cash, and is expected to end the year with $20 billion.

The company is currently working on an updated version of its five-year business plan, comprising the period between 2015 and 2019, and expects to announce it to the market within 30 days.

(This article has been amended from the original to include a quotation from Solange Guedes on divestment plans.)

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Promising signs for AWE at Irwin-1 http://www.upstreamonline.com/live/1397946/promising-signs-for-awe-at-irwin-1 Perth basin well encounters elevated gas shows across several formations Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1397946/promising-signs-for-awe-at-irwin-1 Fri, 24 Apr 2015 03:05:56 +0000 live The well was drilled to a total depth of 4049 metres and encountered elevated gas shows in the Dongara/Wagina sandstones primary target, as well as the secondary objective Carynginia shale, Irwin River coal measures, and the deeper Kingia and High Cliff sandstones.

AWE said on Friday the significance of the gas shows was yet to be determined, but it plans to further evaluate the potential gas finds through a wireline logging programme.

It added that it could also carry out a flow test of the well l to better establish the commercial potential of the reservoirs, but noted it does not have approval under its current work programme to carry out hydraulic fracturing.

The Irwin prospect straddles the boundary of blocks EP320 and L1, with AWE operating the drilling programme under an agency agreement with joint venture partner Origin Energy.

AWE holds a 50% operated stake in L1, with Origin holding the remaining 50% interest, while Origin holds a 67% operated interest in EP320, with AWE holding the remaining 33% equity.

 

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Prices retreat from 2015 highs http://www.upstreamonline.com/live/1397947/prices-retreat-from-2015-highs Benchmarks still on track to post weekly gain despite losses in early trade Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1397947/prices-retreat-from-2015-highs Fri, 24 Apr 2015 03:54:13 +0000 live Crude prices have surged about $10 a barrel over the last month amid growing tension in the Middle East, with slowing US production growth and signs of stronger global demand also providing support.

The spike in prices on Thursday came as warplanes from a Saudi-led coalition pounded Houthi militiamen and military bases with at least 20 air strikes throughout Yemen, residents said, despite Riyadh saying earlier it was winding down its campaign.

Brent crude for June delivery was down 31 cents at $64.54 a barrel in early trading on Friday, after settling $2.12 higher. The contract touched its highest since 10 December at $65.58 on Thursday.

US crude for June delivery dropped 32 cents to $57.42 a barrel, after settling up $1.58. The front-month contract hit a 2015-high of $58.41 on Thursday and is on course for its sixth straight weekly gain.

The rise in futures prices over the last month shows a growing disconnect between oil producers and Wall Street over when slumping oil prices will recover, with the financial community betting that the oil price cycle may turn more quickly than the industry expects.

"Equity markets are already looking for the upside," said Scott Key, chief executive of IHS.

Meanwhile, producers are bracing for oil to remain at about $60 a barrel for as long as the next five years or so.

"One can hope for $75 oil but I think one has to plan for a lower price," said Stephen Chazen, chief executive of Occidental Petroleum. Chazen said he was planning for oil to remain at $60.

International oil prices were also supported by a weakening dollar after underwhelming US economic news.

A weaker greenback makes dollar-denominated commodities like oil cheaper for holders of other currencies.

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CEO out in Houston American settlement http://www.upstreamonline.com/live/1397932/ceo-out-in-houston-american-settlement Terwilliger barred from running a public concern for five years in deal over fraud charges; company fined Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1397932/ceo-out-in-houston-american-settlement Thu, 23 Apr 2015 21:47:43 +0000 live John Terwilliger, who served as an executive at Houston American since its inception in 2001, is also required to pay a fine of $150,000 under the settlement of a civil cease-and-desist proceeding the SEC launched against the company for "wildly exaggerating" resource claims for an oilfield in Colombia.

The company itself will pay a $450,000 civil penalty. Houston American will now be led by John Boylan, who previously served as a director and chair of the company's audit and compensation committees.

Neither Terwilliger nor the company admitted or denied any wrongdoing in the settlement.

The SEC charged that Terwilliger and Houston American "misled investors by wildly exaggerating the extent and nature of their oil and gas holdings" in Colombia between 2010 and 2012.

According to the SEC, the company told investors the oilfield tract in question contained between 1 billion and 4 billion barrels of oil reserves worth more than $100 per share to investors.

The company's stock from near $20 in 2011 to about two cents today.

Terwilliger will remain employed by the company in a non-executive advisory capacity at least through the end of 2015 to facilitate the management transition, the company said.

Terwilliger's future employment with the company will be re-determined by the company at that time.

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Wood Group Kenny nets Ca Rong Do opening gig http://www.upstreamonline.com/live/1397944/wood-group-kenny-nets-ca-rong-do-opening-gig Contractor wins risers FEED job on Talisman Energy’s oil and gas field development off Vietnam stories@upstreamonline.com (Upstream Staff) http://www.upstreamonline.com/live/1397944/wood-group-kenny-nets-ca-rong-do-opening-gig Fri, 24 Apr 2015 02:08:57 +0000 live Find out all the details in this week's edition of Upstream newspaper.

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Shell 'confident' in Brazil despite scandal http://www.upstreamonline.com/live/1397928/shell-confident-in-brazil-despite-scandal Anglo-Dutch supermajor CEO says state-run oil company will emerge stronger Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1397928/shell-confident-in-brazil-despite-scandal Thu, 23 Apr 2015 21:14:14 +0000 live Chief executive Ben van Beurden said oil production from Brazil's offshore subsalt region will remain profitable, and predicted that oil prices will rise from the low levels of the past six months.

Van Beurden briefed Brazilian President Dilma Rousseff for 1-1/2 hours on Thursday on his company's operations in Brazil, where Shell has become the second-largest oil producer following its 8 April purchase of rival BG Group.

The acquisition increases Shell's role in Brazil, where it had been the No. 3 producer, giving it a financial stake in giant new offshore fields operated by Brazil's troubled state-run Petrobras.

In January, BG's 140,562 barrels a day of oil and gas output in Brazil was nearly four times greater than Shell's 49,014 boepd.

While Shell will have to take a backseat to Petrobras on operational decisions, it is believed to have the money and technology needed to push Petrobras-led projects forward.

Petrobras took a $17 billion charge on Wednesday to account for the costs of a political kickback scandal that forced it to cut investment, and paralysed its contracts with engineering firms under investigation for bribery.

"I have 100% confidence that Petrobras will come through this probably as a stronger company than it was before," van Beurden said at a news conference after meeting Rousseff.

He said Brazil's subsalt resources are among the best in the world and that Shell is interested in deepening its involvement.

"The resources in production today are very, very strong. I do not see any issue of profitability of the operation," he said.

Van Beurden said Shell has studied the risks of working with Petrobras.

"We have taken into account the impact that any of today's news will have on the development of existing fields as well as the Libra field going forward, and these risks have been fully factored into the commercial arrangements we have done with BG," he said.

Van Beurden expects Brazil to account for 20% of Shell's global oil output in a decade due to the BG deal.

He said Shell would consider buying any Petrobras assets put up for sale "if the opportunities come up".

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Oklahoma advances bill to prohibit drilling bans http://www.upstreamonline.com/incoming/1397937/oklahoma-advances-bill-to-prohibit-drilling-bans Legislation would stop local moves to restrict oil activity caroline.evans@upstreamonline.com (Caroline Evans) http://www.upstreamonline.com/incoming/1397937/oklahoma-advances-bill-to-prohibit-drilling-bans Thu, 23 Apr 2015 23:33:51 +0000 live The bill, SB 809, passed the state's House of Representatives by a vote of 64-32 Wednesday.

SB 809, were it to become law, would allow cities and towns in Oklahoma to enact "reasonable" regulations regarding activity incidental to oil and gas, such as road use, traffic, noise and odors. It would also allow them to enact setback and fencing rules "as are reasonably necessary to protect the health, safety and welfare of its citizens."

However, it would prohibit them from banning any oil and gas operations, including drilling, hydraulic fracturing, exploration, production and maintenance. In addition, it places the Oklahoma Corporation Commission, the state's chief commercial regulator, in charge of most oil and gas regulations.

Supporters of the bill say it will protect the state's position as an oil and gas producer.

"We understand concerns about public safety and this bill provides those protections at the local level while also ensuring that one of the state's key economic pillars can continue to use the modern techniques that have kept Oklahoma moving forward," State Chamber vice president of government affairs Arnella Karges said in a statement.

However, critics worry that the Corporation Commission is not equipped to deal with the volume of regulations to be overseeing, and that the bill will strip away municipalities' control of oil and gas development.

"It is absolutely wrong to take away an existing right to regulate or ban a given activity when citizens believe it is harming their health, safety or well-being," Oklahoma Sierra Club executive director Johnson Bridgewater wrote in a statement posted on the chapter's website.

The bill comes amid a larger debate over the power of state regulators to override local governments when it comes to oil and gas activity. In Texas, regulators have vowed to continue issuing permits despite voters in the town of Denton passing a ballot measure to enact a fracking ban. A similar bill is currently moving through the Texas legislature.

SB 809 now goes to back to the Senate, where an earlier version was passed. If the Senate approves this version, it will make its way to Governor Mary Fallin's desk.

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YPF sells $1.5bn in bonds http://www.upstreamonline.com/live/1397931/ypf-sells-usd-15bn-in-bonds Argentina's state energy company sold new batch of 10-year bonds on strong demand Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1397931/ypf-sells-usd-15bn-in-bonds Thu, 23 Apr 2015 21:45:26 +0000 live Reuters' IFR reported the issue had been launched earlier in the day at 8.625%, down from price talk of 8.75 percent.

"There was a lot of demand, about $4 billion, which is why the company decided to widen the offer," a local market source, who asked not to be named, told Reuters.

YPF needs to raise cash to invest in its vast but barely tapped Vaca Muerta shale oil and gas formation in order to reverse Argentina's energy sector trade deficit that is pressuring foreign reserves.

"It's an energy company which is not that indebted that is offering paper with a coupon that is high compared with the rest of the world," said Christian Reos, an analyst at Buenos Aires-based brokerage Allaria Ledesma.

In February YPF sold $500 million of bonds, a third less than it had offered, as many bids were for higher yields than it would accept.

Since then investor sentiment has improved as the October presidential election draws closer. The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose government's sweeping currency and trade controls are cited by economists as factors weighing on the economy.

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USGS to model quake hazards in eight states http://www.upstreamonline.com/live/1397923/usgs-to-model-quake-hazards-in-eight-states Environmentalists in Oklahoma call for moratorium on injections wells in state Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1397923/usgs-to-model-quake-hazards-in-eight-states Thu, 23 Apr 2015 20:56:58 +0000 live USGS has released a preliminary set of models that it hopes can forecast how dangerous ground-shaking can be in states that have seen a sharp rise in oil and gas activity such as Oklahoma, Texas, Colorado, New Mexico and Kansas.

The models are designed to calculate how often earthquakes are expected to occur in the next year and how hard the ground will likely shake as a result.

"This new report describes for the first time how injection-induced earthquakes can be incorporated into US seismic hazard maps," said Mark Petersen, head of the project.

"These earthquakes are occurring at a higher rate than ever before and pose a much greater risk to people living nearby."

Click here to read the report.

The report comes just days after the USGS said that a spate of near-daily earthquakes in Oklahoma over the past several years were "most likely" triggered by the injection of produced water in disposal wells.

As a response to that report, which came out earlier this week, the Oklahoma Sierra Club called on state officials to impose a 12-month moratorium on injection wells in the state.

"We think a 12-month moratorium would be a long enough pause to get a much better handle on what is going on," the Associated Press quoted Oklahoma Sierra Club director Johnson Bridgwater as saying. "We do think it would be enough time to give some indication on whether it is having an affect on the overall occurrence of earthquakes."

Democratic state representative Cory Williams had previously called for a similar moratorium.

The Oklahoma Independent Petroleum Association said such a moratorium "would completely shut down oil and gas production" in the counties where wastewater injection occurs.

The number of wastewater-injection wells across US states that allow them has ballooned since 2008. While hydraulic fracturing has been the catalyst for the increase in wells, the fracking process itself "is only occasionally the direct cause of felt earthquakes", USGS said.

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Pemex 'may sell Galicia flotels' http://www.upstreamonline.com/live/1397925/pemex-may-sell-galicia-flotels Two floating accommodation units still under construction in shipyard in Spain Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1397925/pemex-may-sell-galicia-flotels Thu, 23 Apr 2015 21:06:02 +0000 live Pemex has been crunched by sharply lower oil prices, in February saying it will cut its 2015 budget by $4 billion, or 11.5%, to reduce spending.

"We will try to monetise them in 2015," Jose Manuel Carrera Panizzo was quoted as saying in the Voice of Galicia newspaper, adding that shipping companies, investment funds or other players might be interested.

"It would be in the second half."

Pemex did not immediately confirm the move, but it would be a major about-face for the company which ordered the units after signing a letter of intent to buy into the Hijos de Barreras yard in 2013.

The lucrative 10-year deal went to internal subsidiary PMI with a reported bid of $312 million.

Pemex has been increasing its investment in yards in Mexico and abroad as part of a strategy to secure the marine infrastructure it needs to support growth in offshore oil production.

Critics, however, had questioned the prudence of a major investment abroad when Pemex had vowed to focus on reversing production declines and redoubling exploration and production at home.

The two flotels are only about 45% complete and are envisaged to be delivered to the new prospective owners when finished in 2016.

A keel-laying ceremony was held for the units in August.

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Claim for $7bn against Ecopetrol dismissed http://www.upstreamonline.com/live/1397929/billion-dollar-claim-against-ecopetrol-dismissed Llanos Oil Exploration lawsuit dropped from Dutch docket with 'no explanation' Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1397929/billion-dollar-claim-against-ecopetrol-dismissed Thu, 23 Apr 2015 21:19:49 +0000 live The Supreme Court of the Netherlands "dismissed, without any explanation", a lawsuit filed in 2011 by Llanos Oil Exploration against Ecopetrol over the termination of the Guatapuri association contract in Colombia.

Llanos had appealed previous rulings by the Court of Appeal and District Court of The Hague, in which they declared that there was "no jurisdiction to render judgement" on the termination of the contract in July 2003.

"As a result of the Supreme Court of the Netherlands decision, Llanos Oil Exploration's claim for damages for approximately €7 (billion)... loses all legal basis," Ecopetrol said.

A website linked to Llanos Oil Exploration said the company "was exclusively engaged in oil and gas exploration in Colombia".

Llanos claims on the website that Ecopetrol "effected a disguised expropriation of an oil and gas contract worth billions of euros of potential income utilising false criminal proceedings against Llanos Oil".

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BPZ drills Peru dry hole http://www.upstreamonline.com/live/1397936/bpz-drills-peru-dry-hole Bad news keeps coming for bankrupt Latin America-focused player Luke.Johnson@upstreamonline.com (Luke Johnson) http://www.upstreamonline.com/live/1397936/bpz-drills-peru-dry-hole Thu, 23 Apr 2015 22:17:59 +0000 live The Houston-based independent, which continues to operate under provisions of Chapter 11 of the United States Bankruptcy Court Code while it seeks additional financing, said it found nothing but water at the Albacora A-22D well on offshore Block Z-1.

The well was drilled to a measured depth of 13,730 feet.

"The well tested water with no oil shows from the three targeted zones which are productive in the main part of the field," BPZ said.

"These results establish the south-eastern extent of the field. A reinterpretation of all Albacora well and seismic data is underway to further update the field's geologic model."

The company has now begun a workover on the Albacora A-27D well to perforate additional untested zones and to glean additional data on the deeper Zorritos reservoirs.

Block Z-1 production from the Corvina and Albacora fields for April has averaged 4325 barrels per day of oil gross, or 2206 bpd net to BPZ.

BPZ, which filed for bankruptcy protection in March, said earlier this month that its Corvina CX15-9D well in Block Z-1 produced no oil but did register 35 feet of natural gas pay in the upper Zorritos reservoir.

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OneSubsea wins BP Egypt deal http://www.upstreamonline.com/live/1397911/onesubsea-wins-bp-egypt-deal Contractor to supply subsea systems for UK giant at development Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1397911/onesubsea-wins-bp-egypt-deal Thu, 23 Apr 2015 15:32:52 +0000 live The deal will see the joint venture between contractor giants Schlumberger and Cameron work for BP at the West Nile Delta Taurus Libra development.

OneSubsea did not disclose the value of the deal, saying only it was a "multi-million dollar contract".

"The subsea systems scope of supply includes 10 large bore gas trees and related subsea equipment," OneSubsea said.

First deliveries are expected in the first quarter next year.

"The Taurus Libra field is the first development in the West Nile Delta area and is being tied back to the existing West Delta Deep development," it said.

Chief executive Mike Garding added: "This project is being executed on a fast-track schedule, utilising the standardised BP horizontal gas tree and control system that we jointly developed."

The $12 billion West Nile Delta project, where BP is joined by DEA, is set to produce a total of 5 trillion cubic feet of gas and 55 millionk barrels of condensate to help ease Egypt's energy shortage.

It is expected to produce 1.2 billion cubic feet per day, equivalent to about 25% of Egypt’s current gas production.

It was originally due on stream as early as last year, but work stopped after the 2011 revolution that unleashed political and financial turmoil in Egypt.

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BP in $486m CATS stake sale http://www.upstreamonline.com/live/1397896/bp-in-usd-486m-cats-stake-sale Antin Infrastructure picks up UK supermajor's interest in key North Sea pipeline system Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1397896/bp-in-usd-486m-cats-stake-sale Thu, 23 Apr 2015 11:07:26 +0000 live BP has agreed to sell its 36.22% operating interest in the Central Area Transmission System (CATS) pipeline business in the UK North Sea to Antin Infrastructure Partners for £324 million ($486 million).

The deal increases Antin's stake to 99% following its acquisition of a 62.78% stake in July last year.

CATS is a 400-kilometre pipeline system that transports gas from 34 central North Sea fields for processing at Teesside in the UK. In 2013, it transported 13% of UK domestic gas production.

The agreement comprises a payment on completion of £302 million and a deferred amount of £22 million subject to certain post-closing adjustments, BP said.

BP and Antin said they aim to complete the sale and transfer of operatorship before the end of 2015, subject to approvals.

Trevor Garlick, regional president BP North Sea, said: "The North Sea is an important region for BP. Our strategy here is to focus our resources and investment to create an efficient, sustainable and competitive business which will contribute to UK energy security for many years to come.

"Key elements of this are the completion of our major projects in the central North Sea and Shetland area, and continued management of our portfolio.

"CATS has been a great business for BP but, aligned to the recommendations of the Wood Review, we believe securing this new owner will ensure a better long-term future for this key piece of North Sea infrastructure.

"Supporting staff and ensuring continued safe operations will be our priority as we go through this transition period."

Antin Infrastructure Partners managing partner Mark Crosbie said: "We are delighted to have reached this agreement with BP. Having seen first-hand the strength of the CATS operation and the potential for growth, we have decided to increase our share in the business.

"We have exciting plans to grow and develop CATS through additional investment. CATS has a strong and skilled workforce and Antin's priority is to retain and develop employees through the transition and beyond."

It emerged after publication of BP's annual report in March that staff and third parties had been told in December the company was looking to sell its stake in the North Sea pipeline by the end of this year.

The sale of CATS will be as a fully operational business, with staff expected to transfer to the new employer with contractual terms and conditions protected under UK Transfer of Undertakings (Protection of Employment) regulations, known as Tupe, which ensure continuity of service during ownership changes.

The sale does not impact BP's rights to capacity in CATS, BP said.

Antin's CATS management team will be led by Andy Hessell, who has more than 26 years of industry experience and was most recently vice president of commercial operations North Sea and Angola at BP.

Antin will work closely with BP to ensure a safe and smooth transition in the coming months.

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