www.upstreamonline.com http://www.upstreamonline.com/ www.upstreamonline.com COSL nail-biter for rig work http://www.upstreamonline.com/live/1375086/COSL-nail-biter-for-rig-work Latest newbuild yet to line up contract ahead of delayed delivery as Norway market softens on cost-cutting Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1375086/COSL-nail-biter-for-rig-work Mon, 01 Sep 2014 12:40:22 +0000 live Midwater semi-submersible COSL Prospector is now due for delivery from Chinese yard CIMC Raffles in the fourth quarter after being delayed from the third quarter as fabrication work on the rig “has taken slightly longer than expected”, according to COSL Europe chief executive Jorgen Arnesen.

The rig, which is being winterised for work in the Barents Sea, will be the fourth unit built by the Chinese-owned contractor at the yard, with the three previous rigs – Pioneer, Innovator and Promoter – all fixed on long-term contracts with Statoil.

However, Arnesen confirmed to Upstream the Stavanger-based company has yet to secure employment for the latest newbuild, which was intended for work off Norway, and admitted the regional rig market was in the doldrums.

“We are working on different options for use of the COSL Prospector, including marketing it for work overseas. There is still some movement in the market,” he said.

While the COSL Prospector was originally being lined up for work in the Barents Sea amid a rush of exploration activity in the frontier play, Arnesen said other Arctic regions are also on the contractor’s radar screen.

The dynamically positioned deep-water rig, with a newbuild cost of at least $310 million, will be capable of operating in water depths of up to 1500 metres and drilling to a depth of 7600 metres.

The Agility Group-designed unit is being built in line with Norsok standards and the stringent requirements of Norway’s Petroleum Safety Authority.

It will be able to operate in ice conditions and low temperatures up to minus 20 degrees, and would also be suitable for harsh-environment work in the North Sea.

However, the region has seen falling dayrates of late on lower rig demand due to cutbacks in exploration and development drilling programmes as operators such as Statoil seek to cut soaring costs to boost profitability, while others such as Lundin Petroleum have already secured long-term rig capacity.

This has also triggered an exodus of rigs from the region, with Seadrill-owned semisub West Alpha now drilling for ExxonMobil in Russia’s Kara Sea and another of its rigs, West Hercules, due to start drilling for Statoil off eastern Canada this autumn, having just drilled a dry well at the Brugdan-2 prospect off the Faroe Islands.

Seadrill’s drillship West Navigator is also due to exit Norwegian waters by year-end after it completes a wildcat for Centrica at the Ivory prospect in the Norwegian Sea set to kick off this autumn, with the unit to subsequently start work for Russian state-owned Rosneft.

All three units are owned by Seadrill’s harsh-environment rig subsidiary North Atlantic Drilling Ltd, which earlier this year signed an extensive charter deal with Rosneft that will see the West Alpha and West Navigator, as well as other rigs, working in Russian waters.

The rig exodus is also set to have an impact on the offshore labour market in Norway, with the exit of the West Hercules and West Navigator reportedly set to put around 250 jobs at risk.

COSL Europe said earlier it would require 200 workers to man the COSL Prospector once it is delivered, though the rig’s final destination remains unclear.

Statoil readies full In Amenas return http://www.upstreamonline.com/live/1375039/Statoil-readies-full-In-Amenas-return Norwegian outfit says ‘all defined security measures’ in place at terrorist-hit Algerian gas facility Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1375039/Statoil-readies-full-In-Amenas-return Mon, 01 Sep 2014 07:19:46 +0000 live The Norwegian state-owned company said “all defined security measures have been implemented” at the plant in the south of the country, paving the way for a full-scale return of staff following the 16 January, 2013 assault.

Statoil had in June approved the temporary manning of the facility, having between the autumn of 2013 and early this year resumed ordinary operations at other facilities in Algeria.

That involved sending a contingent of 10 personnel on a temporary rotation – including both foreign nationals and Norwegians – to ensure the security of the facility about 18 months after the attack.

On Monday the company said: “Since the In Amenas attack, Statoil has worked systematically with its partners in Algeria with the aim of resuming ordinary operations in Algeria. The security improvements at In Amenas are also based on recommendations of the investigation conducted after the attack.

“In parallel with this work, the company has carried out a continuous and comprehensive improvement effort to enhance the general security work in Statoil. The goal of this programme is to achieve considerable improvements both with regard to awareness, organisation, systems and use of resources.

“Through the security improvement effort at the Algeria plants the joint venture has introduced physical security measures at all operating plants.

“The security work, both in Statoil and in the joint venture, has furthermore been reorganised, and the dialogue with Algerian authorities on securing of the plants has been improved. Algerian authorities have also initiated and introduced security measures beyond those implemented by the joint venture.”

Vice president for development & production international Lars Christian Bacher continued: “The decision to resume ordinary operations also at In Amenas is the result of a thorough and stepwise process of identifying necessary security measures, implementing them and validating that they are in place and operational.”

Five Statoil employees were among 40 workers killed after heavily-armed Islamist terrorists attacked the plant and took around 700 staff hostage, before Algerian forces stormed the facility to end a three-day stand-off.

Production from the three-train facility, operated by a joint venture of BP, Statoil and state-owned Sonatrach, was shut down in the wake of the assault but was earlier this year reported to be running at around 20 million cubic metres per day – two-thirds of its 30 MMcfd capacity – as work was being carried out to repair the third train that was damaged in the attack.

Statoil, which had 17 employees at the plant at the time of the attack, was criticised for having insufficient security measures in place and relaying too heavily on protection from the Algerian military in a report from an external investigation released last year.

The company, which evacuated its foreign staff from Algeria after the attack, resumed full operations earlier this year at the country’s In Salah gas plant, also run in a joint venture with BP and Sonatrach, while it is also working at the Hassi Mouina gas field.

IGas AGM backs Dart acquisition http://www.upstreamonline.com/live/1375068/IGas-AGM-backs-Dart-acquisition UK player planning 'active bidding' in onshore licensing round Bill.Lehane@upstreamonline.com (Bill Lehane) http://www.upstreamonline.com/live/1375068/IGas-AGM-backs-Dart-acquisition Mon, 01 Sep 2014 11:01:44 +0000 live The deal supported by both boards would create the largest licence holder in UK onshore, including a sizeable portfolio of shale exploration blocks.

Dart Energy shareholders are to cast their ballots on 10 September.

The Dart Energy vote was delayed on Friday after the company’s appointed independent expert Deloitte reduced its view of the deal from fair to reasonable because of recent falls in Igas Energy stock, although the change is not expected to affect the deal’s completion.

ASX-listed Dart Energy's shareholders will get 0.08117 IGas Energy shares for each of their stock, or a 40% premium on their Dart shares’ value at the deal’s announcement, and ultimately own around 30.5% of the enlarged Igas Energy.

Shareholders representing 30.5% of Dart Energy’s share capital, including New Hope Corporation holding 16.3%, have agreed to back the deal.

Dart’s non-core shale and coal-bed methane licences in Australia, Germany, Belgium, Indonesia and India are all expected to be put up for sale after the acquisition.

IGas Energy chairman Francis Gugen said meanwhile that the explorer planned to be “active in bidding for various blocks” in the 14th landward licensing round, which opened recently and closes on 28 October.

“Our wealth of background data and operator status means we are well placed to participate and we are in discussions with partners in respect of a number of blocks,” he said.

Gugen also said the company was finalising plans for a new 3D seismic survey on its north-western English acreage to begin in the Autumn, and that IGas Energy still aims to spud its vertical Ellesmere Port coal-bed methane and shale probe by the end of the year.

Siccar Point gains $500m funding http://www.upstreamonline.com/live/1375045/Siccar-Point-gains-500m-funding Former Venture Production bosses set up UK North Sea newcomer Bill.Lehane@upstreamonline.com (Bill Lehane) http://www.upstreamonline.com/live/1375045/Siccar-Point-gains-500m-funding Mon, 01 Sep 2014 08:41:54 +0000 live The new explorer is headed by Jonathan Roger, who has led Centrica Energy Upstream since 2010 after the utility completed a £1.5 billion hostile takeover of UK independent Venture Production, where Roger had been chief operating officer.

Roger said the North Sea was now in "a period during which some of the largest upstream companies are cutting back on capital expenditures and consolidating their global asset portfolios”.

“We believe that selective capital deployment and efficient operations can deliver attractive returns in this environment," he said.

Before a seven-year stint in Venture Production's management team, Roger spent 12 years with ConocoPhillips in the North Sea and Indonesia.

He announced his resignation from Centrica Energy Upstream last March while vowing to replicate his experience at Venture Production of establishing a successful independent business.

Affiliates of Blue Water Energy and Blackstone Energy Partners are leading the initial investment, including funding provided by Singapore’s GIC.

The new company plans to participate across the exploration and production chain with an initial focus on areas of the UK continental shelf “where a change of control will facilitate follow-on investment activity that will further enhance asset potential”.

The company’s management will also include Venture Production and Centrica Energy Upstream veterans Iain Bartholomew as subsurface director, Doug Fleming as finance director and David Sheach as general counsel.

Apache seeking money from Tap http://www.upstreamonline.com/live/1375043/Apache-seeking-money-from-Tap Australian company confirms Apache is claiming money related to 2011 farm-out of Tallaganda discovery Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1375043/Apache-seeking-money-from-Tap Mon, 01 Sep 2014 08:07:38 +0000 live Tap has received a writ from Apache claiming US$4.14 million, plus interest and costs, which it says it owed in relation to to Tap's sale of a 25% stake in WA-351-P to BHP Billiton in 2011.

Tap had originally agreed to sell the stake to Japan Australia LNG (MiMi) for US$30.1 million, but BHP exercised its pre-emptive right to take over the stake under the same terms.

On Monday, Tap said it understood that BHP subsequently assigned a portion of its interest to Apache.

“It is not apparent on what basis Apache is making a claim against Tap under a farm-in agreement to which it is not a party,” Tap said in a statement on Monday.

“In any case, Tap considers that the claim is without merit and will defend the claim.”

The West Australian newspaper reported that the compensation being sort by Apache centred on a US$4.15 million license fee payment made by BHP to Tap as part of the 2011 deal.

The paper claims the writ states the money was payment for Tap getting BHP a seismic license agreement with geotechnical services company WesternGeco on substantially the same terms as enjoyed by Tap.

It added that Apache claims a new licence did not need to be issued or any money to be handed over because BHP was an existing joint venture partner.

According to the writ, Apache claims Tap had received the benefit of the licence fee payment at its expense and argued that it would be unjust for it to keep the payment.

WA-351-P lies in the offshore Carnarvon basin and is operated by BHP with a 55% stake, Apache holds 25% and Tap holds the remaining 20% equity.

Gazprom Neft confirms Badra flows http://www.upstreamonline.com/live/1375042/Gazprom-Neft-confirms-Badra-flows Russian operator sees commercial production maintained at 15,000 bpd to the end of the year Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1375042/Gazprom-Neft-confirms-Badra-flows Mon, 01 Sep 2014 08:04:42 +0000 live The field in Wasit province began commercial flows in late August, after initial production had started earlier in the month.

Confirming the start of commercial output, Gazprom Neft said first oil is now being delivered to Iraq’s main pipeline system for transfer to the export terminal at Basra on the Persian Gulf.

“Current deliveries from Badra to the pipeline stand at over 15,000 bpd of oil and this level should be maintained until the end of 2014,” it said.

“According to the service contract with the Government of Iraq, the consortium of investor companies will begin receiving a share of the oil produced at the field after a period of 90 days following launch of commercial supply.”

Peak production is set to hit 170,000 bpd in 2017, remaining at this level for seven years, with a total of 17 production wells and five injection wells planned.

The explorer had originally pegged August 2013 for commercial start-up before delaying entry to production over security and geological challenges.

In March it hooked up the field to the Gharraf oilfield in Nasiriyah province with a 165-kilometre pipeline connection to the Iraqi pipeline system. The pipeline will have a capacity of 240,000 barrels per day of oil and can supply the oil export terminal in Basra.

Gazprom Neft said in early January it was close to bringing onstream the first 60,000-barrel-a-day capacity line of the 170,000-barrel central gathering facility it is building for the field in eastern Iraq.

Preparations to build a 1.5 million cubic metre annual capacity gas conversion plant are also under way.

Gazprom Neft operates the Badra field on a 30% stake with the state holding Iraqi Oil Exploration Company on 25%, Korea Gas Corporation on 22.5%, Malaysia’s Petronas on 15% and Turkey’s TPAO on 7.5%.

Roxi firms up BNG pay http://www.upstreamonline.com/live/1375037/Roxi-firms-up-BNG-pay Further analysis shows oil bearing interval twice the size of initial interpretation Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1375037/Roxi-firms-up-BNG-pay Mon, 01 Sep 2014 06:58:48 +0000 live Roxi revealed on Monday, based on additional drilling and mud logging, the oil bearing interval in the Airshagyl-5 (A5) well had been interpreted to be at least 105 metres, running from a depth between 4332 and 4437 metres.

This more than double the original estimate given last month when Roxi announced the well had intersected a 51-metre gross oil bearing interval.

Roxi said it had decided to complete the well at 4442 metres due for safety reasons related to different pressure and temperature conditions at lower depths.

Following the completion of the well, the company plans to run and set a liner and carry out flow testing.

"The 105 metres gross interval is an excellent outcome,” Roxi chairman Clive Carver said.

“How far further the interval extends will be for another time to determine. More than ever we look forward to the results of the flow test."

Roxi said its next BNG well, Airshagyl-6, was now planned to target levels below 4437 metres.

Roxi holds a 58.41% interest in the BNG contract area which lies 40 kilometres south-east of Tengiz on the edge of the Mangistau region.

Lundin spins bit at Vollgrav South http://www.upstreamonline.com/live/1375038/Lundin-spins-bit-at-Vollgrav-South Swedish explorer on trail of new North Sea find off Norway with latest wildcat in mature play Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1375038/Lundin-spins-bit-at-Vollgrav-South Mon, 01 Sep 2014 07:09:21 +0000 live The 33/12-10S well is being drilled by semi-submersible Bredford Dolphin in Lundin-operated production licence 631, with the prospect estimated to hold gross prospective resources of 57 million barrels of oil equivalent, according to the Swedish explorer.

The probe aims to test reservoir properties and hydrocarbon resource potential of Upper Jurassic sandstones that are said to be analogous to the earlier Borg discovery, which forms part of the Tordis field to the north.

It is being drilled to a targeted total depth of 3050 metres at a location between the giant Gullfaks and Statfjord fields in the northern North Sea, about 150 kilometres off the west coast of Norway, and has an estimated duration of 55 days.

The Norwegian Petroleum Directorate said in a statement issued after the well had been spudded that Lundin had been granted a drilling permit for the probe, the first to be drilled in the licence.

Lundin holds a 60% operating interest in the licence, with partners Bayerngas and Fortis Petroleum on 30% and 10% respectively.

The Swedish player has a track record of making landmark discoveries in Norway’s mature play, having unearthed the Avaldsnes – now part of Johan Sverdrup – and Luno finds in the prospective Utsira High area.

North Energy in licence coup http://www.upstreamonline.com/live/1375041/North-Energy-in-licence-coup Succession of farm-in deals set to give explorer dominant position in Norwegian Sea permit Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1375041/North-Energy-in-licence-coup Mon, 01 Sep 2014 07:49:41 +0000 live The Norwegian explorer has now struck a deal to acquire an 18% stake from Dana Petroleum that will lift its interest to 53% in production licence 484.

It comes on the heels of recent asset swap transactions with Noreco and Explora Petroleum giving North Energy a total interest of 35% in the licence.

The Oslo-listed company will be the biggest stakeholder in the licence on completion of the latest deal - still subject to state approval – with operator Noreco left with only 15%, Dana on 12%, and Explora and E.ON E&P holding 10% respectively.

North Energy is eyeing other potential drilling prospects in the licence, despite the abortive Verdande probe drilled earlier this summer with semi-submersible Bredford Dolphin that only turned up sub-commercial volumes of hydrocarbons.

However, the company reportedly remains reticent on whether it intends to take over operatorship of the licence.

The explorer is using so-called Virtual Drilling technology that enables it to screen the likely hydrocarbon potential of prospects before making costly drilling decisions as it seeks to increase its chances of exploration success after a run of dusters.

Leni unearths more at Goudron http://www.upstreamonline.com/live/1375040/Leni-unearths-more-at-Goudron Explorer finds additional net oil pay in primary target of latest well on Trinidad field Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1375040/Leni-unearths-more-at-Goudron Mon, 01 Sep 2014 07:34:48 +0000 live The London-listed explorer threw up more than 77 metres of net oil pay in the Gros Morne sandstone at the GY-668 well, its primary target at the probe.

This adds the 58 metres of net oil pay already found in the secondary Goudron sandstone target at the well, which is the fifth of a planned 30 new development wells at the field.

The rig will now be moved to a new drilling pad to drill the next four wells on the play.

Last month LGO hit “excellent oil pay” at its previous development well, GY-667, striking 66.75 metres of net oil pay.

LGO said in late July that it had struck 57 metres of net oil pay at the well. That find was made in the Goudron sandstone, with high-pressure gas intervals in the Upper Gros Morne formation.

The company drilled ahead into the primary target of the Gros Morne sandstone where it hit a “thick massive sandstone interval” of almost 40 metres.

Yiu Lian to sell rig after Jasper misses payment http://www.upstreamonline.com/live/1374995/Yiu-Lian-to-sell-rig-after-Jasper-misses-payment Financial woes continue for Jasper Investments as another vessel is also in danger of being sold Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1374995/Yiu-Lian-to-sell-rig-after-Jasper-misses-payment Mon, 01 Sep 2014 02:21:10 +0000 live Jasper said it had been unable to raise sufficient funds to take delivery of the vessel by 31 August and, as a result, Yiu Lian has now elected to exercise its right to seek another buyer for the vessel.

Jasper said it would work with the yard on the sale process and attempt to negotiate a profit share in the interest of enhancing the sale price.

The company hinted that it could miss the payment deadline on the rig last month when it also warned of a potential breach of the financial obligations under its the five-year $165 million senior secured bonds related to the drillship Jasper Explorer.

Jasper has been seeking waivers to its financial obligations from bondholders given the fact the vessel had not generated any revenue since coming off-hire at the end of February.

However, the waivers were not approved which led to the company to release a statement on 22 August stating it was trying to secure waivers from its financial obligations from the bondholders.

If Jasper is unable to gain the waivers, it could be forced to sell the vessel if it misses its liquidity and interest payment obligations.


Brent holds above $103 http://www.upstreamonline.com/live/1375036/Brent-holds-above-103 Prices steady but slower growth in China's factory sector could strengthen fears over demand Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1375036/Brent-holds-above-103 Mon, 01 Sep 2014 05:49:41 +0000 live Oil prices on both sides of the Atlantic registered a second straight month of losses in August, although prices gained about $1 a barrel towards the end of the month.

Growth in China's factory sector slipped to a three-month low in August as foreign and domestic demand cooled, an HSBC survey showed on Monday. That may strengthen fears of a slowdown in demand for commodities, including oil.

"A fair bit of weak sentiment around China has already been priced in," said Ankit Pahuja, a commodity strategist at ANZ investment bank.

"China has held to a 7.5% growth target, so the government does have plans to maintain growth across the next couple of quarters," Pahuja said.

Brent crude for October delivery was 1 cent lower at $103.18 a barrel early on Monday. The contract had gained 73 cents on Friday. US crude traded 18 cents lower at $95.78 a barrel, after settling $1.41 higher.

Floor trading in the US is closed on Monday for the Labor Day holiday.

"Our view is that oil prices will strengthen a little over the next month or so. Markets have been a bit complacent regarding supply risks, and probably overestimated return in supply from places like Libya and Iran," Pahuja said.

Libya's oil production has ticked higher in recent months, rising to 700,000 barrels per day, state-run National Oil Corporation said on Sunday, putting it 50,000 bpd higher than what was reported early last week.

Geopolitical tension continued to support oil prices, with Iraqi army and Kurdish forces closing in on Islamic State fighters on Saturday in a push to break the Sunni militants' siege of a town in northern Iraq, while the US carried out air strikes there.

In Russia, President Vladimir Putin called for talks on the "statehood" of southern and eastern Ukraine, while his Ukrainian counterpart Petro Poroshenko said his country was close to all-out war with Russia.

The escalation could result in new Western sanctions against Russia, the world's biggest oil producer, although sanctions imposed so far have not directly affected energy supplies.

Head of Russian major Rosneft, Igor Sechin, said Russian oil and gas companies will honour their supply contracts despite sanctions and tensions with the West.

Iranian President Hassan Rouhani said on Saturday that new sanctions against Tehran over its nuclear programme "put into question the seriousness, honesty and good faith of negotiations with the US"

"They are in conflict with the spirit of talks. They are unconstructive in my opinion," Rouhani said at a news conference, although he later suggested there was still hope of reaching a deal by the 24 November deadline.

In other news, Egypt's oil ministry said the United Arab Emirates would provide "about $9 billion" worth of petroleum products to Egypt over the next year in deal to come into effect Monday.


Origin hands out Yolla contract http://www.upstreamonline.com/live/1375035/Origin-hands-out-Yolla-contract Joint venture between Subsea 7 and SapuraKencana to carry out work on field in Australia's Bass Strait Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1375035/Origin-hands-out-Yolla-contract Mon, 01 Sep 2014 05:42:29 +0000 live SapuraAcergy was awarded a contract by Origin to transport and install a compressor module and a condensate pump module onto the Yolla A platform in the Bass Strait.

SapuraKencana said engineering activities for the works had already started, with the offshore installation campaign to start in the fourth quarter of the year.

It did not give a value on the contract but said the offshore work was expected to take about eight days to complete.

Origin is currently carrying out the Yolla mid-life enhancement project which involves drilling two wells and the installation of associated flow lines and other works which will help support the maintenance of gas from the field.

Origin operates the BassGas joint venture with a 42.5% stake and is partnered by AWE and Toyota Tsusho Gas E&P Trefoil which hold a 46.25% and 11.25% interest respectively.

Empire increases Perth basin holdings http://www.upstreamonline.com/live/1374991/Empire-increases-Perth-basin-holdings Empire also reveals deal to raise funds as its acreage now covers more than 50% of onshore basin Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1374991/Empire-increases-Perth-basin-holdings Mon, 01 Sep 2014 00:55:15 +0000 live ERM revealed it had agreed to sell its stakes in eight exploration permits to Empire, including its 23.61% interest in EP 389 which contains the Red Gully-1 and Gingin West-1 wells which currently produce gas and condensate that is contracted to Alcoa and BP.

ERM will provide Empire an interest free two-year loan to fund the deal, however it will be eligible for a top-up payment based on gains in Empire's share price.

Under the condition, the purchase price will ultimately escalate by 70% of the percentage increase in Empire’s share price until the loan is repaid.

In a separate release, Empire said the deal would give it the largest acreage package in the Perth basin, covering about 12,000 square kilometres, or roughly 50% of the basin.

Empire chief executive Ken Aitken said the deal meant the company would now receive 100% of the cash from selling gas and condensate which is expected to generate A$25 million a year, at current production rates.

“The simpler ownership structure will in turn maximise our ability to attract the highest quality exploration partners and investors to help fund what is expected to be an aggressive exploration drive over the next few years to unlock the value of our highly prospective holding," he said.

“The deal also provides funding solutions via both the vendor finance arrangements and the share placement, which will give us the time and financial stability to commence our work programs and seek longer-term solutions to funding an aggressive exploration drive.”

Along with the 23.61% interest in EP 389, ERM's assets being sold include a 30.87% interest in EP 426 which includes the North Erregulla prospect, a 13.88% interest in EP 432, which includes the Black Arrow prospect, a 5.56% interest in EP 416 which includes the Leschenault prospect, a 12.5% stake in EP 440, a 50% stake in EP 454 which includes the Charger and Garibaldi prospects, a 60% interest in EP 480, a 100% interest in EP 467.

The deal also covers ERM's 21.25% holding in Cattamarra Farms, which owns the land that the Red Gully facility and Gingin West-1 and Red Gully-1 wells are located on.

Following the completion of the deal, Empire will hold a 100% interest in all of the assets, with the exception of EP 426 where Norwest Energy holds a 22.22% interest.

Empire and ERM also revealed on Monday that the latter was set to increase its interest in Empire from 10.2% to 19.99%.

Empire said it would raise up to A$7.5 million from ERM through a combination of a share placement and a rights issue, which will be done at a 12.5% discount to Empire's 10-day volume weighted average price immediately prior to the time of shareholder approval.

Empire said it planned to offer all shareholders the opportunity to take part in the proposed rights issue under the same terms to raise an additional A$10 million.

SapuraKencana confirms Vietnam awards http://www.upstreamonline.com/live/1375034/SapuraKencana-confirms-Vietnam-awards Malaysian service provider lands two offshore installation contracts Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1375034/SapuraKencana-confirms-Vietnam-awards Mon, 01 Sep 2014 05:22:13 +0000 live SapuraKencana confirmed earlier reports that its subsidiary TL Offshore had been awarded the $89 million subsea pipeline installation contract on Nam Con Son-2.

The project comprises of the installation of 151 kilometres of pipeline on the Nam Con Son field and 19 kilometres in the Dai Hung field.

Sapura Kencana said work would be carried out over two campaigns in the third quarter of 2014 and the second quarter of 2015.

The company also revealed it had been awarded a $7.3 million sub-contract on the Te Giac Trang field, on Block 16-1, off Vietnam.

It has been handed the sub-contract by PTSC Offshore Services Joint Stock Company to carry out installation work on the H5 wellhead platform and drilling wellbay module I.


Real primes Cooper bit http://www.upstreamonline.com/live/1374992/Real-primes-Cooper-bit Australian player preparing to drill its first well in the onshore Cooper basin Josh.Lewis@upstreamonline.com (Josh Lewis) http://www.upstreamonline.com/live/1374992/Real-primes-Cooper-bit Mon, 01 Sep 2014 01:37:25 +0000 live Real said on Monday that the drilling rig Ensign Rig-916 had been mobilised and was was rigging up at the Tamarama-1 wellsite in ATP 927P.

The well is expected to spud by the end of the week with the objective of confirming the presence of gas in the Toolachee and Patchawarra formations and to determine reservoir production potential.

Subject to results, Real plans to follow up the drilling of Tamarama-1 with the Queenscliff-1 and West Flynnes-1 wells in ATP 927P.

Real holds a 100% interest in three Cooper basin permits, ATP 927P, ATP 917P and ATP 1161P, which cover a combined 8314 square kilometres of the onshore basin.


Athabasca closes PetroChina sale http://www.upstreamonline.com/live/1374985/Athabasca-closes-PetroChina-deal Canadian producer seals C$1.184bn deal to exit Dover oil-sands project Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374985/Athabasca-closes-PetroChina-deal Fri, 29 Aug 2014 22:00:32 +0000 live The Calgary-listed company will see PetroChina subsidiary Phoenix Energy Holdings pick up Athabasca's 40% stake in project, in which it already held a 60% share.

Athabasca said on Friday it would receive a $600 million cash payment with three loans for the remainder for the transaction, initially announced in April.

The Canadian outfit elected to step away from the project to focus on Duvernay light oil assets in Central Alberta.

"Closing of the Dover transaction is an important milestone for Athabasca and marks the beginning of a new chapter for our company," chief executive Sveinung Svarte said.

"We can now finalise our business strategy which will be focused on profitable production and reserve growth, cash flow growth, cost discipline and balance sheet flexibility."

The steam-assisted gravity drainage project in eastern Alberta will be developed in multiple 50,000-barrels-per-day phases, with eventual capacity of 250,000 bpd eyed.

Upstream reported earlier this month that negotiations were still ongoing as the deal had taken longer than expected to close.

Adding to the complexity of the transaction was PetroChina’s provision for a C$49 million of settlement claims pertaining to the future abandonment costs of the Dover project and other oil and natural gas wells in the MacKay River area.

Further complicating matters is the investigation of four Petro­China executives by the Chinese government regarding the acquisition of oil sands properties.

The deal closing at Dover will be PetroChina's second wholly owned thermal oil-sands project in the region.

It also acquired Athabasca’s interest in the 150,000-bpd MacKay River project in early 2012 for C$680 million.

The two companies had previously formed Brion Energy, a joint venture, in 2010 to develop Dover and the MacKay River thermal projects.

US gas rallies to six-week high http://www.upstreamonline.com/live/1374986/US-gas-rallies-to-six-week-high Spike supported by warm end-of-summer weather Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374986/US-gas-rallies-to-six-week-high Fri, 29 Aug 2014 22:15:16 +0000 live Hedge funds and other money managers cut their net-long position in natural gas by 1 percent in the week to Tuesday, before a 4% price rally took the market to six-week highs over the next three days, data from the US Commodity Futures Trading Commission (CFTC) showed, Reuters reported.

The front-month gas futures contract on the CME NYMEX settled the week to Friday up 6% at $4.065 per million British thermal units.

It was the best weekly gain in natural gas in six months and the first time since mid-July that prices settled above $4 per mmBtu.

"We remain of the view that price risks are skewed to the upside from these levels," Barclays said in a research note, citing the weather.

The market spiked after weather forecasts persistently signaled a late surge in summer heat that could bump up energy usage for air conditioning. Until mid-August, temperatures had been mild, making extra cooling of homes and offices hardly necessary.

"It's logical to surmise from the CFTC data that at least a few hedge funds missed this week's big move in natgas by selling out before the wave higher," said Steve Mosley, president at SMC Advisory Services in Little Rock, Arkansas.

"The warmer-than-expected weather forecasts lately and a few tropical storm warnings appear to have been taken more seriously by some speculators who wanted to push the market up before Labor Day," he said, referring to the 1 Septemberholiday.

MDA Weather Services said its six-to-10-day forecast showed persistent heat across the South and Texas. Its 11-to-15-day reading indicated that significant cool air was not expected across most of the United States.

While the weather was interpreted as bullish for gas, weekly supply builds in the fuel were not too large to depress prices, even though U.S. utilities were rebuilding stockpiles at a record pace since the end of winter.

Last week's inventory build came in at the low end of market expectations, with 75 bcf added to storage, against a Reuters poll that forecast an average injection of 78 bcf. Prices hit a six-week high of $4.10 after the data.

The last time natural gas was overbought was in February, when prices were at 3-1/2 year highs of nearly $6.50 from heating demand during a brutal winter.

EIA pumps Mexico output forecast 75% http://www.upstreamonline.com/live/1374978/EIA-pumps-Mexico-forecast-by-75 US statistics arm predicts 'profound' change following reforms to 3.7m bpd by 2040 Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374978/EIA-pumps-Mexico-forecast-by-75 Fri, 29 Aug 2014 20:18:58 +0000 live The US energy statistics agency previously had forecast the country's production continuing to decline steeply to 1.8 million bpd by 2015 and "struggling" to maintain levels of 2 million or 2.1 million bpd by 2040.

"Although there are many complexities to the new reform and many details that still must be settled before the reforms can take effect, reform is expected to improve the long-term outlook for growth in Mexico's petroleum and other liquids production," the EIA said in a statement preceding the release of its 2014 International Energy Outlook, which will include the full details.

Mexico has struggled mightily with declining production, which peaked at about 3.5 million bpd about a decade ago and has continued a steep drop due to diminishing output at fields like Cantarell.

The country ended the monopoly of state oil company Pemex in reforms signed earlier this month in large part to bring in capital and technology to help turn around the production slump.

The company has already cut its output outlook twice this year, most recently to 2.35 million barrels per day at year-end following revelations that production equipment was mistakenly measuring some water as oil.

Pemex aims to add a million barrels of production by 2025.

Tanker with Kurdish crude reappears in Gulf http://www.upstreamonline.com/live/1374877/Tanker-with-Kurdish-crude-reappears-off-Texas Vessel pops up again on tracking systems off Galveston as sales dispute drags on bianca.bartucciotto@upstreamonline.com (Bianca Bartucciotto) http://www.upstreamonline.com/live/1374877/Tanker-with-Kurdish-crude-reappears-off-Texas Fri, 29 Aug 2014 00:35:33 +0000 live The Marshall Islands-flagged United Kalavryta had not sent a signal reporting its position for several days, leading to speculation that the vessel might have unloaded or left the area following a court verdict Monday.

But the ship restarting signalling its unchanged position on Thursday, with the latest update coming at 1:23 UTC time, or about 8:30 am Houston time on Friday, online vessel trackers indicated.

Baghdad has long disputed the rights of the semi-autonomous Kurdistan region to sell its own crude, and filed suit in US court in attempt to block sales transactions there.

Reuters reported that a US court ruled on Monday that the cargo could not be seized because the vessel lay outside of American territorial waters at some 60 miles out.

But Baghdad is reconsidering its legal options, a threat which may leave US companies hesitant to deal with the product, the Houston Chronicle reported.

The US Coast Guard told the Chronicle it authorised the ship to unload its cargo on 27 July, but has received no required notifications to begin "lightering", a process to begin offloading the oil to smaller ships.

Reuters reported that Axeon Specialty Products earlier this month refused delivery of Kurdish crude at its Paulsboro, New Jersey, refinery.

Tracking data analysed by the news wire suggests Kurdish sellers have found a warmer reception in Israel, which has expressed its support for independence for the region.

Suezmax tanker Kamari, at least partially loaded with oil, apparently turned off its tracking signal on 17 August as it sailed near Egypt's Sinai Peninsula, Reuters reported.

It reappeared on 19 August 30 miles off the coast of Israel riding higher in the water, indicating its cargo had been offloaded.

Lukoil eyes spending cut amid volatility http://www.upstreamonline.com/live/1374975/Lukoil-eyes-spending-cut-amid-volatility Russian oil producer plans to scale back given geopolitical concerns Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374975/Lukoil-eyes-spending-cut-amid-volatility Fri, 29 Aug 2014 17:38:19 +0000 live Lukoil has not been directly affected by Western sanctions against Russia over its stance towards Ukraine but is suffering from a spike in international borrowing rates and the overall slowdown in Russia's economy, Reuters reported.

"I will recommend to my colleagues to cut the investment programme to accumulate more cash," Interfax quoted Fedun as saying.

Fedun is one of two main Lukoil shareholders along with chief executive Vagit Alekperov.

Senior vice-president Alexander Matytsyn said the company aimed to cut capital expenditure by as much as $2 billion starting from 2015.

In the first six months of the year, Lukoil's capex stood at $7.7 billion, with around a quarter in overseas projects. Lukoil has the most foreign assets among Russian energy companies.

It is leading the West Qurna-2 project in Iraq. The company said in a presentation on Friday that daily production at the project had reached 330,000 barrels per day.

West Qurna-2's output is expected to peak at 1.2 million bpd from estimated recoverable reserves of about 13 billion barrels.

Input from the project boosted Lukoil's overall crude production in the second quarter by 7 percent to 2 million bpd.

It posted second-quarter net profit of $2.39 billion on Friday, up 14% year on year, on the back of rising oil prices.

US rig count rises by 18 http://www.upstreamonline.com/live/1374970/US-rig-count-rises-by-18 Count hits 1914 while Texas total hits 900, Baker Hughes says Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374970/US-rig-count-rises-by-18 Fri, 29 Aug 2014 17:24:28 +0000 live The latest figure is up by 138 units from a year ago, the Houston service firm said.

The count of oil rigs stood at 1575 for the week, up 11 from the prior week and 187 units ahead of the year-ago figure.

The tally of gas rigs was by eight units to 338, off 42 from a year ago.

The number of rigs in the Gulf of Mexico was up by one this week to 63 and ahead by two from a year ago.

Texas saw the greatest increase in rig activity, adding 12 rigs for a total of 900, with the Permian basin adding two units and the Eagle Ford three.

Oklahoma and Pennyslvania tacked on four and five rigs for totals of 212 and 55 respectively. Accordingly the Marcellus play added four units for a total of 80.

Kansas dropped by three units for a total of 25, while Arkansas, Ohio and West Virginia all shed a single rig.

SapuraKencana in big Malaysia gas find http://www.upstreamonline.com/live/1374938/SapuraKencana-in-big-Malaysia-gas-find Local operator comes up trumps at final well in 2014 block drilling campaign Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1374938/SapuraKencana-in-big-Malaysia-gas-find Fri, 29 Aug 2014 11:58:53 +0000 live The Malaysian player struck a gross column in excess of 600 metres at the Bakong-1 wildcat in production sharing contract SK 408, it revealed on Friday.

This follows on from four previous discoveries at the block, following a quartet of wells earlier this year.

The Bakong-1 well was the fifth and final probe planned on the block this year, but SKE will come back for five more next year.

SKE hailed the latest find as a "significant discovery", made in the primary target of the Late Miocene carbonate reservoir.

The fifth discovery in the block has pushed discovered gas-in-place up to 3 trillion cubic feet.

The well followed the Teja-1 (gross gas column of 219 meters), Gorek-1 (gross gas column of 235 meters), Legundi-1 (gross gas column of 139 meters) and Larak-1 (gross gas column of 333 meters) probes on the block.

SapuraKencana Petroleum chief executive Tan Sri Dato’ Seri Shahril Shamsuddin said of the latest find: "This last well ranks as one of the larger discoveries in Malaysia this year and has doubled the resources found in the block to-date.

“The drilling campaign for SK408 this year has been well executed and completed safely by the SKE team and has yielded exceptional results."

SapuraKencana Energy operates the block on 40%, with state-owned giant Petronas Carigali on 30% and Shell on 30%.

The 4480-swuare-kilometre block is situated in shallow water some 120 kilometres off Sarawak in the prolific Central Luconia gas province.

Samson looks to sell deep-water assets http://www.upstreamonline.com/live/1374961/Samson-looks-to-sell-deep-water-assets Portfolio includes stakes in high-profile Gulf of Mexico discoveries, prospects Kathrine.Schmidt@upstreamonline.com (Kathrine Schmidt) http://www.upstreamonline.com/live/1374961/Samson-looks-to-sell-deep-water-assets Fri, 29 Aug 2014 15:09:01 +0000 live For the full story, read Friday's edition of Upstream.

Green Dragon in $40m ConocoPhillips settlement http://www.upstreamonline.com/live/1374927/Green-Dragon-in-40m-ConocoPhillips-settlement CBM player and US giant reach 'mutual satisfaction' deal over long-running arbitration case Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1374927/Green-Dragon-in-40m-ConocoPhillips-settlement Fri, 29 Aug 2014 10:10:49 +0000 live The agreement to the "mutual satisfaction" of both parties has, however, cost Green Dragon $40 million in cash.

The agreement, which follows what the London-listed Chinese coalbed methane (CBM) player said was "a period of arbitration and subsequent appeals", means US giant ConocoPhillips will drop any claims and awards in the case.

An appeal from Green Dragon due to be heard in Singapore has also been withdrawn.

The $40 million has already been made made from Green Dragon's existing cash reserves.

ConocoPhillips agreed in mid-2009 to a farm-in deal with Green Dragon unit Greka Drilling concerning the development of CBM reserves at three of its production sharing contracts.

Under the agreement, ConocoPhillips was to pay an initial $20 million to compensate Greka for past costs incurred, as well as fund up to $30 million to drill surface-to-inseam wells in the Shizhuang South, Shizhuang North and Qinyuan PSCs in Shanxi province.

ConocoPhillips had an option to acquire 50% of Greka’s interest in the three PSCs by paying up to $120 million, subject to approval Chinese authorities.

The US major was also entitled to another option until mid-2011 to participate in Greka’s midstream and downstream business.

In the end, Green Dragon received $42.6 million from ConocoPhillips in relations to the deal.

Commenting on Friday's announced deal, Green Dragon chairman Randeep Grewal said: "While we feel strongly in the merits of the company's appeal, there is risk in any litigation, which this pragmatic settlement eliminates.

"The conclusion of this matter is the last of several that had pre-occupied us in protecting the substantial shareholder value that was being challenged."

Perth-Lowlander plan 'in the works' http://www.upstreamonline.com/live/1374929/Perth-Lowlander-plan-in-the-works FPSO option on table as operator pair look at joint UK project after signing heads of agreement: partner Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1374929/Perth-Lowlander-plan-in-the-works Fri, 29 Aug 2014 10:11:55 +0000 live A joint development concept using new infrastructure is now under consideration by Parkmead and Faroe Petroleum, operators for Perth & Dolphin and Lowlander respectively, and their partners with a view to unitisation of the North Sea discovery trio.

The pair are apparently looking at a possible ship-shaped floating production, storage and offloading vessel to develop the fields, according to Atlantic’s latest results presentation.

Joint studies are currently being carried out under appraisal work that is due to be completed by year-end, with the heads of agreement covering equity alignment for the unitisation process, budgeting of the work programme and securing of finance for the project.

Torshavn-based Atlantic estimated a combined potential resource base of more than 80 million barrels of oil equivalent for the potential development. Perth holds 5.1 million boe of contingent resources net to Atlantic.

Parkmead holds a 52.13% stake in licences P218 and P588 that host the Perth and Dolphin finds, with Faroe Petroleum on 34.62% and Atlantic on 13.35%.

The integrated plan “creates an enhanced economic opportunity from combining three fields”, with upside through other undeveloped discoveries, Atlantic stated.

The Torshavn-based company reported a significantly wider first-half net loss of Dkr36 million ($6.4 million), compared with a loss of Dkr2.5 million a year earlier, as exploration costs increased to Dkr104.1 million from Dkr74.5 million a year ago while its revenue dropped 7% year on year to Dkr198.2 million.

Write-offs on a pair of failed exploration wells - Langlitinden in the Barents Sea and Brugdan-2 off the Faroe Islands - added to costs.

Atlantic’s revenue was largely generated from average net production of 1762 barrels of oil equivalent per day from the Chestnut, Ettrick and Blackbird fields off the UK in which it is a partner.

The contract for the Hummingbird FPSO producing Chestnut has now been extended, which will prolong production until 2017.

“Further contract extensions are being evaluated along with other long-term options for the field,” the Oslo-listed company said.

Atlantic, which is participating in the ongoing Pegasus exploration well being drilled off the UK, has further wildcats lined up, notably the Centrica-operated Ivory well in the Norwegian Sea that is due to be sunk next month with Seadrill’s drillship West Navigator.

It is also looking to drill wells at the Aurora and Skerryvore prospects in the UK North Sea next year.

The company is meanwhile participating in the under-development Orlando and Kells projects off the UK.

Bluewater speeds up for Brynhild http://www.upstreamonline.com/live/1374947/Bluewater-speeds-up-for-Brynhild Modified Haewene Brim FPSO 'back at Pierce' as preparations move ahead for tie-in of stalled Lundin field Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1374947/Bluewater-speeds-up-for-Brynhild Fri, 29 Aug 2014 13:51:10 +0000 live The Dutch floating production contractor and field operator Shell recently came under fire from Lundin Petroleum over delays to the modification and outfitting work on the vessel at the Nigg yard in Scotland, which have pushed back start-up of the Swedish operator’s Brynhild field in the Norwegian sector.

The floating production, storage and offloading vessel is being modified to receive oil output from Brynhild, which is now expected to be brought online in the fourth quarter after missing the previous target of the second quarter due to stalled work on the vessel.

Lundin chief executive Ashley Heppenstall said earlier this month he did not expect the schedule to slip further, with Bluewater apparently backing up his prognosis.

Its first-half results release stated“preparations are ongoing to prepare the vessel for recommencement of production on the Pierce field and start-up of the Brynhild field”, adding the floater had infact been on location at the field since November 2013.

The contractor also disclosed it had been fully reimbursed by the Brynhild field owners for costs of $42.4 million related to the modification and lifetime extension work to prepare the FPSO for tie-in and production of the Norwegian field, which is being tied back to Pierce across the UK median line.

As if to underline the point that it is making progress, Bluewater has posted a high-speed video on its website of the upgrade work that has been carried out at the Scottish yard.

Holding company Bluewater Holding reported a wider net loss for the first half of $67.3 million, compared with $50.9 million a year ago.

Its earnings before interest, tax, depreciation and amortisation were down 11% year on year at $86 million as revenue dropped 5% to $265.2 million.

The company suffered 27% lower earnings of $12.7 million in its single-point mooring (SPM) systems  division as projects were still in an early stage of completion, although it expects higher SPM income going next year after recently winning a major contract worth $300 million for engineering, procurement and construction of two turret-and-swivel systems.

Earnings of its FPSO division dropped 9% as it faced higher operational costs and lower production income on its Glas Dowr unit due to gas compressor failiures as well as lower income from the Aoka Mizu floater due to a field decline and water injection swivel repair costs.

Bluewater was also hit by higher finance expenses, which rose by $8.4 million to $107 million.

Norway targeted by hackers http://www.upstreamonline.com/live/1374951/Norway-targeted-by-hackers Energy companies receive security warning after over 50 cyber attacks in major assault on data systems Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1374951/Norway-targeted-by-hackers Fri, 29 Aug 2014 14:42:59 +0000 live The agency has now issued warnings to a total of 300 companies in the sector, including state-owned giant Statoil, over the risk from the attacks in which virus software in e-mails sent to employees is used to target security holes in corporate data systems.

If an e-mailed attachment is opened, a destructive programme is unleashed that seeks out security holes that can then be used as a communications channel through which hackers can gain access to a company’s data system.

This enables them to install so-called Trojans and other viruses that can be used to steal key information, obtain log-in data or disrupt important control systems.

Such information can include contracts, project data, patents and business leads and opportunities.

A spokesman for Statoil, quoted by Norwegian business daily Dagens Naeringsliv, confirmed it had been warned about the attacks by the NSA and is checking its systems as a matter of routine.

The malware being used has been identified as Crouching Yeti, which is capable of disrupting power supply systems, according to the paper.

The group behind the programme, which is similar to other variants such as Energetic Bear, is believed to have carried out similar attacks on the energy sectors of other countries.

Det Norske fails at Heimsdalshoe http://www.upstreamonline.com/live/1374900/Det-Norske-fails-at-Heimsdalshoe Norwegian operator finds no hydrocarbons at North Sea wildcat Eoin.Ocinneide@upstreamonline.com (Eoin O'Cinneide) http://www.upstreamonline.com/live/1374900/Det-Norske-fails-at-Heimsdalshoe Fri, 29 Aug 2014 08:05:04 +0000 live The Norwegian player failed to find anything at the 2/9-5S well on the Heimsdalshoe prospect on production licence 494, it said on Friday.

The wildcat, spudded at the end of July, was drilled 30 kilometres east of the Valhall field using the Maersk jack-up Maersk giant.

It was intended to test a new play concept in the Mandal High area, with the primary target being the Upper Jurassic. The company was also chasing Pre-Jurassic sandstones as a secondary target.

The primary target yieleded thin sandstones with reservoir quality, but only thin and sparce sandstones were encountered in the secondary target, with no hydrocarbons found in either.

The well, the first on PL 494, will now be plugged and abandoned.

It was drilled to 3525 metres in just 65 metres of water.

Det Norske holds a 30% operating stake in PL 494, with partners Dana Petroleum (24%), Fortis Petroleum (16%), Spike Exploration (15%) and Tullow Oil (15%).

The Maersk Giant will now head to Talisman's Yme field.

Drilling blows cloud Odfjell profit http://www.upstreamonline.com/live/1374905/Drilling-blows-cloud-Odfjell-profit Rig contractor back in black but suffers deal termination off UK as Statoil refuses semisub option Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1374905/Drilling-blows-cloud-Odfjell-profit Fri, 29 Aug 2014 08:09:36 +0000 live The company was also hit by reduced dayrate income from semi-submersible Deepsea Atlantic due to survey work that left it laid up and revealed Statoil has decided not to exercise an optional two-year extension for the rig - currendly working on the Gullfaks field off Norway - with the existing contract due to expire in August 2015.

Odfjell has further warned of likely lay-offs in the UK after the termination of its drilling contract with Taqa Bratani on the Harding platform with effect from this month, having also cut 43 engineering staff at its Stjordal office in Norway.

The Oslo-listed rig contractor’s operating profit tumbled 34% year on year to $51 milliion in the latest quarter on 6% lower revenue of $272 million, which was also reduced by the earlier divestment of its mooring business unit.

However, Odfjell’s bottom line was buoyed by significantly lower income tax expenses of $4 million in the quarter, compared with last year when it was hit by a $63 million cost related to a court case.

As a result, the company was left with a quarterly net profit of $29 million versus a loss of $9 million a year ago, which represents an increase of $38 million.

The improved result was greeted positively by the market with Odfjell shares up marginally at Nkr31.50 in early trading on Friday to halt a slide of around 8% over the past week.

The company’s rig operating revenue remained flat at $184 million, with variable utilisation rates for its five-vessel fleet, although Odfjell secured in the quarter a lucrative six-well extension with for its semisub Deepsea Stavanger off Angola, with two optional two-well extensions.

While the company had positive cash flow of $60 million in the quarter that was at a similar level to last year, it remains saddled with more than $1 billion in debt, having recently secured a $450 million credit facility to refinance existing loans.

Its current order backlog stands at $4.4 billion, including $1.6 billion in optional work, giving it earnings visibility going forward.

Odfjell meanwhile stated that its newbuild semisub Deepsea Aberdeen is due for delivery in October or November from South Korean yard Daewoo Shipbuilding & Marine Engineering, ready for work on BP’s Quad 204 redevelopment project off the UK scheduled to start early next year.

However, the company warned of a softer near-term market for deep-water and ultra-deepwater rigs, evidenced by shorter lead times and a reduced tally of contract awards.

Chief executive Simen Lieungh told a results presentation that a cutback in exploration and production spending by oil companies, such as Statoil, “has led to reduced demand for engineering services due to postponement of development and upgrade projects” in the platform drilling and technology segment.

Odfjell has also seen a softening in the well services market but Lieungh said he believes the segment will continue its long-term growth trend.

Luno 2 appraisal fails to deliver http://www.upstreamonline.com/live/1374890/Luno-2-appraisal-fails-to-deliver Lundin downgrades resource estimate after disappointing result from probe at Norwegian discovery Steve.Marshall@upstreamonline.com (Steve Marshall) http://www.upstreamonline.com/live/1374890/Luno-2-appraisal-fails-to-deliver Fri, 29 Aug 2014 07:01:29 +0000 live The 16/4-8S probe drilled by semi-submersible Bredford Dolphin in Lundin-operated production licence 357 was targeting additional resources in the central-south basin about four kilometres south-east of the discovery well in the North Sea.

The well struck a total oil column of about 30 metres underlying a thin gas cap, of which about 15 metres had very good properties, but pressure data showed there was no communication between the discovery well and the latest hole, according to the Norwegian Petroleum Directorate (NPD).

Lundin said in a statement that “reservoir properties were lower expected in this part of the structure” after carrying out a drill stem test that flowed at a rate of only 450 barrels per day.

As a result, the company has revised downwards its contingent resource estimate for the find to between 27 and 71 million barrels of oil equivalent, compared with a previous range of 26 million to 121 million boe.

The appraisal, which was the third well to be sunk in a licence awarded in 2006, was drilled to a total depth of 2700 metres in a water depth of 100 metres and will now be permanently plugged and abandoned.

The NPD stated further delineation of the discovery would be considered by the licence partners, comprising operator Lundin that will hold a 50% stake after completion of pending transactions, while OMV has a 20% interest and Statoil and Wintershall are each on 15%.

Lundin also has on its radar screen a further exploration well to be drilled in the third quarter at the Luno 2 North and Fignon prospects in the same licence that aims to prove up further resources of around 46 million barrels of oil equivalent.

The rig is set to be mobilised shortly to drill the 33/12-10 S well targeting the Vollgrav South prospect in PL631 in the North Sea that is also operated by Lundin.