Monday, March 28, 2011

Sinopec reports 2010 annual results; Natural Gas Production up 47.6% over 2009; Plan to invest RMB 54,100 million (US$ 8,300 million) for exploration and development of mature oil fields in eastern China, Tahe, Angola Block 18, and gas fields in Yuanba.

Sinopec produced 441.4 bcf of gas in 2010, up 47.6% over the 2009 gas production of 299 bcf. This is due to the start of commercial production from the Puguang gas field in Sichuan province. The capital expenditure for exploration and production segment was RMB 52,680 million (US$ 8,018 million), which was mainly used for exploration, development and capacity construction of key oilfields including Tahe, Shengli and Angola Block 18 and gas fields in Puguang and Erdos, as well as for pipeline construction of the Sichuan-to-Eastern China Gas Project

In 2011, Sinopec plans to produce 45.59 million tons of crude oil and 14.1 bcm of natural gas. The company has also estimated a set of operational targets as part of 12th five year plan, which include domestic crude production of 43.5 to 45 mt/y; gas production of 20 to 24 bcm/year.

Capital expenditure for 2011 is projected to be around RMB 124.1 billion, primarily for E&P projects, Shandong LNG project, Changling and Beihai refinery revamping and upgrading, as well the construction and upgrading of new service stations, Wuhan ethylene and Zhongyuan coal-to-olefin projects, crude and product pipeline projects and logistics system.
To know more about Sinopec Corp., visit:

Bill Barrett 2011 Howard Weill 2011 Energy Conference Presentation

OGX 2011 March Institutional Presentation

Pacific Rubiales 2011 March Investor Presentation

Comstock Resources 2011 March Corporate Presentation

Penn West Exploration March 2011 Investor Update

SOCO plc 2010 Annual Results Presentation

National Fuel Gas 2010 Financial & Operational Update

Brazil - sitting on a gold-mine of oil and gas reserves!!!!!

In a dynamic industry such as oil & gas, the recent discoveries in the presalt layers off Brazil could rank as the biggest in the world in several decades. Due to these significant discoveries, the Brazilian government has been grappling with how to structure and regulate exploration, drilling, and the potential for a large influx of foreign investment.

What is pre-salt?
  • The pre-salt region is located approximately 170 miles off the coast of Brazil in the Atlantic Ocean. The region likely ranges from EspĂ­rito Santo to Santa Catarina State, measuring 497 miles in length and 124 miles in width.
  • The region is named “pre-salt” because the oil is held beneath deep and ultra-deep waters, around 3,000 meters of sand and rock, and an additional layer of salt that, in places, reaches thicknesses of over 2,000 meters, making extraction challenging.

 …. tip of an iceberg!!

Over the span of 10 to 15 years, the industry’s deepwater capabilities has progressed manifold along with the realization that the largest prospects lay in deeper and deeper waters. The string of discoveries in the pre-salt region have proven the same.
  • In 2006, Petrobras discovered the Tupi field in the Santos Basin which holds estimated reserves of about 5 to 8 billion barrels.
  • In September 2010, the Brazilian Government announced the discovery of the Libra field which is said to be largest oil field discovered anywhere in the world since the enormous Kashagan find (over 17 billion barrels) in Kazakstan in 2000.
  • Devon Energy, which holds 6 exploration blocks in the pre-salt, announced an discovery in the Campos Basin , quite close to the Jubarte field.
  • The  Petrobras as operator and 45% owner, has made an important discovery of very light oil in the ultra-deep waters of the Santos Basin.
  • Maersk Oil has discovered oil in the offshore Campos Basin in a license jointly owned with the Brazilian independent OGX.

As a result of recent major discoveries, oil and natural gas potential reserves in Brazil are now recognized as some of the largest in the world. . Hence, many foreign players are ready to dip their toes in the waters off Brazil.

Source: Derrick Petroleum E&P Transactions Database

The combination of vast untapped potential oil and natural gas resources with a favorable regulatory framework positions Brazil as one of the most attractive petroleum regions in the world today.

Vanguard offers to acquire remaining 56% stake in Encore Energy for $567 million- a 27% increased offer price!!

Vanguard Natural Resources submitted a proposal to acquire the remaining 56% stake in Encore Energy Partners LP for $567 million. Under the terms of the current offer, Vanguard would offer 0.72 Vanguard common units for each outstanding publicly-held Encore Energy common unit. Based on Vanguard's closing unit price on March 24, 2011, the offer values each Encore Energy unit at $23.20. If accepted, the bid for Encore would be Vanguard’s largest acquisition. Here is the list of Vanguard's acquisitions...

Encore Energy has its assets located in the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota and Montana, the Permian Basin in West Texas and New Mexico, and the Arkoma Basin in Arkansas and Oklahoma. Encore Energy’s 2010 year end reserves are reported to be approximately 41.074 MMBOE (90%- PDP and 70%- Oil).

Why is the offer price high compared to November-2010 offer??
Earlier in November 2010, Vanguard acquired the initial 46% stake in Encore from Denbury Resources for $380 million. This current offer by Vanguard values the remaining 54% stake in Encore at $567 million, a 27% increase compared to the November offer. The increase in the offer price could be justified by the following facts:
  • 18% increase in Encore’s stock price
  • 31% increase in the oil price (WTI Spot)
  • Encore reported net income of $32.07 million in 2010 compared to a net loss of $40.3 million in 2009. These facts put Encore in a better financial status. Hence, the higher offer price from Vanguard.
Try this: Derrick Oil and Gas Search Tool

Rosneft and ExxonMobil to cooperate in the Russian Black Sea coast.. Will this be the springboard for full-scale Black Sea basin development???

Rosneft and ExxonMobil have entered into an agreement regarding joint development of oil and gas resources in the Black Sea, which includes an initial focus on oil exploration and production in the Tuapse Trough in the Russian Black Sea basin.

Region to be developed

The agreement signed contemplates a joint operating company to conduct exploration and production in the Tuapse Trough, an 11,200-square-kilometers deepwater offshore area along the Black Sea coast of the Krasnodar region. The exploration stage is estimated to cost $1 billion, with ExxonMobil to make initial investments. . Drilling in the block is scheduled for year 2011-2013.  Rosneft will own a 66.7% stake in the joint operating company, with ExxonMobil receiving the remaining 33.3% stake. The financial details of the transaction are not disclosed.

Larger plan for the joint venture
The agreement enables Rosneft and ExxonMobil to consider additional opportunities to expand Black Sea energy sector cooperation in areas such as additional exploration and production, crude oil sales to Rosneft’s Tuapsinsky refinery and other Black Sea markets, development of regional transportation infrastructure, and deepwater offshore technology research and development.


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