Tuesday, April 19, 2011

Woodside’s Q1 2011 production drops by 19%. Woodside plans aggressive appraisal and development activities to achieve 2011 production target!!

Woodside reported production of 15.6 mboe for March 2011 quarter end, down 19% compared to the corresponding quarter due to tropical cyclone activity in the North West, the sale of Woodside’s interest in the Otway Gas Project in March 2010, planned outages at Vincent and NWS Oil and oil-field natural decline. However, this production fall was partially offset from increased volumes from the company’s Stybarrow fields. The company also announced it had abandoned plans to sell its Laminaria-Corallina assets, Darwin, after testing the market for a potential buyer.

The company projected its 2011 production between 63 to 66 MMboe – excluding its Pluto field, from which Woodside’s stake in production would be between 5 and 9 MMboe, the company said. Woodside has planned development, exploration and appraisal activities in Australia.

Development Activities:
Pluto LNG Foundation Project has transitioned to an operating site with the introduction of natural gas into the plant in early March 2011. Mitigation plans are in place to recover four weeks of weather related delays and retain our start-up target of August, with LNG one month later.

Pluto Expansion – progress continues with a gas discovery at Martin-1 in permit WA-404-P.
Browse LNG Project – Woodside’s Board approved Browse moving into FEED during the quarter, and has appointed FEED contractors who have now been mobilized.
Sunrise LNG – In accordance with international treaties, Woodside is continuing to advocate for the
approval of the proposed Floating LNG development with Australian and Timor-Leste governments.
NWS North Rankin Redevelopment Project – project remains on schedule and budget for 2013 completion.
NWS Oil Redevelopment Project – overall works are nearing completion with production shut-in on 7
March and resumption of production expected in late Q2 2011.

Exploration and Appraisal activities:

Woodside has planned exploration and appraisal activities in Australia, Asia and America.
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Overstated oil estimate pulls down OGX stock

OGX, the Brazilian oil and gas company responsible for the largest private-sector exploratory campaign in Brazil, today disclosed the results of the reports prepared by petroleum consultants DeGolyer & MacNaughton ("D&M"), which estimate new volume of resources held by the Company in Brazil's Campos and Parnaiba basins and three basins in Colombia. These reports indicate net potential resources for OGX of 5.7 billion barrels of oil equivalent ("boe") in the Campos Basin, 1.0 billion boe in the Parnaíba Basin and 1.1 billion boe in Colombia. When combined with the estimates from the previous report for the Santos, Espírito Santo and Pará-Maranhão Basins (Sep/09), these new results present a total volume of net potential resources of 10.8 billion boe.

The report by oil-field auditors DeGolyer and MacNaughton released on Friday showed a nearly 60 percent jump in the company's potential oil resources, but the Deutsche researchers noted that the crude found in recent exploration activity carried a higher degree of risk.

Potential resources refer to estimates, often based on seismic and geological data, of the amount of oil in a given reservoir that could be recovered. The estimates are less certain than proven reserves.

Batista on Monday described the DeGolyer and MacNaughton report as overly conservative and insisted the company would demonstrate the reserves situation was in fact optimistic.

OGX is seeking $2 billion in financing to finance investments, Batista said, adding it could be through a bond issue or by receiving money upfront for future oil production.

Repeated discoveries in Campos basin pushed OGX stock up
The company throughout 2009 reported repeated discoveries in the shallow water Campos Basin that helped push its stock up more than four-fold between the start of that year and the end of 2010. Its valuation has at times rivaled that of mid-sized oil companies with significant production profiles such as Spain's Repsol and  Devon.

Though reserves are significantly overstated, investors likely to remain interested in OGX's shallow water offshore field

Local securities firm BTG Pactual also lowered their price target for the company. Gustavo Gattass, BTG's senior energy analyst, described the report as "more anticlimactic than bullish."

Frank McGann, an oil analyst with Bank of America Merrill Lynch, said in a report that "though the 10.8 billion boe (barrels of oil equivalent) headline figure did not disappoint, a closer look at the underlying data suggests that this number is significantly overstated."

However BTG, along with analysts from other banks, said investors will likely remain interested in OGX's portfolio of shallow water offshore fields that are cheaper to produce than those in the deep-water region known as the subsalt that is dominated by state-oil company Petrobras. 

EnCore Oil plans for exploration assets flotation under XEO Exploration

EnCore announces that it is planning for a subsidiary company, which will be assigned the Exploration Assets, to be floated on AIM. The new company will be known as XEO Exploration plc. Subject to regulatory approvals and a successful institutional placing, XEO is expected to be admitted to AIM around the end of May 2011. EnCore is in the process of transferring the Exploration Assets listed below into XEO, subject to receiving the necessary partner and regulatory approvals. The exact percentage shareholding of EnCore in XEO will depend upon the final amount of funds raised by XEO.

In addition to their indirect interest in XEO through EnCore’s remaining holding, the company plans to offer qualifying EnCore shareholders the opportunity to subscribe for shares in XEO directly at the institutional placing price. The offer to EnCore shareholders will be made around the time of XEO’s admission to AIM and close shortly following admission.

In addition to the licences above, XEO has the potential option to acquire a number of UK26th Round licences, yet to be awarded by DECC, that are under further environmental review.

Rationale behind the flotation

The EnCore Board has considered a number of scenarios for progressing the exploration portfolio and has concluded that placing those assets into a separately quoted company is the most beneficial route forward for the following reasons:

  • EnCore’s future focus is now to be directed towards its two main assets, Catcher and Cladhan, which are in the latter stages of appraisal and will soon be moving into the development stage of their lifecycles.
  • A very significant proportion of the value of the company is in Catcher and Cladhan. Therefore, the Board did not wish to dilute shareholders’ exposure to these assets by an EnCore fundraising for a high-impact exploration programme covering the Exploration Assets with the attendant risks.
  • Moving forward, EnCore’s existing and any future capital/debt can be targeted directly at the development assets.
  • Existing EnCore shareholders will remain exposed to any success from the Exploration Assets through EnCore’s shareholding in XEO. However shareholders who wish to have increased exposure to a risked exploration programme will also be offered the opportunity to participate in the offer at the institutional placing price.


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