DNO sales up 44% in 2010; plans to grow asset base through new ventures in Middle East and Africa

DNO operating revenues were up 44% compared to 2009, due to increased production from the Kurdistan region of Iraq and higher oil prices in Yemen. The company plans to invest NOK 600 million (USD 103.508 million) for development activities and NOK 275 million (USD 47.4413 million) for exploration activities in 2011. The exploration drilling program for 2011 is expected to be six wells, of which two will be in Kurdistan, three in Yemen and one in Mozambique.

Key highlights are:

-          Sales increased by 44 %, from NOK 869 million in 2009 to NOK 1.25 billion in 2010; Increase mainly driven by strong increase in Kurdistan local sales

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Group cash position increased from NOK 303 million at year end 2009 to NOK 1.38 billion in 2010. The company divested treasury shares in March and new equity raised in November

  

Adjusted EBITDA increased from NOK 262 million in 2009 to NOK 804 in 2010 and adjusted netback increased from NOK 169 million to NOK 710 million

CNOOC to spend more than the Supermajors – Plans US$151 billion capex globally over next five years!

CNOOC plans to spend as much as 1 trillion yuan ($151 billion) in the five years through 2015 to boost production, China Business News reported, citing President Fu Chengyu, of which US $53 billion is for China alone. At $30 billion/year capex, CNOOC will spend more than the Supermajors. Chevron, Shell, ExxonMobil, Conocophillips, BP and Total plan to spend between $20 billion to $30 billion per year for next five years from  2011 to 2015.

CNOOC's immediate plans for 2011:
CNOOC announced its 2011 strategy plan and development plan to spend about US $8.77 billion in the coming year of which capital expenditure for exploration, development and production is US$1.56 billion, US$5.05 billion, and US$2.02 billion respectively.

Aggressive Exploration !

• 2011 exploration program remains intensive with 96 exploration wells, 19,967 km of 2D seismic  and 17,129 sq km of 3D seismic

• More efforts in independent deepwater exploration especially in South China sea will be made in 2011, including 2-3 deepwater wells and more seismic data

Increase in production target

• The total net production of the Company in 2011 is targeted at 0.972 - 1 MMBOE/D  (assuming with WTI at US$82.0/barrel). The Company’s net production for 2010 is estimated to be 0.895 – 0.901 MMBOE/D (with WTI at US$79.5/barrel)
• Four new projects offshore China expected to come on stream, including major projects such as Jinxian1-1 and Jinzhou 25-1
• Eagle Ford project in the U.S. and Bridas Corporation in Argentina are expected to deliver production
• 15 projects are under construction, driving the mid to long term production growth of the Company

Legacy builds up position in Spearfish; Spearfish is the next Bakken??

The $2-billion Legacy Oil + Gas is purchasing light oil production, reserves and undeveloped land in the Spearfish light oil resource play in Pierson, Manitoba, from Molopo Energy for C$185 million. This is in addition to their three light oil acquisitions in 2010 totaling C$740 million.

Commenting on the sale, Molopo’s Managing Director, Mr. Stephen Mitchell, stated: “We have spent ~A$75m on acquiring, appraising and developing this asset over the last 16 months. The sale proceeds will place Molopo in a strong position to focus its financial, technical and managerial resources on its extensive remaining portfolio of oil assets in North America (Bakken and Wolfcamp) and its gas assets in Australia, 

Quebec and South Africa – all of which offer significant value generation potential for shareholders.

Legacy’s view on light oil plays:

Trent Yanko, president and chief executive of Legacy says about the transaction, "It's a classic case where coming in now with the horizontal well and multi-stage frac technology you take a marginal play and turn it into a highly economic play". Yanko adds, "Part of it is the technology advancement in the completions and part of it is price. We wouldn't be doing this if oil was C$15 a barrel. Our philosophy is we are pursuing light oil resource-style opportunities. We have had success in identifying those and being able to negotiate one-off transactions and being able to properly assess the upside."

Spearfish, is this going to be a sibling of Bakken??

The Spearfish formation is at a shallower depth than the Bakken oil, so it should be cheaper to drill the Spearfish. Also, it is a low permeability poor quality inter-laminated silty-sandstone sitting on top of the Mississippian water bearing formation. The porosity is 15% for the Pierson area. The Spearfish light oil resource play began development in southwest Manitoba in early 2007 and since that time, more than 150 multi-stage fracture stimulated horizontal wells have been drilled in the greater Waskada area.

Lynn Helms, director of the North Dakota Department of Mineral Resources, “The Spearfish play is about where the Bakken was in 2005 with positive indications of recoverable oil, but a lot of work to do to get repeatable economic results".

Shell 2010 Results – 6 New Start-Ups - 5% Production Growth

Shell’s 2010 oil and natural gas production volumes were 3.3 million boepd, an increase of 5%, LNG sales volumes increased by 25%, with continued growth in Downstream. The company’s fourth quarter and full year 2010 earnings were supported by higher oil prices and chemicals margins.

Key highlights in 2010:

- Oil and natural gas production volumes were 3.3 million boepd, an increase of 5% from 2009.

Production in the fourth quarter increased by some 160 kboepd (170 kboepd for the full year 2010) from new field start-ups and the continuing ramp-up of fields, more than offsetting the impact of field declines

-Disposals of $7 billion of non-core assets in 2010, meeting 2010-11 asset sales targets ahead of schedule.

- $7 billion of acquisitions

- $3 billion in exploration activities and 8 new discoveries

Oxy buys Nations Petroleum's California Package; What next?? Run or Rest???

Nations Petroleum’s California package put up for sale in Oct 2010 is reportedly under a $500 million contract to Occidental Petroleum. The transaction values production at US$125,000 per producing barrel per day. Nations Petroleum has retained Macquarie Tristone as the advisor for the transaction.

Nations Petroleum (California) LLC holds operating assets in Kern County, California. The core asset is the Northwest Lost Hills field in the San Joaquin Basin. Production from the field has increased from 700 BOPD to 4,000 BOPD since early 2009, and is expected to peak at over 35,000 BOPD in six to seven years. Recent Monterey Shale activity in the San Joaquin Basin has highlighted unconventional resource potential that could add additional value.

Asset highlights:
-- Nations’ leasehold consists of approximately 4,834 gross and net acres; Total of 27 leases with average WI and NRI of 100% and 78% respectively
-- 271 Producing wells; Producing well count by reservoir: Tulare (204); Etchegoin (22); Williamson (43); Diatomite (2); Most of the wells were drilled in 2007 and 2008
-- According to Miller and Lents Ltd’s reserve report, effective July 1, 2010, the total reserves were: Proved Reserves – 53.328 MMBO with NPV10 of $1,026 million; Proved + Probable Reserves: 79.812 MMBO with NPV10 of $1,544 million and Proved + Probable + Possible Reserves of 103.276 MMBO with a NPV10 of $1,885 million
-- Current oil capacity of 6,500 BOPD with equipment onsite to increase capacity to 15,000 BOPD.

Nations Petroleum, a privately held company based in Calgary, acquired its Lost Hills stake in 2005 when its predecessor Nations Energy won a hostile takeover of Calgary-based Tartan Energy for a mere $63 million. It then is said to have invested about $300 million to get production up to about 4,000 b/d.

 

What are Oxy’s plans for 2011?  Run or Rest????

Oxy was busy making acquisitions in 2010 for ~$4.5 billion in South Texas, Permian and Bakken areas and discontinued Argentina operations for ~$2.5 billion. In particular, Oxy’s trend in 2010 was about taking over private companies like Anschutz Exploration and Yates Drilling Co. The trend continues with this Nations Petroleum deal. What next???

Oxy says, “We expect capital spending for the total year 2011 to be about $6.1 billion compared to the total 2010 capital of $3.9 billion”. Of the total capital 8% or ~$500 million will be allocated towards new acquisitions. So, Oxy will take rest with this Nations Petroleum deal or it wants to run in search of assets???

Toreador attempts to allay fears about shale gas drilling in France

Toreador Resources and its partner, Hess Oil France, along with select other energy industry companies in France, met with France’s Ministry of Environment and the Ministry of Energy to discuss the government’s decision to instruct the General Council of Industry, Energy and Technology (CGIET) and the General Council on the Environment and Sustainable Development (CGEED) to undertake a study to determine the economic, social and environmental impact of both shale oil and shale gas development in France.

Marc Sengès, CFO of Toreador and President of Toreador Energy France, spoke on behalf of the Partners and made the following points:

• There have been over 2,000 oil wells drilled in the Paris Basin. Toreador is a longstanding French operator and has produced over 5 million barrels of oil in 17 years while fully respecting the environment and the local communities where it operates.
• The concept of hydraulic fracturing in the Paris Basin is not new and the technology itself has 50 years of data and experience supporting its safe application in oil fields around the world.
• Our ‘proof of concept’ exploration program is aimed at determining the type of petroleum resources contained in the tight rock within the Liassic shale in the Paris Basin (depth of between 2,300 and 3,000 meters) as well as their economic potential.
• The Paris Basin tight rock oil ‘proof of concept’ program already is providing numerous benefits to the country in the form of investment, job creation, and proceeds to the government. If recovery of the oil is proven to be commercially feasible, then the social benefits will increase with investment levels potentially reaching several billion dollars and job creation measured in the thousands.

Location and hydrocarbon activity map in Paris Basin

                                        

Toreador and Hess have concluded the following:

• The Partners will voluntarily delay their Paris Basin tight rock oil ‘proof of concept’ program until after the interim report is issued (mid-April 2011).
• The Partners will assist the French Government in the CGIET-CGEED study by providing scientific data and practical experiences regarding oil development and host delegations to observe oil operations in the Paris Basin.
• The Partners will determine the timing and sequencing of their hydraulic fracturing operations following the disclosure of the final results of the French Government’s study (before end of June 2011).
• The Partners will initiate baseline environmental studies with third party French environmental experts that will be used to evaluate the quality of groundwater, surface water, surface soils, and air.

Paris Basin: Toreador Permits & Applications

Craig McKenzie, President and Chief Executive Officer of Toreador, said, 'We fully support the responsible approach the Ministry of Environment and the Ministry of Energy are undertaking with the CGIET-CGEED study. As a longstanding, established operator in France, Toreador welcomes higher standards to ensure all operations are prudent and compliant and deliver net economic and social benefits. Simply put, this is why we chose Hess Corporation as our partner.' He also added that, 'It is important to bear in mind that our project represents a renaissance for the Paris Basin oil industry. What we are pursuing is not oil shale, which is essentially strip-mining, nor is it gas shale'.

Anadarko shows strong results; 2010 production above guidance; aims for 5-7% CAGR production growth over next 5 years

Anadarko reported fourth quarter 2010 results. Key highlights are :

- Increased sales volumes by 7 percent over 2009, including a 13-percent liquids increase

- Added 359 million barrels of oil equivalent of proved reserves, which equates to replacing 153 percent of production

- Continued offshore exploration success with an approximate 60-percent discovery rate and 100-percent appraisal success rate

- Achieved first oil from the Jubilee mega project in a record 3.5 years following discovery