Ecopetrol plans exploration led production growth

Ecopetrol is planning to spend about $80 billion from 2011 to 2020, with 80% of it devoted to the upstream segment. The Company expects to produce 670,000 barrels daily by 2015, with a goal of a million barrels a day by 2020.

With $1.293 billion capex allocated to 2011, 95% of the investment plan is slated to unfold in Colombia, while the remaining 5% will go to the Company’s operations in Peru, Brazil and the United States.

The Company will finance most of this through internal cash generation, but will also issue up to $23 billion in debt and sell an additional $6.5 billion in equity to the public.

2011…

• Ecopetrol plans to drill 37 exploratory wells in 2011; 28 in Colombia, 4 in  the US GOM, 4 in Brazil and 1 in Peru  
• It also plans to explore the development of non-conventional resources such as shale gas in Colombia

Leverage, Growth and Sustainabilty 

 Colombia …

• Ecopetrol is continuing to invest in Colombia and, along with Talisman Energy and  recently purchased properties in Colombia owned by BP
• Ecopetrol holds 28 E&P contracts which span across an area of about 17.6 million hectares

…. and the Unconventionals 

 Love thy neighbours!

• Ecopetrol has exploration plans in its neighbouring countries like Peru and Brazil which also hold an attractive oil and gas framework

• In Peru, the Company is working with Petrobras to develop Lot 117 in the onshore area of the country

Looking offshore....

Ecopetrol may not be well known among most investors but this won't be the case for long if it successfully executes its strategic plan for the next decade which will transform its identity from a national oil company to a leading player in the energy industry!

Gazprom buys half of ENI’s Elephant stake and says doing business in Libya is easy

Gazprom cashes out approximately $163 million to acquire the 50% of Eni's stake (33.3%) in the consortium developing the Elephant oilfield in Libya. The Elephant field contains 700 million barrels of estimated recoverable oil reserves. The field infrastructure is fully developed and comprises power supply, oil treatment and transmission facilities to the oil export terminal. This agreement is part of the strategic partnership signed between Eni and Gazprom in 2006 which envisages the commitment of both parties to jointly develop projects in the entire gas chain.

Projects with Gazprom in Libya

In 2006 and 2007 Gazprom was an active participant of international bidding procedures for the right to explore the most geologically promising licensed blocks. Based on the bidding results Gazprom obtained exploration rights for licensed blocks 19 and 64. In addition, following the asset swap deal with BASF in December 2007, Gazprom acquired a 49% stake in Libya’s oil concessions C96 and C97.

Easy to do business in Libya- says Gazprom

Gazprom last year said, “Libya is becoming the key priority of Gazprom Neft in Africa. On the whole we are planning to become a serious player in the Libyan market by actively participating in other projects as well; what those projects will be, we’re not prepared to tell yet; we are making an estimate and this is confidential information. If we manage it, we expect to increase the company's share in production of Libyan oil "to the critical mass", producing at least 10% of the country's oil”.

The advantages of Libyan business for Gazprom Neft are obvious – production here is done on land, and our company has extensive experience in this area. In addition, in Libya there are no political or economic sanctions against foreign business – any contractor can come and start working. And, logistically speaking, traveling to Libya is simpler and faster than, for example, to countries of West Africa, which are also potentially interesting for us – here we can pick up experience of working on the shelf, which is really necessary for Gazprom Neft.

Santos 2010 production down 8%; two-thirds of that due to flooding

Santos reported a production of 134.5 kboepd, 8% lower primarily due to wet weather and flood events in Central Australia which reduced Cooper Basin production by 7.95 kboepd, partially offset by stronger gas production in Western Australia and Indonesia. Higher commodity prices were evident across the company’s portfolio in 2010 and drove sales revenue to $2.2 billion, up 2% than 2009.

Results highlights

- Production 49.9mmboe, down 8%

- 2P reserves increased to 1,445 million barrels

- Sales 59.2 mmboe, down 1%.  Average oil and gas prices up 11% and 5% respectively

- Plans to achieve production exposed to oil price from 27% in 2010 to 70% in 2015

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

- 

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