Adverse weather conditions affected Santos Q1 2011 Operational results; Revised 2011 Production Guidance to 47-50 mmboe

Santos reports oil and natural gas production of 11 mmboe for first quarter 2011, down 11% than the corresponding period. This is due to adverse weather in Central and Western Australia. Due to this, Santos revised production guidance for the year 2011 from 48-52 mmboe to 47-50 mmboe.

Operational update during the Quarter:

GLNG 

Sales gas production of 2.4 PJ (412.65 kboe)was 50% lower than Q1 2010 due to Santos’ interest in GLNG reducing from 60% in Q1 2010 to 30% in Q1 2011 following the sale of interests in the project to Total and KOGAS.

Carnarvon Basin

Gas production from the John Brookes field of 10.3 PJ (1771 kboe) was 17% lower than Q1 2010 due to cyclone activity and lower customer nominations. Mutineer-Exeter production of 0.05 mmbbl was 67% lower than the previous quarter due to unplanned FPSO repairs in January and February 2011. Stag production of 0.35 mmbbl was 46% higher when compared to Q4 2010 due to the completion of two new development wells following a drilling campaign during Q4 2010.

Bayu-Undan / Darwin LNG

Gross Bayu-Undan gas production of 50.9 PJ (8,752 kboe) was 16% higher than Q1 2010.  Santos’ net entitlement production of 3.7 PJ (636 kboe)was marginally higher than Q1 2010.

Indonesia

Indonesia sales gas production of 10 PJ (1,719 kboe) was 3% higher than Q1 2010 due to temporary high gas demand from Maleo. Crude oil production of 0.11 mmbbl, down 8% lower over  Q4 2010 mainly due to Oyong oil field natural decline.

Key Exploration Activities:

Source: Derrick Petroleum Planned Exploration Wells Database

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Canadian assets worth $7 billion on the market, contributes 15% to global deals in play

Source:Global E&P Transactions 2010 Review

Canadian oil sands reported $12.8bn in asset sales, corporate acquisitions and joint ventures for 2010. The Montney (BC & Alberta)  recorded $2.3bn in trades or 5x times 2009 total and twice 2008 deals less Shell-Duverney. The number of oil sands deals went up, but the average deal value decreased significantly due to the 2009 Petro-Canada Suncor $18bn merger. Bakken & Saskatchewan plays totalled $2.6bn. The Montney and Bakken unconventional plays made up ~10% of the Canadian transactional market place.

Canadian assets worth $7billion on the market in Q1 2011

Source: Derrick Petroleum E&P Transactions Database

$7bn of assets on the market, corporate acquisitions and development assets worth $5.46 bn in Q1 2011. 


Key assets on the market

Source: Derrick Petroleum E&P Transactions Database

Parex acquires remaining interests in four Colombian blocks from Remora Energy for $255M

Parex Resources Inc has entered into a definitive agreement to acquire Columbus Energy Sucursal’s (a wholly owned subsidiary of Remora Energy) 50% share in four Llanos Basin blocks for total consideration of $255 million, subject to customary adjustments. Parex already holds the remaining 50% interest in the blocks. The acquisition is effective January 1, 2011 and is expected to close no later than June 29, 2011.

Acquisition Highlights :
-- Increases working interest from 50% to 100% in each of the four Llanos basin blocks namely, LLA-16, LLA-20, LLA-29 and LLA-30.
-- Block LLA-16: This block covers an area of 78,772 net acres and holds Kona multizone light oil discovery (35 degree API oil). In 2011, Parex expects to drill six appraisal/development wells on Block LLA-16 at the Kona discovery, of which two wells have been drilled and cased to date. Effective, March 31, 2011, it holds Proved Reserves of 1.066 MMbbl, 2P Reserves of 5.2 MMbbl and 3P Reserves of 9.6 MMbbl. Current production from the discovery is 1,160 BO/d. The block also holds few exploration prospects - Java, Sulawesi, Moragogi and Merida.
-- Exploartion activities are on going in Block LLA-20, LLA-29 and Block LLA-30.
-- The GLJ Report, effective March 31, 2011, included future development capital of $24.2 million for 2P reserves and $34.6 million for 3P reserves.
-- Acquisition metrics (excluding future development capital): 2P Reserves - $49.42/BOE and 3P Reserves - $26.48/BOE.
-- As of December 31, 2010, NPV-10 of 3P Reserves - $239.105 million and NPV-10 of 2P Reserves - $149.321 million.

Source: Derrick Petroleum E&P Transactions Database

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Encana Reports Positive Operational Results for Q1 2011 results; Plan to ramp up Development and Exploration activities in its extensive 1.7 million acres!!!

Encana reported average production of 3.34 Bcfepd for Q1 2011, up 2% over first quarter 2010. The company is on-track to meet 2011 year-end production guidance of between 3.475 Bcfepd and 3.525 Bcfepd for 2011. The company has accelarated oil and NGLs production from its extensive liquids-rich lands – now covering more than 1.7 million acres in Canada and the U.S.

Encana redirected a portion of our capital investment to oil and natural gas liquids development and exploration to build facilities to extract more liquids from our high energy-content natural gas streams. The company is drilling liquids-prone targets on our existing lands, expanding developments into liquids-rich areas, exploring for oil, and acquiring large and significant positions in highly-prospective liquids-rich lands. “The capital investment associated with these multiple initiatives is expected to represent about $1 billion in 2011,” Eresman, President & CEO, Encana said.

Encana has assembled about 190,000 net acres in the Simonette and Kaybob areas of the Duvernay shale in Alberta, adding to its existing 380,000 net acres of liquids-rich lands in the Alberta Deep Basin and 495,000 net acres in the Montney in Alberta and British Columbia. In Colorado, Encana holds about 240,000 net acres in the Piceance and Denver-Julesburg (DJ) basins where the company has identified liquids potential in the Niobrara and Mancos shales. In Michigan this year, Encana plans to expand evaluation drilling on its 425,000 net acres in the Collingwood shale.

Encana offers Horn River and Greater Sierra JV and acquisition opportunities in northeast B.C.

Encana’s joint-venture investment strategy is aimed at accelerating value recognition of the company’s resource potential. This new joint venture initiative builds on previous announcements of a farm-out agreement with Kogas Canada Ltd., a subsidiary of Korea Gas Corporation, in the Horn River and Montney formations and a planned joint venture and acquisition by PetroChina of a 50% interest in Encana’s Cutbank Ridge business assets. RBC Capital Markets and Jefferies & Company, Inc. have been retained by Encana to conduct the potential joint venture and divestiture processes on the Horn River and Greater Sierra assets.

Source: Derrick Petroleum E&P Transactions Database

Vedanta acquires 10.4% stake in Cairn India from Petronas for $1.5 billion! Indian upstream sector - Magnetising the foreign players.

Vedanta Resources Plc announced the acquisition of a 10.4 % stake in Cairn India Limited by Sesa Goa (a subsidiary of Vedanta) from Petronas. Sesa Goa acquired 200 million shares amounting to a 10.4 % stake in Cairn India from Petronas at Rs 331 (US$7.48), a 1.6% discount to Cairn India's closing prices on Monday. Petronas sold its entire 14.9% stake in Cairn India with domestic and foreign institutions buying the rest.

Cairn India produces about 125,000 barrels a day of oil from the Mangala field in the Rajasthan block. Cairn India may start the Bhagyam field in Rajasthan in the second half of 2011 and reach peak output of 40,000 barrels a day by the end of the year.

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Vedanta keen on Cairn!!

Vedanta, in August 2010, had proposed to buy up to 51% stake in Cairn India from Cairn Energy for as much as ~$8.8 billion. As announced on 13 December 2010, Vedanta received shareholder approval for the purchase of a 51%-60% interest in Cairn India. The transaction is yet to receive the Indian government's approval, due to a dispute in royalty payments.

Subsequent to the deal to buy Cairn India at Rs 405 a share, Vedanta announced an open offer to buy an additional 20% stake at Rs 355 a piece. The Rs 405 a share price that Vedanta is paying to Cairn Energy, includes a Rs 50 per share non-compete fee, which is not being paid to minority shareholders.

Vedanta is now in quite comfortable position even if the response to the open offer is moderate.

Indian Upstream Sector- A Magnetiser!!

2011- A big year for Indian Upstream sector.. This year is marked with two significant transactions

- BG's $7.2 billion alliance with Reliance

- Vedanta's offer to acquire upto 51% stake in Cairn India for ~$8.8 billion.

These deals show the confidence of the foreign players in the Indian oil sector. Many more players to venture into India with the path set by these two deals.

The following slide shows the overview of the Vedanta-Cairn India deal

Source: Global E&P Transactions 2010 Review

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:

Source: Derrick Petroleum Planned Exploration Wells Database

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.