Vero Energy reported Operational Update for First quarter 2011; Increased oil production by 120% to 1,051 bpd over the same quarter last year; Disclosed 2011 average production guidance of 10,000 – 10,500 boepd (27-28% liquids)

Vero Energy Inc. (Vero) is a Canadian energy company involved in the exploration, development and production of oil, natural gas and liquids in Alberta.  In third quarter 2010, the company has entered into farm-in agreements to earn up to 19 sections of land in Edson core, Alberta. Vero Energy increased the liquids proportion of total production to 25% in the first quarter of 2011 from 20% in the first quarter of 2010. The company also increased oil production by 120% to 1,051 bpd.

Operational Highlights:

During the quarter, Vero participated in the drilling of 11 (9.2 net) horizontal wells and one vertical deep basin gas well. Horizontal drilling activities achieved success on 10 of 11 wells resulting in five Cardium oil wells, four Notikewin wells, and one Viking well. The drilling program enabled the Company to add significant production since Q4 2010, adding approximately 2,700 boepd and yielding current production field estimates of approximately 11,000 boepd (27-28% liquids). 

"In a challenging operating environment, our team has efficiently and effectively executed an active program that added a significant amount of production in a short period of time on our asset base. Many of the production additions have come from exploratory wells and step out locations.  The results have exceeded our expectations and will be followed up throughout the year and into the future“, said Doug Bartole, President and CEO, Vero Energy.

Plans for the Rest of the Year:

For the remainder of the year Vero plans to drill approximately 25-28 gross (17-19 net) horizontal wells with a focus on Cardium light oil which will comprise approximately 20-23 gross (13-15 net) of the horizontal wells. Gas drilling will continue to be high-graded to target high impact, liquids rich wells that have strong economics.  The Company's gas production is liquids rich and averages ~30 bbls/mmcf.

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Vero reiterates its previously released 2011 average production guidance of between 10,000 - 10,500 boed (27-28% liquids). Upon successful implementation of the Company's 2011 program, the production mix is expected to have changed from approximately 22% oil and liquids in 2010 to an estimated 31 - 35% by year end 2011.


Here is an Interactive Tool with regards to Vero Energy's Production and Capital spending data:

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EUROPE O&G Major's Presentations - 2011

Statoil:
Morgan Stanley Gas Conference 2011

Field development on the Norwegian continental shelf
Market Outlook for Natural Gas

ExxonMobil:
Business Model & Fundamental Strategies 2011
Goldman Sachs Global Energy Conference 2011

Shell:

CREDIT SUISSE EUROPEAN OIL & GAS CONFERENCE
CreditSuisse Brazil Oil Trip 2011

ENI:
2011-2014 Strategy

ConocoPhillips:
Investor Update June 2011
UBS Energy Conference May 2011

2011 Annual Meeting of Stockholders
Investor Update May 2011

BP:
China's Energy Future
BP Energy Outlook 2030

Liberia on course to prove oil riches in 2011. Companies that stand to gain..

Liberia  is a country on the west coast of Africa, bordered by Sierra Leone on the West,Guinea on the north, Côte d'Ivoire on the east, and the Atlantic Ocean on the south. The potential for significant oil and gas discoveries in Liberia is huge, given some recent exploratory success in the region, especially Anadarko’s Mercury and Venus discoveries in neighbouring Sierra Leone’s waters. No commercial deposits have so far been found in Liberia and therefore there is no production or field development. However, this might soon change, as companies are looking to drill different plays than the old conventional structural traps. Here are the companies active in Liberia and looking to drill in 2011 and 2012. 


Material has been sourced from Derrick Petroleum's exhaustive data on exploration and deals. The Derrick Petroleum Planned Exploration Wells Database is an extremely useful research tool to keep track of exploratory drilling of companies by region, year, etc. It will also be useful to E&P companies for identifying farm-in opportunities and to oil field services companies for identifying sales opportunities.

Table showing companies looking to drill in Liberia. Source: Derrick Petroleum Planned Exploration Wells Database.

Anadarko operates blocks LB 15, LB 16 and 17 which cover an area of 3400, 3225, and 3150 sq km respectively. In 2008, Anadarko acquired a 4700-sq kms of 3D-seismic survey on these blocks. The 3D was used to develop deepwater Cretaceous fan prospects. A key target called Montserrado (Cobalt) in Block 15 is planned to be drilled in H2 2011. The prospective resources for the Cobalt prospect is estimated to be about 1.2 bbls. Anadarko holds 57.5% interest along with Tullow Oil (25%) and Repsol YPF (17.5%)

Map showing location of Liberian Blocks along with their operators. Source: Modified from Simba Energy.

Simba Energy has a 100% interest in the onshore NR-001 licence which covers an area of 1,366 square kilometers within the Roberts and Bassa Basins of south coastal Liberia. An Application to convert its current Hydrocarbon Reconnaissance Licence NR-001 into a Production Sharing Agreement (PSA) has been submitted to the Liberian government. The company carried out an oil seep survey on its property in 2010 using a team of 25 geology students. Reportedly, oil seeps were found on all their traverses. Evaluation of the oil associated with the seeps indicates it is economically desirable ‘mature oil.’

Chevron operates blocks LB-11, LB-12 & LB-14 which together cover an area of ~9,600 sq km. Two wells are scheduled to be drilled on these blocks in 2011 and 1 in 2012. Cheveron has a 70% interest in the blocks while Oranto Petroleum has 30%.

African Petroleum Corporation Ltd (APCL) has a 100% interest in 2 blocks: LB-8 and LB-9. The company has completed the acquisition and interpretation of about 5,100 sq km of 3D seismic over these blocks. About 40 leads and prospects have been identified s in the Upper Cretaceous section, some of which have been said to be similar Anadarko’s recent discoveries at Mercury and Venus, immediately to the north west. The Company has contracted the ultra deepwater semisubmersible, Maersk Deliverer to drill two exploration wells over the blocks with the first well in June 2011 as part of a two-well programme. 

In all 5 wells are scheduled to be drilled in 2011. The potential is enormous!

For more information of discoveries and exploration plans for the following West African countries, click on the following links. Cote D’ivoire; Ghana discoveries; Ghana Exploration in 2011, Exploration in Mauritania, Benin & Togo; Angola; Sierra Leone; Sengal; List of West African discoveries in 2010 – 2011.

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1H-2011 review of global oil and gas transactions.

How is the deal activity coming up in 2011? Let's take a look based on one category- Conventional vs Unconventional.

The deal activity for the first five months of 2011 was busy with 633 deals captured. In total, there were 202 deals reported with deal value greater than $10 million. The analysis is based on these 202 deals that hit the total deal value at $65.3 billion. The share of unconventionals in total deal value is almost same as 2010 which reduced to 31% from 49% in 2009. However, a significant part of the unconventional deal value in 2009 was due to a single deal, the acquisition of XTO by ExxonMobil (unconventionals’ share without XTO would be 30%).

Source: Derrick Petroleum 2010 M&A Review Report

Taking North America as the special case, the split of conventional and unconventional deals is 35% and 65%, respectively, against the 2010 split of 46% and 54%. The activity in North American unconventional sector for the five months was robust with many Asian investors including KNOC, CNOOC and Marubeni, venturing into the shales. It is anticipated that this increasing interest will strengthen the transaction activity levels for the rest of 2011. 
Among all the shales, Eagle Ford shale was highly noted for its metrics skyrocketing to a new level. KNOC-Andarko JV had left the mterics at ~$14,000/acre and the recent Marathon's $3.5 billion acquisition at ~$21,000/acre. The metrics quoted are different from the reported industry metrics of $19,000/acre and $25,000/acre. Click the deals to know how.

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Unconventional interest outside North America

Apart from North American shales, the oil and gas players’ have started venturing into other regions as well. Notably, European countries like Poland and Bulgaria have induced certain majors like Total, Chevron, Mitsui and Nexen to explore their shale reservoirs. Take a look at the snapshot of the following European shale deals in 2011.

The number of columns of the reported deals are limited to fit in this table. To view the complete analysis on these deals click the table.

Here are the few blockbusters of 2011. Start interacting.

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SM Energy divests Eagle Ford acreage at ~$15,000/acre

SM Energy entered into an agreement with Statoil and Talisman to divest a portion of its Eagle Ford shale position. The position is a detached block of acreage that is comprised of the entirety of the company's operated acreage in LaSalle County, Texas, as well as an immaterial portion of adjacent operated acreage in Dimmit County, Texas. In total, approximately 15,400 net acres are being sold for cash proceeds of approximately $225 million.

Due to limited infrastructure, there is currently no production associated with three wells that have been drilled on the acreage. As of year-end 2010, there was an immaterial amount of proved reserves booked for this acreage. The buyers will be entitled to approximately 12% of the takeaway capacity associated with SM Energy's agreement with Eagle Ford Gathering LLC, a joint venture between Kinder Morgan Energy Partners LP and Copano Energy LLC.

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A busy month for Eagle Ford Shale. A look at Eagle Ford metrics
SM Energy’s Eagle Ford divestiture is the third deal for the month June, 2011. The most notable transaction was Marathon’s acquisition of Eagle Ford acreage for ~$25,000/acre. The current SM divestiture leaves the acreage metrics at $14,600/acre.

In addition, Talisman is also looking to buy additional assets in Eagle Ford Shale, if prices are going to be reasonable. Recently, the metrics in Eagle Ford Shale is skyrocketing between $20,000-$25,000/acre as compared to the 2010 average metrics of $8,000/acre.

Here is an interactive tool with regards to Eagle Ford acreage metrics. Play around.

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Oil exploration in Sierra Leone in 2011..Maybe a new frontier

          Oil and gas exploration has had a very short history in Sierra Leone. Although some seismic and G&G studies were carried out in in the past, there was not much potential seen for oil and gas deposits. All this changed with Anadarko’s Venus discovery in the deep waters offshore Sierra Leone in August 2009. Although this discovery was relatively thin (50 ft of net hydrocarbon pay), in water depth of 1800m, the discovery generated a lot of interest and opened up the potential for a multi-billion barrel oil frontier in West Africa. Linking the Venus discovery to the previous Jubilee find in Ghana which was discovered by Anadarko’s partner in that block, Kosmos Energy, gives a new interpretation of the petroleum geology in the region. The new Transform Margin (a place where 2 tectonic plates slide past each other) play was generating a lot of interest as it could potentially lead to a string of discoveries along its length. Although Venus was a significant discovery, it has still not been deemed to be commercial.

Figure 2: Map  showing the location of the Venus and Mercury discoveries. Blocks SL-06 and SL-07 have now been merged and are now together called Block SL-07B-10. Source: Anadarko

On the 15^th of November 2010, Anadarko announced that it had struck oil with its Mercury-1 well which encountered approx. 135 net feet of oil pay in two Cretaceous-age fan systems. The well was drilled to a total depth of approx. 15,950 feet in about 5,250 feet of water. In the primary objective, the Mercury well encountered approx. 114 net feet of light sweet crude oil with a gravity of between 34 and 42 degrees API, with no water contact. An additional 21 net feet of 24-degree API crude was encountered in a shallower secondary objective. This discovery is almost certain to be declared commercial, although it has not yet been announced. Both, Venus and Mercury, discoveries were in Block SL-07B-10. A third exploration well on the Jupiter prospect is planned to be drilled in Q4, 2011. Anadarko (55%) operates the block and the partners are Repsol YPF (25%), Tullow Oil (10%) and Mitsubishi (10%).

African Petroleum Corporation Ltd., has a 100% interest in Block SL-03. The block covers an area of 3,135 km and is located ~ 150 km from the Mercury-1 discovery and 85 km from the Venus discovery. The company is planning an extensive 3D seismic survey over the block in 2011 to firm up exploration prospects. It is understood that drilling would occur in 2012, after processing and interpretation of the seismic data. 

                              

Background
Sierra Leone has had a long history of strife, turmoil and civil war. It is bordered by Guinea to the east Liberia to the southeast, and the Atlantic ocean to the west. After more than a century of colonial rule, the country gained independence in 1961. Its history since independence has been marked by widespread corruption and economic, social and educational deterioration. It culminated with the beginning of a 10 year long civil war in 1991 that is estimated to have cost the lives of 50,000 people, besides displacing 2 million more and causing  civilian populations to endure violence at the hands of opposing factions. In 2001, with the help of United Nations forces, rebel forces of the Revolutionary United Front (RUF) were disarmed, and president Kabbah was re-elected to power, and he declared the civil war officially over. The current president is Ernest Bai Karoma, who was elected in the 2007 elections for a period of 5 years.

Figure 1: Map showing location of Sierra Leone (Red Polygon)

Economy
Sierra Leone is an extremely poor country and ranks 163 in its GDP compared to other countries in the world. 70% of the population is estimated to be below the poverty line (CIA). According to the CIA world factbook, its GDP in 2010 was $4.72 billion, a marginal increase from $4.498 billion in 2009 and $4.358billion in 2008. The biggest threat to its economic development is disruption of domestic peace and isolation from foreign aid. Economic and social infrastructure development has been severely stymied due to the long history of civilian unrest. However, relative peace since the end of the civil war in 2002, has offered the promise for economic rejuvenation and development of the country. GDP growth rate since 2002 has been between 4% and 7%. The country is endowed with rich mineral resources and the economy is overly dependant on mineral exploitation. Although agriculture employs most of the population, it accounts for only 42% of national income. The mineral extraction and exploitation industry generates most of the income although it has been managed poorly, with most of the income escaping formal channels, and used to fund rebel activities in the region. Diamond exports account for almost half of Sierra Leone’s exports, and remains the biggest source of earnings. A number of significant offshore oil discoveries in 2009 and 2010, could herald a new period of growth, although development of these reserves is still many years away.

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Talisman hunting for more oil-rich Eagle Ford assets..Will clinch deals if price are in-line

Canadian O&G company, Talisman Energy has oil and gas assets in North America, the North Sea and Southeast Asia. The company is pursuing a number of high-impact international exploration opportunities for 2011. In 2010, Talisman produced 417,000 boepd, approximately 50% oil and 50% natural gas.

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Talisman's Transforming to Oil-Focused Company:

In terms of the portfolio, the company completed the sale of $2 billion of non-core, predominantly North American natural gas assets during 2010, bringing the total to $5 billion over the past two years. In general, the intent was to sell higher-cost, high-decline conventional gas assets and reposition the portfolio towards lower-cost, long-life assets, focusing on liquids.

"In North America, our emphasis will shift to liquids, and we will reduce gas directed spending by 35%. Our reduced gas directed drilling remains profitable at US$4 prices, and our land retention commitments are relatively minor. With the Eagle Ford acquisition complete, we plan to build to eight rigs by year end, with net Talisman production expected to average 55-65 mmcfepd, just under half of which will be liquids” said John A. Manzoni, President and Chief Executive Officer, Talisman.

Talisman’s Divestitures from 2010:

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Following the successful entry into the liquids-rich Eagle Ford through two acquisitions in 2010, the company is expecting to drill approximately 35 net wells. Talisman expects to ramp up to eight operated rigs by year end, and has budgeted approximately US$300 million. Net annual production from this play is estimated at 55-65 mmcfepd. Approximately half of this production is expected to be liquids.

Shale production in North America is expected to average 455-525 mmcfepd (~75,000-85,000 boepd), with an additional 90,000 boepd of conventional production.

Talisman in Eagle Ford:

Talisman took its first position in Eagle Ford in May 2010, buying 37,000 acres, and augmented that in December, when it and joint-venture partner Statoil paid $1.33 billion for 97,000 acres
The company successfully sold $2.2 billion of assets through 2010, all at very good metrics, and that allowed company to reposition the portfolio substantially through the year with about $2 billion of acquisitions, including some discoveries in Norway, the BP Colombia acquisition partnering with Ecopetrol, and deepening in the Eagle Ford jointly with Statoil.

Recent Major Transactions in Eagle Ford:

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Investor Open House NAO

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