DISCOVERIES/DEVELOPMENTS

Exxon Mobil uncovers additional oil at Payara, offshore Guyana

Exxon Mobil has uncovered additional resources at the Payara reservoir in the Stabroek Block, offshore Guyana. The well, Payara-2, was drilled to 19,068 ft in about 7,000 ft of water. It reportedly encountered 59 ft of high-quality, oil-bearing sandstone just 12 mi northwest of the Liza project. The discovery increases Payara’s resource estimate to approximately 500 MMboe. It also brings the overall estimated gross recoverable resource for the Stabroek Block to between 2.25 Bboe and 2.75 Bboe. “Payara-2 confirms the second giant field discovered in Guyana,” said Steve Greenlee, president of Exxon Mobil Exploration Co. “Payara, Liza and the adjacent satellite discoveries at Snoek and Liza Deep will provide the foundation for world class oil developments and deliver substantial benefits to Guyana.” Exxon Mobil affiliate Esso Exploration and Production Guyana Limited  operates the Stabroek Block with a 45% interest. Partners include Hess Guyana Exploration Ltd. (30%) and CNOOC Nexen Petroleum Guyana Limited (25%).

Faroe Petroleum, Point Resources revise gross volumes at Brasse field, following successful sidetrack

Faroe Petroleum (50%) and its partner, Point Resources (operator, 50%), have reported positive results from the 31/7-2S Brasse sidetrack appraisal well in the Norwegian North Sea. The well, drilled to a TD of nearly 7,464 ft, reportedly had been targeting the reservoir almost a mile to the west of the 31/7-2 appraisal well, and nearly 1.5 mi to the south of the main discovery well. According to Faroe Petroleum, a comprehensive data acquisition was carried out in the sidetrack, which included the cutting of cores and a full suite of wireline logs and fluid samples. The sidetrack well encountered approximately 59 ft of gross oil-bearing and 13 ft of gross gas-bearing Jurassic reservoir. It was reportedly in a sand-rich reservoir of very good quality, in the same oil-water contact as in the main discovery well. Based on the data gathered from all three of the wells, the companies have revised the gross volumes of recoverable hydrocarbons at Brasse field. The field’s total gross volume has been increased to 46–76 MMbbl of oil and 59–97 Bcfg.

Lundin Petroleum reports successful drilling, testing of appraisal well at Alta field

Lundin Petroleum’s wholly-owned subsidiary, Lundin Norway AS, has completed the drilling and testing of appraisal well Alta-4 in PL 609, in the southern Barents Sea. The well, which was drilled by the semisubmersible rig Leiv Eiriksson, is situated more than a mile south of the original Alta discovery well. According to the company, it encountered a gross hydrocarbon column of more than 157 ft, containing about 13 ft of gas and about 144 ft of oil in a sequence of Permian-Triassic clastic carbonate sediments. Based on the data acquisition and sampling carried out in the reservoir, good communication across the Alta structure has been confirmed. Lundin Petroleum has reported that a geological sidetrack will now be drilled nearly 3,000 ft north of Alta-4. This will help determine adequate placement of a horizontal well for an extended well test, which is expected to take place next year. Lundin Norway is the operator of PL 609 with a 40% working interest. Partners include DEA Norge AS and Idemitsu Petroleum Norge AS, each holding a 30% working interest.

Statoil discovers gas near Snøhvit field, in the Barents Sea

After drilling wildcat well 7121/8-1, Statoil reported a small gas discovery in the Barents Sea. It reportedly is the first exploration well to be drilled in PL 849. The well—which was drilled by the Songa Enabler, about 15.5 mi southeast of Snøhvit field—was drilled to a vertical depth of nearly 3,310 ft below the surface of the sea. Its primary exploration target was to prove petroleum in Middle Jurassic reservoir rocks in the Stø formation, while its secondary target was to prove petroleum in Late Triassic reservoir rocks in the Fruholmen and Snadd formations. The well encountered a more-than-75-ft gas column in the Stø formation, in sandstone with moderate reservoir quality. Statoil reported that preliminary estimates have placed the size of the discovery between 2 Bscmg and 3 Bscmg. It reportedly has been plugged and abandoned and the Songa Enabler will now move to PL 855, where it will drill wildcat well 7325/4-1. That well reportedly will be drilled more than 19 mi northeast of the Wisting discovery well.

PRODUCTION

OPEC to crack down on nations not complying with production cuts

OPEC members have expressed that there may be a need to extend their output cut agreement once again, as crude markets are still showing little sign of recovery. The group will meet in November to discuss their progress. In the meantime, however, Saudi Arabia—OPEC’s biggest oil producer—reportedly has plans to increase pressure on the nations that are not complying with the agreement. This includes a proposal to begin monitoring exports. “Exports have now become the key metric for financial markets, and we need to find a way to reconcile credible export data with production data in our monitoring,” said Saudi Oil Minister Khalid Al-Falih while attending a meeting in St. Petersburg in July. The UAE and Kuwait have pledged already to further their output cuts, which could begin as early as September. Conversely, Ecuador announced in mid-July that it would begin raising its output, arguing that it is in need of the extra income. “There’s a need for funds for the fiscal treasury, hence we’ve taken the decision to gradually increase output,” Oil Minister Carlos Perez reportedly said in an interview with Teleamazonas. “What Ecuador does or doesn’t do has no major impact on OPEC output.” According to the EIA’s monthly report, Iraqi compliance slumped to 29% in June. Additionally, the UAE made just 60% of its production cuts. Participating nations’ targets are reportedly based on production estimates from six independent parties, called “secondary sources.” Some OPEC members are claiming that these estimates are inaccurate.

Statoil brings Byrding field onstream in the Norwegian North Sea

Statoil (operator, 70%) and its partners—Engie E&P Norway AS (15%) and Idemitsu Petroleum Norway AS (15%)—have started production at Byrding field, north of giant Troll gas field in the North Sea. The field’s development reportedly consisted of a duo-lateral well that was drilled from the existing Fram H-Nord subsea template, through which oil and gas from Byrding flow to Troll C. With recoverable volumes estimated at 11 MMboe, the partners have invested approximately NOK 1 billion in the field’s development. Gunnar Nakken, senior V.P. for the operation’s west cluster, explained, “Good utilization of existing infrastructure has resulted in a cost-effective development that will add profitable resources to the Troll field.” 

BUSINESS

Schlumberger acquires majority share in Russia’s Eurasia Drilling Co.

Schlumberger has agreed to acquire a majority equity interest in Eurasia Drilling Company (EDC) Limited, the largest provider of drilling and well services in Russia. The drilling company owns and operates one of the world’s largest fleets of land drilling and workover units. This reportedly is Schlumberger’s second attempt to buy into EDC. The first effort was in 2015, when the oilfield services giant agreed to purchase more than 45% of EDC for $1.7 billion. The deal, however, never received final approval from the Russian Federal Antimonopoly Service (FAS). In addition to the FAS approval, the agreement also is subject to approval by Russia’s antitrust body. Upon final approval, the deal will represent the first U.S. stake in Russia’s oil and gas sector since sanctions were imposed in 2014. 

QEP Resources divests natural gas assets in Wyoming

QEP Resources has agreed to sell its natural gas assets in southwestern Wyoming for more than $777 million. The Denver, Colorado-based company reportedly has entered into two definitive agreements. The first will see the sale of all of the company’s assets in Pinedale Anticline field in Sublette Country to Pinedale Energy Partners for a purchase price of $740 million, while the second will see the sale of certain non-core gas assets in southern Wyoming to an undisclosed buyer for $37.5 million. According to the company, the Pinedale divestiture includes an estimated 964 Bcfe of proved reserves, and net production in first-quarter 2017 was approximately 234 MMcfed. Of that, about 12% reportedly was liquids. The second divestiture is said to include an estimated 15.2 Bcfe of proved reserves, and net production in first-quarter 2017 stood at about 4 MMcfed. Of that output, approximately 2% was liquids. 

Samson Resources sells its Texas, Louisiana assets for $525 million

Samson Resources II has reported that it will sell its East Texas and North Louisiana assets to an affiliate of Rockcliff Energy II for $525 million. The sale includes approximately 210,000 net acres, which produce about 90 MMcfged. Samson says it will use the proceeds to pay down all outstanding debt that remains on its $280-million revolving credit facility. The remaining proceeds reportedly will be used to fund its capital requirements in 2018, as well as a potential distribution to its equity investors. The company also has sold approximately $14 million of non-core assets and equipment. Following the asset sale, which is expected to close on Sept. 29, Samson Resources says it plans to continue developing its assets in the Powder River and Green River basins in Wyoming.

Oil majors’ second-quarter profit reports signal upward trend in cash flow

Oil majors, including Shell, Total, Statoil and Chevron, have reported second-quarter earnings results that definitively show a rise in cash flow. Shell’s cash flow reportedly rose to $11.3 billion from $9.5 billion in the previous quarter. The company has seen a significant decrease in debt, as well. Likewise, Total’s adjusted net income rose 14% from the year prior to $2.47 billion. Chevron’s second-quarter profit stood at $1.45 billion, which was a vast improvement from the year prior, when it reported a loss of $1.47 billion. Statoil also reported an increase in second-quarter net earnings, which stood at $1.29 billion. The upward trend seems to imply that many oil companies are getting a handle on the current state of the industry, and may be learning how to remain profitable despite the lower prices. “We’ve come a long way,” Statoil CFO Hans Jakob Hegge told Bloomberg. “We’re now able to cover investments and dividends with an oil price at $50/bbl. Three years ago, we needed $100/bbl. This is an entirely different situation.”

Oil giants to jointly invest $1.15 billion in Argentina’s Vaca Muerta

Total, Wintershall and BP unit Pan American Energy have joined Argentina’s state-run oil firm, YPF, in a major $1.15-billion investment to increase shale production in the Vaca Muerta, one of the world’s largest shale formations. The EIA has estimated that the formation holds 308 Tcfg and 16.2 Bbbl of oil. The investment reportedly comes at a time when Argentina is seeking to reduce its reliance on gas imports. According to a statement, the Neuquen provincial government will divide the Aguada Pichana area into two sections, and will combine it with the Aguada de Castro area. Total will operate the eastern section of Aguada Pichana, with a 41% stake, and Pan American Energy will operate the western side, in addition to Aguada de Castro, with a 45% stake.