BUSINESS

BG to invest A$12.4 billion in Australian gas expansion

BG Group’s Australian subsidiary, QGC Pty Ltd., along with JV partners CNOOC and Tokyo Gas, has announced a two-year, A$1.7-billion (US$12.4-billion) development of its natural gas tenements west of Wandoan, Queensland, Australia, to support gas production. The development, known as Charlie, involves constructing 300-400 wells, a large field compression station and associated pipelines and facilities, which will feed into existing gas processing and water infrastructure at Woleebee Creek. The works are part of the continuous development of QGC’s tenements in the Surat basin to sustain natural gas supply to both domestic customers and the two-train Queensland Curtis LNG (QCLNG) liquefaction plant on Curtis Island, near Gladstone. The investment, which follows receipt of Commonwealth and state government environmental approvals, has been approved by QGC’s parent company, BG Group, and the JV partners. QGC has a 73.75% interest in the relevant natural gas tenements.

Hercules Offshore emerges from bankruptcy

Hercules Offshore has completed its financial restructuring and emerged from Chapter 11 bankruptcy, according to a company statement dated Nov. 6. Funding of the company’s new $450-million senior secured credit facility was also completed. “Proactively restructuring our balance sheet early in the cycle generated significant benefits for Hercules, including substantial debt reduction and added liquidity that will allow us to meet our capital commitments and support operations. With our new capital structure, we are much better positioned to compete successfully in the offshore drilling market,” said John T. Rynd, CEO and president of Hercules Offshore.

qedi wins commissioning contract from Apache North Sea

qedi, Amec Foster Wheeler’s completions and commissioning provider, has been awarded a commissioning contract from Apache for brownfield modifications on all their North Sea assets. This will include the provision of ad-hoc commissioning management services, such as technical resources, commissioning expertise and qedi’s GoTechnology solutions. The three-year contract will see qedi work alongside Apache’s engineering, procurement and construction contractors as part of a combined effort to support Apache’s ongoing operations in the North Sea.

Marathon Oil sells Gulf of Mexico assets for $205 million

Marathon Oil Corp. has signed an agreement to sell its operated producing properties in the greater Ewing Bank area, and non-operated producing interests in Petronius and Neptune fields in the Gulf of Mexico for $205 million. These assets represent a majority of the company’s operated and non-operated producing properties in the Gulf of Mexico. The effective date of the transaction is Jan. 1, 2015; closing is expected before year-end. The buyer will assume all future abandonment obligations for the acquired assets. Marathon will retain its interests in certain other producing assets and acreage in the Gulf of Mexico, as well as its interests in the Gunflint development and Shenandoah discovery.

MERGERS AND ACQUISITIONS

Schlumberger-Cameron merger approved by Justice Department

Schlumberger and Cameron have received clearance from the U.S. Department of Justice for their proposed merger without any conditions, the companies said in a joint statement dated Nov. 17. The closing of the proposed merger remains subject to approval by Cameron stockholders, and the satisfaction or waiver of other closing conditions contained in the merger agreement. A special meeting of Cameron stockholders is scheduled for Dec. 17, during which they will consider and vote upon the proposed adoption of the agreement and plan of merger between the companies. Subject to receipt of approval from Cameron stockholders, and satisfaction or waiver of other closing conditions contained in the merger agreement, Schlumberger and Cameron expect to close the merger in the first quarter of 2016.

Anadarko’s bid for Apache Corp. rejected

Anadarko Petroleum withdrew its bid for Apache Corp. after the Houston-based company rejected Anadarko’s non-binding offer to acquire the company. The proposed all-stock transaction “offered shareholders of both companies numerous value-creation opportunities,” said Anadarko Chairman, President and CEO Al Walker, in a statement announcing the withdrawal. “Our efforts to enter into a mutually acceptable confidentiality agreement, for the purpose of exploring the merits of a potential transaction, were summarily rejected, and no discussions of substance occurred,” Walker added. “We are unwilling to pursue the transaction without access to detailed, non-public information, and based on our analysis, which shows that Apache appears to trade at or near full value currently, the offer was withdrawn.” Image: Apache.

Encana completes sale of Haynesville assets

Encana Oil & Gas (USA) Inc., a wholly owned subsidiary of Encana Corp., has completed the sale of its Haynesville natural gas assets, in northern Louisiana, to GEP Haynesville, LLC (GeoSouthern), a JV formed by GeoSouthern Haynesville, LP and funds managed by GSO Capital Partners LP. Total cash consideration to Encana under the transaction is $850 million, subject to normal closing adjustments. In addition, through the transfer of current and future obligations, Encana is reducing its gathering and midstream commitments by $480 million on an undiscounted basis. The transaction has an effective date of Jan. 1, 2015. The transaction includes 112,000 net acres of leasehold, plus additional fee mineral lands. Collectively, they represent Encana’s total position in northern Louisiana.

Schlumberger acquires Fluid Inclusion Technologies

Schlumberger announced its acquisition of Fluid Inclusion Technologies, Inc. (FIT)—a U.S.-based oil and gas service company specializing in laboratory analysis of trapped fluids in rock material, and advanced borehole gas analysis on drilling wells, on Nov. 16. “FIT offers innovative and proprietary technologies that will further strengthen our ability to deliver integrated rock and fluids solutions to our customers,”said Amir Nessim, president, Testing Services, Schlumberger. The expanded rock and fluids services and technologies enable integrated workflows from Schlumberger field and laboratory services. This is Schlumberger’s second acquisition focused on petroleum geochemistry and integrated laboratory services. In 2013, the company acquired Canada-based Gushor Inc.

PRODUCTION

Wood Mac predicts big jump in Vaca Muerta shale output

Output from Latin America’s premier shale play—Argentina’s Vaca Muerta—is expected to double by 2018, according to a development study by Wood Mackenzie. This shale continues to be the most prospective tight oil play outside of North America. While a marked ramp-up can be expected by 2020, the study highlights that oil and gas output gains in 2016 should be moderate, with year-over-year production up 10%. Wood Mac expects horizontal wells to become the development tactic of choice, as operators are increasingly able to target the play’s most productive intervals. “YPF and its JV partners continue to decrease drilling and completion costs, aiming to move into ramp-up and development phases,” said Horacio Cuenca, Wood Mac’s research director for Latin America. In the Loma Campana Block, the average horizontal IP30 rate is around 646 boed, up from 443 boed in 2014. By comparison, in the Karnes Trough of the Eagle Ford shale, the first 100 wells had an IP30 rate of 420 boed, a rate that has now more than doubled. More JV deals will be necessary to fully develop Vaca Muerta, Cuenca added.

Second train at QCLNG starts operations, says BG Group

BG Group has started commercial operations from the second train at its Queensland Curtis LNG (QCLNG) plant. QGC, BG Group’s Australian subsidiary, also has assumed control of Train 2, from Bechtel Australia, which built the facility. BG now has full control of both LNG trains and associated facilities at QCLNG. By mid-2016, the integrated project should reach plateau production, producing enough LNG to load around 10 vessels per month, combined, which is equivalent to exporting around 8 MMtpa. Since starting production in December 2014, 71 cargoes have been shipped from the facility. The partners in Train 2 are BG Group (97.5%) and Tokyo Gas (2.5%), which is also a foundation customer. Image: BG Group.

EXPLORATION

Statoil joins Shell in exiting Alaskan offshore

Statoil no longer considers its leases in the Chukchi Sea, offshore Alaska, as competitive within its global portfolio, and has decided to exit the area and close its office in Anchorage, the Stavanger-headquartered company said on Nov. 17. The decision follows disappointing results in neighboring licenses. “Since 2008, we have worked to progress our options in Alaska. Solid work has been carried out, but given the current outlook, we could not support continued efforts to mature these opportunities,” said Tim Dodson, executive V.P. for exploration at Statoil. The decision means that Statoil will exit 16 operated leases, as well as its stake in 50 leases operated by ConocoPhillips, all in the Chukchi Sea. The leases were awarded in a 2008 lease sale and expire in 2020. In October, the Obama administration announced the cancellation of two proposed lease sales—Chukchi Sea Lease Sale 237 and Beaufort Sea Lease Sale 242—and BSEE denied requests from Shell and Statoil for lease suspensions, which would have allowed the companies to retain the leases beyond their primary 10-year terms. Following Statoil’s November announcement, U.S. Sen. Lisa Murkowski (Rep. – Alaska) laid blame for Statoil’s decision at the feet of the Obama administration. Murkowski, chairman of the Senate Committee on Energy and Natural Resources, said, “Low oil prices may have contributed to Statoil’s decision, but the real project killer was this administration’s refusal to grant lease extensions; its imposition of a complicated, drawn-out, and ever-changing regulatory process; and its cancellation of future lease sales that have stifled energy production in Alaska.” In September, Shell said that it would cease further exploration offshore Alaska following disappointing exploration results. Statoil’s Chukchi leases are roughly 40 mi north of Shell’s Burger prospect.

Maersk Oil buys into exploration licenses in Kenya, Ethiopia

Maersk Oil has agreed to acquire half of Africa Oil Corp.’s shares in three onshore exploration licenses in Kenya and a further two in Ethiopia. The licenses cover an area of about 100,000 km² and include eight recent oil discoveries, with ongoing exploration and appraisal activities. Four of the blocks are operated by Tullow Oil and the remaining by Africa Oil. The exploration areas in question cover the Turkana region of northern Kenya and southern Ethiopia. The value of the deal is split between an upfront farm-in payment of $365 million, including exploration costs. Future contingent payments of up to $480 million will be made by Maersk Oil for the Lokichar project, determined by the size of the resource after final appraisal and the agreed timetable for first oil. The transaction includes a 25% interest in license 10BB in Kenya; a 25% interest in license 10BA in Kenya; a 25% interest in license 13T in Kenya; a 25% interest in the Rift Basin exploration license in Ethiopia; and a 15% interest in the South Omo exploration license in Ethiopia.

DISCOVERIES

Petrobras confirms deepwater oil find

An extension well has confirmed the presence of oil in the Pitu area of the Potiguar basin, said Petrobras. The discovery of this accumulation, in the deep waters of the Potiguar basin, was first announced on Dec. 17, 2013. The new well, known informally as Pitu North 1, is the first extension well drilled as part of the Pitu Discovery Evaluation Plan and is 60 km off the Rio Grande do Norte state coast, at a water depth of 1,844 m and with a final well depth of 4,200 m. The discovery was confirmed by profile analyses, and fluid samples are to be examined in the laboratory, according to a Petrobras statement. Petrobras (40% interest) is the operator of the B-POT-17 concession, in partnership with BP (40%) and Petrogal (20%). Image: Petrobras.

BG Group secures equity in Aphrodite discovery, offshore Cyprus

Noble Energy has announced a farm-out agreement for a portion of its interest in Block 12, offshore Cyprus, with BG International. BG is acquiring a 35% interest in Block 12, which includes the Aphrodite natural gas discovery, for a total cash consideration of $165 million. Discovered in 2011, Aphrodite has gross mean gas resources of approximately 4 Tcf. The transaction has an effective date of April 1, 2015, and is expected to close before the end of 2015. Noble Energy will maintain operatorship of Block 12 with a 35% interest. In addition to this transaction, Noble also sold its 47% interest in the Alon A and Alon C licenses, offshore Israel, which include Tanin and Karish fields, to the Delek Group for a total deal value of $73 million.

Eni in gas, condensate discovery offshore Congo

Eni has reported a new discovery of gas and condensate offshore Congo, in the Nkala Marine exploration prospect, in Block Marine XII, about 20 km from the coast and 3 km from the Nene Marine producing field. The discovery, drilled in the Nkala Marine 1 well, is expected to have a potential of 250-350 MMboe in-place. During the production test, the well produced more than 300,000 scmd of gas and associated condensate. The well, drilled in a water depth of 38 m, encountered a major gas and condensate buildup in the pre-salt, clastic geological sequence of lower Cretaceous age, crossing a 240-m hydrocarbon column. Eni will evaluate the Nkala Marine prospect through new delineation wells. In the meantime, the company, together with its JV partners, will start studies on the discovery’s commercial development.

GOVERNMENT/REGULATORY

Murkowski welcomes approval of U.S.-Mexico oil exchange license

U.S. Sen. Lisa Murkowski (Rep. – Alaska) has applauded the U.S. Department of Commerce’s confirmation that the agency did, in fact, issue a cross-border oil exchange license with Mexico. “I welcome the Department of Commerce’s approval of a license to exchange oil across the border with Mexico, following more than a year of urging by me and a bipartisan, bicameral coalition to do so,” said Murkowski. “Although it took two months from the time of the favorable announcement to any actual approvals, this is a long-awaited step in the right direction. We must move expeditiously to modernize our broader oil export policy, and lift the ban on sales to our friends and allies.”

API, ANGA to combine into single trade association

The American Petroleum Institute (API) and America’s Natural Gas Alliance (ANGA) are to combine into a single trade association, effective Jan. 1, 2016. The combined association will continue ANGA’s mission under API. “There is a natural synergy between our organizations,” said API CEO Jack Gerard. “As a single organization, the combined skills and capabilities bring an enhanced advocacy strength to natural gas market development—ANGA’s primary mission—and the combined association’s expanded membership will provide additional lift to API’s ongoing efforts on important public policy issues.” Under the agreement, ANGA’s mission to promote natural gas as a clean, affordable solution to America’s energy and environmental needs will be handled by a new Market Development Group at API, a team led by current ANGA President Marty Durbin. ANGA members who are not already members of API will become full members.