Saturday, February 9, 2013

Crude Settles at Highest Level Since Mid-September

Crude-oil futures prices settled modestly higher Wednesday as gasoline-futures prices gained for a 10th straight day and the U.S. Federal Reserve voted to keep its low-interest-rate policy in place.

Crude shook off a bigger-than-expected increase in U.S. inventories in the latest week and a surprisingly weak report from the Commerce Department that showed U.S. gross domestic product declined by 0.1% in the fourth quarter, against expectations of a 1% rise. The GDP drop was the first decline in three-and-a-half years, and it briefly plunged crude into the red.

But the raucous rally in reformulated gasoline blendstock futures continued for a 10th day as gasoline inventories in the key Mid-Atlantic region remain about 15% below their five-year average level for this time of year. The Energy Information Administration reported that implied demand for gasoline and distillate fuel--diesel and heating oil--rose last week from recently depressed levels.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled up 37 cents at $97.94 a barrel, the highest level since Sept. 14. That date, nearly 20 weeks ago, was the last time Nymex crude traded to $100 a barrel. ICE Brent crude for March settled 54 cents higher, at $114.90 a barrel, the highest price since Oct. 16.

Gene McGillian, broker and analyst at Tradition Energy, said prices may soon test $100 a barrel, but strong signs of improving oil demand will be needed to keep further gains.

"The way we shrugged off the GDP figure and the near-6-million-barrel build in crude stocks, the market clearly has that level in its sites," he said. "The global economy is slowly improving, and energy demand needs to pick up with it."

Analysts said the Fed's continuing policy of market stimulus is a positive signal for the market. "That fact is, a lot of the rally that we've had in the energy market is because of the easy money policies we've seen from the world's central bank," Mr. McGillian said.

Petroleum products prices have rallied in recent days on expectations that heavy season refinery maintenance work this quarter will tighten inventories of refined products like gasoline and heating oil.

February-delivery contracts for reformulated gasoline blendstock settled 6.53 cents, or 2.2%, higher, at $3.0387 a gallon. The contract expires at Thursday's settlement. The penny-for-penny gain was the most since Nov. 9, while the percentage increase was the biggest since Dec. 26. Wednesday's price marked the highest-ever settlement price for gasoline during January, when prices are most often the weakest of the year. In 28 years of trading gasoline futures on the Nymex, the average front-month gasoline price during January has been the lowest for the year 10 times, more than any other month.

The RBOB contract has gained 33.21 cents, or 12.3%, in the past 10 days, which is the longest stretch of consecutive gains since July 2009.

Heating oil for February delivery settled 0.81 cent higher, at $3.1173 a gallon, the most since Oct. 19. The contract has gained 2% in the last three sessions and also expires at Thursday's settlement.

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UK Oil Output Fell by Record 28% in September-November

LONDON - The extent of the oil-production outage that contributed to tipping the U.K. economy into a fourth-quarter contraction was laid bare Thursday, as official statistics showed production of crude fell nearly 30% in the three months to November.

Production of petroleum fell a record 27.9% compared with the same period the previous year, according to energy department data, with output particularly hit by a lengthy outage at Buzzard, the largest producing field in the North Sea.

Last week, the U.K. statistics office said the closure of Buzzard, operated by Canada's Nexen Inc., was a big reason for the 0.3% contraction in the final three months of 2012. The field, which was shut for maintenance, produces up to 220,000 barrels of oil a day.

Production of natural gas also fell sharply from September through November--20.6% to be exact. This was mainly due to a continued outage at the Elgin natural gas field and to maintenance at the St. Fergus terminal, which processes gas from over 20 North Sea fields providing around 20% of the U.K.'s daily needs.

Separately Thursday, the statistics office said weak output from U.K. mines and quarries--mostly comprising North Sea oil and gas--reflects the longer-term decline in reserves. Output in the sector is now less than 40% of its 1999 peak, equivalent to an annual rate of decline of more than 6%, the office said.

Production at Buzzard has now resumed, according to oil traders. Barring more severe disruptions in the North Sea, oil and gas output should recover in the first three months of 2013, potentially boosting economic activity overall.

Total production of U.K. indigenous primary fuels in the third quarter fell 17.7%. Electricity from nuclear and from wind and hydro sources both increased.

Jason Douglas and Cassie Werber contributed to this item

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Canary Soars to Shale Stardom

Canary Soars to Shale Stardom

There seems to be a common theme with companies servicing the oil and gas industry – growth and job recruitment. How can an institution grow as a top-notch company while recruiting for the best in the industry?

Canary, LLC, formerly Frontier Energy Group, seems to be leading by example and appears to be on the fast-track to stardom by expanding its domestic presence with its latest acquisition, Canary Wellhead. This eighth acquisition in four years elevates the company to a national level – one that takes its roots beyond Bakken and into all major shale oil plays.

"It's been a lot of hard work," said Dan Eberhart, CEO of the company, reflecting on his success in a Rigzone exclusive interview. "We have built a phenomenal team that has helped us with our growth, specifically at integrating companies."

"I'm confident that the gains made over the last year are setting us up for an even better playing field – specifically the exposure we now have to the Utica and Mississippi Lime," he added. "We want to be a part of that and we will be focusing on that for the next five years."

Prior to becoming Canary, LLC, Frontier Energy Group experienced rapid growth in a short amount of time. The oilfield services company acquired Canary Wellhead Equipment Services, Inc. (2013); Spicer Wireline Inc. (2012); Luft Machine & Supply Co. (2011); Hanson Hot Oil (2010); Western Wellhead Grand Junction (2010); Cable, Incorporated (2010); Kodiak Stack Testing Company (2009); and Frontier Wellhead & Supply Co. (2009).

This latest acquisition allows for the company to expand the company's footprint and service offerings in the oilfield drilling and production services.

"With all of the M&A [merger and acquisitions], the medium-size companies are gone," said Eberhart. "There are no independent, medium-size companies left. We really want to emerge and fill that role and I feel that this latest multi-million dollar agreement will allow us to do just that."

This acquirement brings together two long-standing companies with more than 50 years of experience and advances Canary into the largest independent wellhead service provider in the United States with combined revenue of up to $100 million. With more than 26 locations across the United States and around 300 employees, the company is now servicing customers in every major shale oil and gas region, including North Dakota's Bakken, Colorado's Niobrara, Oklahoma's Woodford and Ohio's Utica.

"We are a relatively fun company to watch," stated Jacob Eberhart, the company's communications and marketing manager. "We are a growing group and we are aggressive. We have done an excellent job of integrating quickly. Where other companies have struggled with that in the past, we have a team that focuses specifically on integration while the rest of the team focuses on what's presently on hand."

The company is set to expand its distribution business in Oklahoma City by building a centralized center in 2013. Canary is looking to expand its growth by 15 percent throughout the year and is looking to hire laborers, engineers and a sales team in Oklahoma City. Canary will also come south and open a Houston executive sales center that will serve the greater Houston area.

"It will be a migration of growth and we expect to have these two areas completed within this year," said Mark Tassin, sr. vice president of operations. "We incorporate, we merge and we grow."

But such rapid growth brings challenges. Job recruitment and job retention appear to be two categories in which Canary is looking to overcome by culling through available candidates to find who best fits the overall picture of the company.

"North Dakota, the Bakken area, has been a tough recruiting area due to the high cost of living and weather issues," said Tassin. "We are recruiting out of the northern states to find individuals that are used to that type of environment, but what we have noticed is that a lot of these people do not have much industry experience. We will invest in our employees that are interested in a long-term commitment. Our basic recruiting process is we will work with you, get you started, get you trained, and pay accordingly."

"We are basically looking for someone that wants to make a career out of it and that will help our company grow," he added.
"Canary really prefers when our employees can recommend someone," added Jacob. "We know that we can count on what our own people say and recommend."

Canary is now the number one inventory company in North Dakota, which is also the number one oil producing state. In November 2012, North Dakota reached its highest output, yet. With more than 4,910 wells online, the state produced 20,072,728 barrels of oil.

"The Bakken is really our core competency and has been our focus until recently. We always have what the customer wants – that is how we grew in that area," said Tassin. "We are always forecasting, looking at markets, looking at our customers and forecasting with them. We stay one step ahead in order to meet our customer needs."

"We are not finished – we have only started," he stated.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Norway Considers Sharing Risk Intelligence with Businesses

OSLO - Norway will consider sharing national risk assessments with businesses operating in politically unstable regions after five Statoil ASA employees were killed in a terrorist attack in Algeria, the Minister of Trade and Industry said Thursday.

Trond Giske was meeting with business associations and unions to discuss security one day after the caskets of four deceased Statoil employees arrived in Norway, following the Jan. 16 terrorist attack and the kidnapping of hostages at the In Amenas gas plant in Algeria, operated by Statoil ASA, BP PLC and Algerian energy company Sonatrach.

"Of course, when such a dramatic incident occurs, it's a reminder of how important security is," said Mr. Giske. "Our international activity is growing, and this development will continue" he said, adding that "it's no alternative not to engage abroad."

The business associations wanted to combine the risk assessments of Norwegian government ministries and agencies, embassies and big companies, and to make them easily accessible to each other as well as to smaller companies.

"Unfortunately, sometimes it takes a serious incident to increase the focus on security," said Kristine Breitland, leader of NSR, a council set up by business associations in sectors like shipping, oil and gas and telecom to give security advice to companies.

Among the bigger Norwegian companies with global operations are telecom provider Telenor ASA, aluminum producer Norsk Hydro ASA and fertilizer producer Yara International ASA.

Even companies with solid emergency organizations had been reviewing their preparedness after the attack, Ms. Breitland said. But most Norwegian companies are small and medium-sized, and will need help from the government and big companies to gather intelligence, Ms. Breitland said.

"They need good tools and to know what risks they are facing," she said. "Statoil has been in front and said it will share what it finds in its investigation process [after the Algeria attack]. That's positive."

If Statoil couldn't guarantee the safety of its workers in any of its facilities abroad, Chief Executive Helge Lund said Wednesday, "we can't have employees in those areas."

Statoil has said it operates in politically, economically and socially unstable areas of the world, and has identified a range of potential threats such as wars, guerilla activity, nationalization of assets, political unrest, strikes and insurrections.

"The span of topics is so huge," said Petter Haas Brubakk, executive director of the Confederation of Norwegian Enterprise, who joined the calls for the government to improve information sharing. "Some countries you avoid because they are too dangerous. It may be health-related risk, traffic risk, abduction, crime, corruption--you have to analyze each country to be prepared."

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Rosneft CEO Sechin Keen for BP CEO to Join Board

MOSCOW – OAO Rosneft Chief Executive Igor Sechin has said he would "welcome" BP PLC boss Bob Dudley onto the board of the Russian oil giant, Interfax news agency reported Thursday.

BP will receive two seats on Rosneft's board after increasing its stake in Rosneft to 19.8% share in Rosneft as part of a deal to sell its stake in TNK-BP, Russia's No. 3 crude producer. Rosneft is buying out BP and its partners in TNK-BP in deals worth $55 billion.

"Robert Dudley is a very good candidate for the Rosneft board of directors. We would welcome a manager of this level joining the company's board of directors," Interfax cited Mr. Sechin as saying during a trip to Venezuela.

Mr. Dudley fled Russia in 2008 while working as chief executive of TNK-BP amid disputes with BP's partners, the AAR consortium of Soviet-born billionaires.

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Ferguson Group Extends Middle East Presence

The Ferguson Group, specialists in the rental of equipment to the offshore energy industry, has announced the launch of its new Ferguson Middle East Abu Dhabi division.

Ferguson Middle East LLC, based in Abu Dhabi, will support the Ferguson Group's increasing presence in the Middle East that saw the opening of its Dubai office in August 2012.

The new Abu Dhabi division will allow Ferguson Middle East to offer its range of offshore containers, refrigeration containers and its accommodation and, workspace modules to a wider market and range of companies operating within Middle East.

Mike Melville, commercial director for the Ferguson Group said: "The launch of our new office in Dubai last year was an extremely positive move for the company. Having this new office in Abu Dhabi is a great start to 2013 for Ferguson Middle East.

"I am excited about the future plans for our Middle East offices, as the company is able to expand and better support the offshore energy sector in the region."

The new company will be based in the Al Hilal Building in Abu Dhabi. The new division will offer the company's full range of products that include offshore containers, tanks, baskets, refrigeration/chiller containers, accommodation solutions and workspace modules.

Steven Ferguson, Chairman and CEO of the Ferguson Group, said: "We are delighted to launch this second company in UAE, servicing our clients in the Middle East. Our presence in these two key locations demonstrates our commitment to the region, acknowledging how important this market is to the Ferguson Group and recognizing the growing client demand in the region.

"Internationalization is a key aspect of our business and allows us to provide our high quality products across the globe, teamed with short lead times and first class, on the ground support."

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Musings: Hydraulic Fracturing Issue Encounters Protests And Movies

USGS: Estimate of Conventional Gas Resources Grows Internationally

On Friday, January 11, a 30-day public comment period in New York State on the issue of hydraulic fracturing ended, but not without a certain amount of high-drama. The wife and son of the late Beatles star John Lennon, Yoko Ono and Sean Lennon, led a group of protestors on a visit to the Albany office of New York Governor Andrew Cuomo (Dem) and the Department of Environmental Conservation. At the latter stop, the duo, who founded Artists Against Fracking last July, delivered 50 boxes reportedly containing 204,000 comments about hydraulic fracturing.

Around the same time, Ms. Ono had an op-ed published in the Albany Times Union in which she wrote, "My husband, John Lennon, and I bought a beautiful farm in rural New York more than 30 years ago. Like the rest of our state, this peaceful farming community is threatened by fracking for gas. She went on to say, “Governor Cuomo, please don’t frack New York. Don’t allow our beautiful landscapes to be ruined, or our precious and famous clean water to be dirtied."

Sean Lennon has made the point that his father’s home, which was purchased for its beauty and serenity, would be threatened by the possible construction of a pipeline to haul natural gas from Northeastern Pennsylvania (the Marcellus formation) to New York City and New England. While he is not stating that the property would be the site of drilling and fracturing activity, but the pipeline would be needed if fracturing was allowed to occur in the region near their home.

Gov. Cuomo has been wrestling with the fracking issue for over a year while watching upstate New York’s economy languish due to fallout from the financial crisis and resulting recession. In his recent State of the State message, Gov. Cuomo made the following point about the problems of that region. "We need an additional focus on upstate New York. There have been decades of decline in upstate New York. When you look at the job growth in upstate New York, frankly, it is sad and troubling."

The Governor has been reminded of the economic benefits of shale development from a leading Democrat, former Pennsylvania Governor Ed Rendell (Dem), who allowed development of the Marcellus Shale in his state, which has contributed significantly to that state’s economic recovery. The economic benefits of shale’s development were recently pointed out by Rachael Colley and Joe Massaro, field directors with Energy in Depth, a public outreach campaign funded by the Independent Petroleum Association of America, who said, "The ‘state’ of New York State is grim. Natural-gas development could be the light at the end of the gloomy tunnel."

Gov. Cuomo says he is working on an overall energy development plan for the state and suggests that his silence on the issue and reluctance to release an environmental study on the health impacts from hydraulic fracturing should not be taken as a sign that he has reached a decision. He did, however, recently hire Richard L. Kauffman, a former adviser to U.S. Energy Secretary Steven Chu, to serve as New York’s new energy secretary. Some are interpreting the move as an indication that Gov. Cuomo is prepared to take dramatic steps on energy policy.

The Governor should recognize that a decision to support fracturing, even if restricted to just those few New York State counties that border the Pennsylvania shale development activity, will not be popular with many citizens such as those following Ms. Ono and Mr. Lennon. Ms. Ono told supporters and Rolling Stone magazine that "If they do this, there will be a class action, and the class action is going to hit everybody who is doing this. It’s going to go on and on and on. Do we want that?"

We’re not sure whether Gov. Cuomo was holding off his decision in anticipation that Matt Damon’s movie, Promised Land, would bring some clarity to the fracking issue. The much anticipated movie, which released a trailer last fall to tease potential viewers about the message of the film, arrived with a whimper – and not many positive reviews. We’ll leave the acting reviews to Hollywood-types, but having seen the movie during its second weekend of release, we suggest you save your $8 ticket money.

The movie is cute and delivers a twist at the end, which we interpreted as an attempt by Mr. Damon, who both co-authored the script and was the lead actor, to garner sympathy from the anti-fracking people in the audience. It is presented as a morality play with Mr. Damon as the "bad" guy who eventually becomes a "good guy only to suffer at the hands of both the owners of the land whose mineral rights he is trying to lease and his bosses at Global, the $9-billion-a-year natural gas company. The discussions about hydraulic fracturing are incomplete and largely inaccurate, so one should not hold out hope that the topic would be advanced by the movie.

In a movie of this type, you would expect some interesting scenes, characters and dialogue. There were a few, but often we wound up shaking our head at the illogical events and explanations or outright mischaracterization of facts. However, we found one scene early in the movie quite funny. As Mr. Damon and Frances McDormand, playing his assistant, were driving through the Pennsylvania country-side on the way to visit a local farmer, he comments on how the landscape looks like Kentucky. We laughed because when we first saw the scenery, my wife leaned over to me and said “it looks like Kentucky,” based on the farmland of the Whiskey Trail that we drove last year on our way to Rhode Island. Having Mr. Damon make the same claim literally seconds after my wife did was very funny.

The new year will certainly not lessen the focus on shale development and the role played by hydraulic fracturing. President Barack Obama’s emphasis on climate change and environmental stewardship in his inaugural address means the federal government will be energized to resolve the science of fracking and set forth a path to a cleaner and cooler environment. For a president focused on his legacy, this mission offers many opportunities to legislate, if not to govern through executive order, Mr. Obama’s preferred way to deal with an uncooperative Congress. Mr. Obama certainly hopes the message of his second inauguration day will be looked back upon much as how Walter Cronkite used to close his 1950s "You Are There" history shows: "What sort of day was it? A day like all days, filled with those events that alter and illuminate our times … and you were there."

G. Allen Brooks works as the Managing Director at PPHB LP. Reprinted with permission of PPHB.

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Cosco Wins Platform Supply Vessel Contract

Singapore-listed Cosco Corporation disclosed late Monday that its subsidiary – Cosco (Guangdong) Shipyard – has inked a contract with a European ship owner for the construction of platform supply vessels (PSVs).

The contract takes effect Jan.28, and is valued at $54 million.

Under the agreement, which comes with an option for two additional vessels, Cosco is obliged to deliver both of the PSVs by 1Q 2015.

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U.S. M&A Activity Hits 10-Year High in 4Q2012

Merger and acquisition (M&A) activity in the U.S. oil and gas industry hit a 10-year high during the fourth quarter of 2012 with 75 deals, according to PwC US. A number of factors drove this activity, including private equity (PE) interest, foreign buyers, shale plays, and companies looking to get deals done before the end of the year with the looming fiscal cliff and proposed tax changes. In fact, that flurry of fourth quarter activity pushed overall deal volume in 2012 to a ten-year high at 204 transactions (for deals valued at over $50 million), representing $146.2 billion – the second highest total deal value in 10 years.

During the final three months of 2012, total deal value reached $56.2 billion, marking the second highest level seen in 10 years (behind the $79.1 billion total deal value seen during the fourth quarter of 2011).

"M&A activity in the U.S. oil and gas sector was extremely robust in 2012, with the vast majority of that activity happening in the final three months of the year as many deals got pulled forward due to the uncertainty surrounding the fiscal cliff," said Rick Roberge, principal in PwC’s energy M&A practice. "This past year was a watershed moment for the industry, with private equity involvement reaching an all-time high, shale deal volume at a two-year high during the fourth quarter, and a jump in asset transactions as companies have shifted their focus to adding more profitable liquid rich shale plays to their portfolios.

"We expect to see a slight pause in M&A during the first part of 2013 as companies focus on the recent wave of deals announced, but believe 2013 will be another banner year for deals as the U.S. oil and gas industry is ripe for continued consolidation. In fact, our recent PwC Global CEO Survey found that energy CEOs are among the most confident on growth prospects for this year than any other industry."

Private equity deal activity in the oil and gas industry marked an all-time high in 2012 with 34 transactions (which represented $28.4 billion). In the fourth quarter of 2012, there were 11 financial sponsor-backed deals worth $6.9 billion, a slight drop from the 13 PE deals in the fourth quarter of 2011 that totaled $13.6 billion. Additionally, there were 170 strategic deals in all of 2012 that contributed $117.8 billion, compared to 163 strategic deals in 2011 with a total deal value of $136.5 billion. During the fourth quarter of 2012, there were 64 strategic deals, a 64 percent increase from the 39 deals during the same time period last year. Total deal value for strategics was $49.2 billion during the last three months of 2012, a decline from the $65.5 billion in the fourth quarter of 2011.

PwC noted that during 2012, master limited partnerships (MLPs) were involved in 42 transactions, representing more than 20 percent of total 2012 deal activity, continuing the trend of increased MLP involvement over the past two years (MLPs represented 15.6 percent of total deal activity in 2010 and 18.4 percent in 2011).

For deals valued at over $50 million, upstream deals accounted for 53 percent of activity in the fourth quarter of 2012 with 40 transactions, representing $38.0 billion, or 68 percent of total fourth quarter deal value. The number of oil deals within the upstream sector totaled 22, a significant difference compared to five gas deals in the quarter. There were 21 midstream deals that contributed $10.9 billion. Nine downstream deals during the fourth quarter of 2012 added $5.9 billion, while oilfield services contributed five deals worth $1.4 billion.

Asset transactions dominated total M&A deal volume during the fourth quarter of 2012 with 56 deals, a continuation of a trend that PwC noted during the third quarter of 2012, marking the highest volume of asset transactions in at least ten years. Total deal value for those asset transactions represented $27.2 billion, the second highest value in ten years. For all of 2012, there were 158 asset deals worth $89.3 billion.

Also marking a ten-year high, there were 19 corporate transactions (with values greater than $50 million). Those deals had a total deal value of $29.0 billion during the fourth quarter of 2012. For full year 2012, there were 46 corporate transactions that contributed $56.9 billion.

According to PwC, there were 27 deals with values greater than $50 million related to shale plays in the fourth quarter of 2012, totaling $16.3 billion, an increase from the 22 shale-related deals during the fourth quarter of 2011, although total deal value was flat. For all of 2012, there were 77 shale deals that contributed $51.7 billion, an increase of two deals when compared to full year 2011, but a drop from the $72.7 billion in shale deal value from 2011. Included in the shale deals for fourth quarter 2012 were two transactions from the Marcellus Shale with a total deal value of $685 million and one Utica Shale deal worth $372 million.

PwC also noted that the volume of upstream and midstream shale deals increased in the fourth quarter of 2012 when compared to the same quarter in 2011. There were 17 total shale deals in the upstream sector, accounting for $9.0 billion, which was one more deal when compared to Q4 2011, although deal value had decreased from $12.3 billion last year. Midstream shale-related deals totaled 10 for the fourth quarter of 2012, representing $7.3 billion, an increase from the six midstream deals worth $4.0 billion during the fourth quarter of 2011.

"Throughout 2012, we continued to see a fair amount of repositioning and realignment with companies around midstream assets in the Marcellus Shale and Utica Shale as they looked to build the infrastructure needed to transport the extracted oil and gas," said Steve Haffner, a Pittsburgh-based partner with PwC’s energy practice. "Given the disparity in commodity prices, we expect to see continued movement during the year from the Marcellus to the Utica, as the Utica is a more attractive play due to its higher liquid content."

The most active shale plays for M&A with values greater than $50 million during the fourth quarter of 2012 include the Bakken in North Dakota, which had seven deals with a total value of $4.1 billion, followed by the Eagle Ford in Texas with six deals representing $3.1 billion.

"As we look out at the deal landscape throughout 2013, we believe the fundamentals are in place for continued transactions, including the potential for some very large deals to get done,” added Roberge. “The combination of independents who still control the majority of resources and the majors who have strong balance sheets and financial muscle may result in consolidation, as the capital requirements to develop shale plays continues to grow. We also expect PE to remain active in new investments."

Foreign buyers announced nine deals in the fourth quarter of 2012, which contributed $3.2 billion, versus seven deals valued at $10.4 billion during the same period last year.

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Crux JV Receives Retention Lease Offer from Joint Authority

Nexus Energy disclosed Wednesday that the Crux joint venture has received an offer from the Joint Authority for the issuance of a retention lease, with respect to Production License AC/L9, for five years.

The Crux JV applied for the retention lease with the National Offshore Petroleum Titles Administrator following completion of the consolidation of the Crux assets with Shell Development (Australia), Oaska Gas Crux and Nexus Energy on Oct. 25, 2012.

"The Crux JV will now review the attaching conditions to the retention lease offer and has up to 30 days to formally accept. The detailed work program and associated defined timelines include technical studies of a range of development options, including a standalone development concept, and exploration drilling of the Auriga prospect targeted for 2014," Crux said in a statement.

The development options currently under consideration for the Crux field include a tie-in to Shell's Prelude floating liquefied natural gas (FLNG) vessel or a standalone FLNG project.

Under the Crux JV agreement, Shell is operator of the Production License AC/L9, with an 80 percent interest. Nexus and Osaka Gas hold a 17 percent and 3 percent interest respectively.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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