Novatek Saw 32% Increase in Reserves during 2012

Russian independent gas producer Novatek reported Thursday strong growth in its proved reserves. Independent petroleum engineers DeGolyer & MacNaughton estimated that Novatek's proved reserves increased by 32 percent last year to 12.4 million barrels of oil equivalent.

Novatek added 3.4 billion barrels of oil equivalent of proved reserves, inclusive of 2012 production, and recorded a more than eightfold (842 percent) reserve replacement rate, it said. Total proved reserves of natural gas increased to 62.1 trillion cubic feet.

The company said that the increase in its reserves was due to successful exploration at its fields, production drilling, the inclusion of the Salmanovskoye and Geofizicheskoye fields that it acquired in 2011 into the reserve appraisal and the acquisition of a 49-percent stake in Nortgas (the holder of the license for the North Urengoyskoye field).

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Otto Sees Successive Full Year Loss amid Contract Cancellations

Otto Marine – an offshore marine group specializing in the building of offshore support vessels, ship chartering and offshore services operation – posted Friday a full year loss, ended Dec. 31, 2012, of $73.7 million, citing termination of three contracts and fewer number of vessels deployed by its geophysical segment as factors responsible for the company’s dismal results.

Throughout 2012, Otto was grappling with a drop of orders in its shipyard and lower utilization rate of its seismic vessel. The company was also plagued by rising administrative and selling expenses. 

Otto also suffered a net full year loss of $52.2 million in 2011. 

Otto noted that the rest of this year will remain difficult for the company.

"Global economic conditions as well as the general environment of the shipbuilding industry remain challenging. Additionally, the shipyard is under-utilized due to lower order intake," Otto said in its earnings statement Friday.

Otto also revealed Friday that its subsidiary, Reflect Geophysical, applied for an order Thursday with the Singapore High Court for it to be placed under judicial management as creditors seek money. Reflect is unsuccessful in obtaining the order for a short to medium term standstill of claims from its creditors, and the company is at present seeking legal advice for its next course of action. 

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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North Energy Teams Up with Rex for 'Virtual Drilling' System

Norway-focused North Energy announced Wednesday that it is teaming up with technology firm Rex Oil & Gas to use Rex's 'Virtual Drilling' exploration system for identifying and locating oil prospects.

Virtual Drilling – which has not been used on the Norwegian continental shelf (NCS) before –exploits the way different fluids resonate in different frequencies in seismic data. This allows it to distinguish between water-bearing structures and oil. North said it has conducted a number of blind tests with it on historical wells over the past 12 months, which yielded very good results.

North Energy Chief Executive Erik Karlstrøm commented in a company statement:

"The technology does not replace any of the tools we are using today, but helps to develop more oil prospects with current exploration tools.

"We will then make use of resonance technology as a final filter, then select the most promising prospects out of a wider range than today. This process will require more geologists and geophysicists as well as more seismic. A search for a partner in seismic is therefore a natural step further in this process."

North reported that it has expanded its NCS drilling program by one well, with appraisal drilling imminent on its Norvarg target. This is due to be drilling by the Leiv Eiriksson rig in March. Plans are also being drawn up for a well on the Frode oil prospect in the PL 299 license on the Halten Bank in the Norwegian Sea.

Meanwhile, the firm said that it had completed the reduction of its 100-percent holding in production license 510. Maersk Oil Norway is now the operator of the license with a 50-percent holding, while North retains a 20-percent stake.

North said it made a net loss of NOK 59.6 million during the fourth quarter, which it attributed to increased exploration and license costs as well as extensive work in connection with Norway's 22nd licensing round.

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Tullow's Twiga South-1 Discovery Flows at 2,812 bopd

Africa-focused Tullow Oil unveiled results from flow tests at its Twiga South-1 oil discovery in Kenya, which showed a combined flow rate of 2,812 barrels of oil per day (bopd) from three reservoir zones.

In a statement released Thursday, Tullow added that the combined rate has the potential to flow at around 5,200 bopd. However, the company also said that its Ugandan Ondyek-1 exploration well did not encounter hydrocarbons.

Tullow said the Twiga South-1 results provide encouragement for the company's forthcoming testing program at Ngamia-1A on Block 10BB, where four zones are planned to be tested using the Weatherford 804 rig. Testing activities here are expected to begin in March and be complete by the end of May.

Meanwhile, the firm said Ondyek-1 well in Uganda has now been plugged and abandoned after it failed to find hydrocarbons but that it is carrying out further evaluation of the nearby Lyec-1 discovery, with the partners on block EA-1A reevaluating the remaining exploration potential of the area.

Tullow Exploration Director Angus McCoss commented in a statement:

"While it is still early days for our exploration campaign in Kenya, these flow tests results at Twiga South-1 are an important step on the way towards understanding the commercial potential of the two discoveries we have made so far. The Ondyek-1 well in Uganda did not encounter hydrocarbons but has contributed much to our understanding of the limits of the EA-1A block."

Tullow has a 50-percent operated interest in the Twiga South-1 well.

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Six Foreign Oil Workers Kidnapped in Nigeria

LAGOS (AFP) – Armed pirates who stormed an oil service ship in southern Nigeria have kidnapped six foreigners and demanded a $1.3 million ransom for their release, police told AFP.

"Three of those abducted are from Ukraine, two from India, one from Russia," Bayelsa state police spokesman Fidelis Odunna said of the Sunday attack.

"One of the kidnappers called to demand the sum of 200 million naira" ($1.3 million), he added.

The Armada Tuah vessel operated by the Lagos-based Century Group with a crew of 15 was attacked by gunmen in waters off Bayelsa, police said.

It was not immediately clear how far offshore the vessel was at the time of the attack, or whether it had in fact docked.

"We have deployed intelligence personnel in search of the six workers," Odunna said.

The kidnapping of foreign oil workers is common in Nigeria's oil-rich south, with the hostages often released following a ransom payment. It is however rare for police to discuss the details of ransom demands.

Copyright (c) 2012 Dow Jones & Company, Inc.

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State Rep. Broxson Withdraws Blackwater River Park Oil, Gas Bill

State Rep. Doug Broxson withdrew his bill that would have allowed drilling for oil and gas in the Blackwater River State Forest in Holt, Florida.

"We think the public needs to know much more about what would happen," Broxson told the News Journal Wednesday. "The timing is not perfect for pursuing this."

The bill, filed in January 2013, proposed to allow private companies to drill for oil and gas in the 190,000-acre park.

The bill would have allowed the governor's Board of Trustees of the Internal Improvement Trust Fund the ability to enter into a contract with oil development companies. The bill also stated that drilling and contracts would bring in royalties and other revenue for the state.

Broxson said he did not anticipate that opposition to the idea would be so fierce. Florida Fish and Wildlife Conservation Commission granted approval for exploration in the state park – as long as the area's "natural assets" were not disturbed, he said.

David Guest, the Florida managing attorney for the environmental group Earthjustice, said the idea of drilling in a state park that holds one of the nation's purest sand-bottom rivers was ludicrous.

"It's really a symbolic statement that says screw the environment," Guest said to Rigzone in an interview. "Operators can get to these resources that are held underneath the forest through directional drilling - there's really no need to do this at all."

Many opponents drew comparisons between the idea of drilling in the forest to the 2010 BP oil spill.

"Having that experience of Deepwater Horizon only two years ago, it defies logic," Guest said.

The comparison baffled Broxson.

"We certainly miscalculated that. There's no separation in their thinking of the two of what might happen on land – which is almost impossible – with what happened in the Gulf a mile deep," Broxson told News Journal.

Broxson is moving forward with the Feb. 25 town hall meeting he has set for the issue in Jay, Florida – a town in Santa Rosa County. Broxson wants to ensure that the community, estimated at 151,372 by in 2010 by the U.S. Census Bureau, is aware of the issue and answer any questions residents may have.

“I look forward to continuing this discussion on Monday and in the future as a means to safeguard our quality of life and achieve maximum economic benefit for every citizen in Northwest Florida,” he said.

The bill, which was under review in the state House's Energy & Utilities Subcommittee before being withdrew, is similar to a bill first introduced by state Rep. Clay Ford, R-Pensacola. That bill died before being passed. A similar bill in the state Senate, also granting the governor's office the same abilities in state lands across the state was never passed.

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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TNK-BP to Target US Tight Oil

MOSCOW - Russian oil producer TNK-BP Ltd. wants to gain access to U.S. tight oil projects in order to get expertise that can be used on deposits in Russia, the company's senior vice president for international projects, Boris Zilbermints, said Wednesday.

Russia has potentially huge tight oil resources in Western Siberia, where output at its main Soviet-era fields is waning.

TNK-BP, a joint venture between BP plc and a group of Soviet-born tycoons, is being taken over by Russian state-controlled oil giant OAO Rosneft.

Mr. Zilbermints said he'd had no contact with Rosneft on integration. He said the integration process would begin after the takeover closed, expected in the first half of this year.

Copyright (c) 2012 Dow Jones & Company, Inc.

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McMoRan Touts 'Sizable Reserves' at Sub-Salt, Ultra-Deep Trend

McMoRan Exploration Co. reported Wednesday that independent reserve engineers engaged for the sole account of McMoRan estimated proved, probable and possible oil and gas reserves of 546.7 billion cubic feet equivalent (Bcfe) gross (141.7 Bcfe net to McMoRan, including 12.9 Bcfe of net proved reserves) associated with interim results from the sands encountered above 24,000 feet in the Lineham Creek ultra-deep exploratory well located onshore South Louisiana. These are the first reserves to be booked in the sub-salt, ultra-deep trend. The well is currently drilling below 27,600 feet to evaluate the deeper primary objectives and has a proposed total depth of 29,000 feet. Development plans will be determined following completion of drilling and evaluation of the deeper objectives.

Co-Chairman, CEO and President of McMoRan James R. Moffett said, "These are the first of what we hope will be sizable reserves from the sub-salt, ultra deep trend onshore and in the shallow waters of the Gulf of Mexico. Indications of hydrocarbons shallower than 24,000 feet have positive implications for additional targets on trend within our portfolio. We look forward to results from ongoing drilling activities on the Lineham Creek structure and from the onshore Lomond North exploratory prospect currently being drilled."

Lineham Creek is located onshore in Cameron Parish, Louisiana. Chevron U.S.A. Inc., as operator of the well, holds a 50 percent working interest. McMoRan is participating for a 36 percent working interest. Other working interest owners include Energy XXI (9.0%) and W. A. "Tex" Moncrief Jr. (5.0%).

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Jimbolia-100 Well Reaches Target Depth

Romania-focused Zeta Petroleum announced Thursday that the Jimbolia-100 appraisal well has reached its target depth of 8,500 feet.

Spud Dec. 31, the well is located on the Jimbolia concession near the Romanian-Serbian border. It is targeting the Jimbolia Veche oil discovery, which has two hydrocarbon-bearing intervals and a current contingent resource of 1.7 million barrels.

Now that it has reached target depth, the well will be logged and a seven-inch liner will be run into the bottom section of the hole. A decision to test the well will be made on receipt of the logging results, said Zeta.

Zeta holds a 39-percent interest in the Jimbolia-100 well. The well is operated by NIS Petrol SRL, which holds a 51-percent stake.

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Sembcorp Marine Sees Profit Dip, Admits 2012 is a Challenging Year

Sembcorp Marine posted late Thursday a net profit for the final quarter of 2012 at $135 million (SGD167 million), down 27 percent from the same period last year. In 4Q 2011, Sembcorp Marine booked a net profit of $185 million (SGD229 million).

Operating profit for the quarter was $120 million (SGD148 million), down 26 percent from one year ago.

Sembcorp Marine also saw its net and operating profits slide on a full year basis. For the year ended Dec. 31, 2012, the company posted a net profit of $435 million (SGD538 million) and an operating profit of $448 million (SGD554 million), down 28 percent and 25 percent respectively.

Sembcorp Marine noted in its earnings release that it was operating in a challenging environment last year. The company ended last year having to grapple with the aftermath of an offshore accident; the Noble Regina Allen (400’ILC jackup) tilted during a jacking system test on Dec. 3, 2012. The incident led to some 89 workers being injured.

Sembcorp Marine revealed in its earnings report that the company has a net order book of $11 billion (SGD13.6 billion) with completion and deliveries stretching into 2019.

"Amid the fragile global environment, the long-term industry fundamentals for the Offshore Oil and Gas sector remain sound underpinned by high oil prices and projected increases in offshore exploration and production spending," Sembcorp Marine said in a statement.

"Yard activity level will remain high over the next two years, supported by Sembcorp Marine’s $11 billion net order book. However, margins may continue to normalize. In this rig order cycle, price increase is slower and we believe this is attributed to rising competition for offshore orders," OSK Research's analyst, Jason Saw, said in an opinion statement.

"The jackup rig replacement theme is still intact but this market segment will see competition from Chinese and Middle East yards," Saw noted.

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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