Sunday, April 14, 2013

Repsol Sells Stake to Temasek Holdings

Singapore state investment company Temasek Holdings said Monday it acquired 5% of Repsol SA for 1.04 billion euros ($1.35 billion), as part of a strategy to increase its exposure to the energy sector.

The share sale further boosts Repsol's balance sheet, following an agreement last week to sell most of its liquefied natural gas assets to Royal Dutch Shell PLC for $4.4 billion in cash, plus the assumption of $2.3 billion in debt.

Repsol, the Spanish oil group, is selling off assets and paying down debt as it strives to protect its investment-grade credit rating, which was hurt by the nationalization of its controlling stake in Argentine energy company YPF SA last year. Its credit rating is on the brink of junk status.

The deal announced Monday builds on an existing stake to make Temasek the fourth-largest shareholder in Repsol, with a total holding of 6.3%. Spain's Caixabank SA is Repsol's largest shareholder with a 12.98% stake. Mexican national oil company Petroleos Mexicanos and Spanish construction firm Sacyr Vallehermoso SA hold stakes of around 9.5% each in Repsol.

It is the Singaporean fund's largest investment in Spain to date and one of its biggest in the energy sector. Temasek, which owns a $157 billion securities portfolio, doubled the size of the energy sector in its portfolio to 6% in the year to March 2012.

The energy sector is a good proxy for the needs of transforming economies with growing middle-income populations, both of which are part of Temasek's investment approach, said Tay Sulian, managing director of investment at Temasek. "We will continue to look for good, long-term investments in the energy space," he said.

The share sale represents "important international backing of our growth strategy," said Repsol Chairman Antonio Brufau.

Monday's deal allows Repsol to unwind a transaction it had made in December 2011 when it used its own cash to purchase a 10% stake from Sacyr, a debt-laden builder that was being forced by its creditors to cut its stake in Repsol from 20% to raise cash.

The 64.7 million Repsol shares sold Monday were bought by Temasek at EUR16.01 each. Repsol had sold the other 5% it acquired from Sacyr to several institutional shareholders in January 2012 at EUR22.35 apiece. Since then, Repsol's shares have declined because of the YPF nationalization.

P.R. Venkat in Singapore contributed to this article.

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

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Transocean: BP Gave Low Flow Estimates of Gulf Spill

Deepwater Horizon Gulf of Mexico Oil Spill

NEW ORLEANS - The owner of the oil rig that exploded in the Gulf of Mexico in 2010 says BP hampered efforts to stop the resulting gusher of oil by misleading government officials about how many barrels of oil were flowing each day from the damaged well on the Gulf floor.

The Transocean Corp.'s assertions were filed Friday in federal court in New Orleans, where a civil began last week to determine percentages of blame and how much BP, Transocean and others will pay for the April 2010 catastrophe that killed 11 workers and sent millions of gallons of oil spewing into the Gulf for 87 days.

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Centrica Achieves First Gas from York Platform

Gas production has begun at Centrica Energy Upstream's York platform in the southern North Sea, the company announced Friday afternoon (UK time).

The field, which is 100-percent owned by Centrica, will produce around 120 million cubic feet of gas per day at its peak, the firm said.

Centrica highlighted that the York platform is the third significant greenfield project completed in as many years after Ensign, also located in the southern North Sea, and F3-FA, the first self-installing platform in the North Sea. The field also represents a successful collaboration between Centrica Energy and Centrica Storage, with gas from the field being exported via pipeline to Centrica Storage's terminal in Easington, in northeast England.

Drilling is now underway on York's second well which, at some 3.75 miles, is the longest well Centrica Energy has drilled and is one of the longest wells in the southern North Sea.

Greg McKenna, Centrica's regional director for the southern North Sea, commented in a company statement:

"The team is celebrating as first gas is achieved from York, which will produce enough gas to meet the demands of half a million households. We have taken this project from investment decision to production in just 24 months, which is testament to the hard work of the project teams in both Centrica Energy and Centrica Storage. We will continue to work closely in the coming weeks as we bring gas onshore to the upgraded Easington Terminal."

The York platform is located around 25 miles east of Humberside, England, in a water depth of 150 feet.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Providence Completes Sale of UK Onshore Assets

Irish explorer Providence Resources announced Friday that it has closed the sale of its UK onshore assets to IGas Energy for $66 million.

The UK assets that made up the transaction included the Singleton oil field, the Baxter's Copse development project and the Burton Down exploration prospect. Providence said that the realized proceeds from the deal, after repaying a debt facility, amount to approximately $22 million.

Providence Chief Executive Tony O'Reilly commented in a statement:

"We are very pleased to have closed this transaction, which means that the company is now totally debt free. We will now continue to concentrate on our extensive Irish portfolio of appraisal projects and exploration prospects, which are the subject of a major multi-basin drilling program."

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InterMoor Wraps Up Apache IRIS Installation, Recovery in Gulf of Mexico

InterMoor, an Acteon company, has completed an installation and recovery project for Apache Deepwater LLC (Apache) in Mississippi Canyon Block 148, Well 5 in the Gulf of Mexico. The work scope included the overboard, wet transfer, deployment and recovery of a 30-ton interchangeable riserless intervention system (IRIS) owned by Blue Ocean Technologies. InterMoor undertook the work in water approximately 168 meters deep from Cal Dive's Uncle John semisubmersible vessel.

InterMoor delivered the project using its compensated anchor handler subsea installation system (CASIM) which reduces heave motions relative to vessel motions. CASIM units are pre-charged at the surface to deliver the needed heave compensation for the load at depth. InterMoor's proprietary CASIM method requires less deck space and demands fewer deck operations than the traditional buoy-based heave-compensated landing system. The company also provided the associated rigging equipment and a technician to help facilitate the subsea compensation.

"Apache selected InterMoor for this project on the basis of our service record, the fact that we had the necessary equipment available and because of our experience in subsea operations of this kind," said InterMoor project manager Jacob Heikes. "Although we have used CASIM to deploy and recover many types of subsea equipment, this is the first time that we have used CASIM for IRIS deployment and recovery, and the project's success shows that this proven installation method is suitable for a wide range of subsea equipment."

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Sembcorp Marine Bags $208M Jackup Deal with Perisai

Sembcorp Marine disclosed late Thursday that its subsidiary, PPL Shipyard, has won a $208 million contract to build a second Pacific Class 400 jackup for Perisai.

Scheduled for delivery in 2Q 2015, the jackup is capable of operating in deeper waters of 400 feet and drilling high pressure and high temperature wells to depths of 30,000 feet. The jackup will be able to accommodate 150 people on board.

Sembcorp Marine delivered its first Pacific Class 400 jackup to Perisai in May last year.

"We are very pleased that Perisai has chosen to order the second Pacific Class jackup with us. This repeat order is a reflection of the optimism that the owner has in the jackup market," PPL Shipyard's Managing Director Douglas Tan said in a statement.

Analysts said this week that the outlook for Sembcorp Marine this year is optimistic.

"We see compounded annual growth rate earnings of 16 percent for Sembcorp Marine over the next three years, supported by its $11 billion orderbook," Maybank Kim Eng said in a research note Wednesday.

DBS Group Research noted Thursday that Sembcorp Marine's performance this year will offset an anticipated performance slack of parent company Sembcorp Industries.

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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Alaskan Villagers Challenge Alpine Satellite Permit Decision

Residents of a northern Alaskan village have challenged the U.S. Army Corps of Engineers' (Corps) issuance of a Clean Water Act (CWA) permit to ConocoPhillips for its fifth Alpine satellite field, citing the proposed project's negative environmental impact and the Corps failed to comply with the CWA and National Environmental Policy Act (NEPA) in its decision-making.

In a lawsuit filed this week in U.S. District Court in Alaska, seven residents of Nuiqsut, Alaska argued that ConocoPhillips' proposed plan to build a drilling pad, bridges and access road as part of the Alpine West CD5 project would permanently bury 58.5 acres of high functioning wetlands and streams, presenting a "serious risk" for catastrophic oil spills in the Colville River Delta, and would adversely impact the wildlife that rely on the Arctic Coastal Plain and Colville River Delta.

The residents, who rely on food gathered through subsistence hunting and fishing to feed themselves, also said the development could limit their ability to hunt and fish. The residents regularly visit the area where the drilling project would be located, and say they have had difficulty hunting on the east side of the Nigliq Channel because of ConocoPhillips' existing Alpine satellite facilities and expect further development in the Delta will negatively impact their ability to hunt.

The residents argued the Corps failed to provide reasoned analysis for least environmentally damaging practicable alternative determination (LEDPA) pursuant to CWA Section 404 permits, noting that a Section 404 permit could not be issued if an alternative to a water discharge with a less environmental impact exists. The CWA act prohibits the discharge of any pollutant into navigable waters unless authorized by a Section 404 permit.

The Corps in December 2011 had issued a CWA Section 404 permit to ConocoPhillips to allow the company to discharge fill material into the site where the drilling pad, 6-mile access road and bridge that would cross the Nigliq Channel of the Colville River.

ConocoPhillips had initially applied for a Section 404 permit for CD-5 in September 2005. In November of that year, the U.S. Environmental Protection Agency (EPA) determined that ConocoPhillips had not demonstrated that the proposed project was the LEDPA and did not provide enough information to support ConocoPhillips' decision that the roadless design proposed for the site was infeasible, or ConocoPhillips' proposed road was the environmentally preferable alternative.

The residents argued that the Corps had initially determined in its 2010 Record of Decision & Permit Evaluation (ROD) that the HDD pipeline alternative and no road to connect to the main Alpine facility with CD-5 was the least environmentally damaging practical alternative, but then reversed its decision in the 2011 ROD, finding that ConocoPhillips' preferred road and bridge alternative as the LEDPA.

"The Corps failed to discuss why facts and policies that were relevant to the 2010 decision, such as the risk of a catastrophic spill from the suspended pipeline, no longer support the finding that the HDD alternative is the LEDPA," according to the filing.

The residents also claimed that the Corps failed to comply with the National Environmental Policy Act (NEPA), which requires that environmental information be made public before decisions are made. The residents said the Corps did not prepare its own NEPA analysis for its Section 404 permit decision for CD-5, and failed to take a hard look at the direct, indirect and cumulative impacts associated with the project.

Additionally, the Corps relied heavily on materials not included in the Bureau of Land Management's 2004 Alpine environmental impact statement (EIS) to evaluate the direct, indirect and cumulative impacts of the CD-5 project. These materials were not subject to public review and comment as part of the NEPA process, which violates the public participation requirements of NEPA.

The residents said the Corps failed to provide any supplemental NEPA analysis that addresses changes in the proposed project, including new information regarding climate change, changes in industry practice, changes in federal land management within the National Petroleum Reserve Alaska, expanded oil and gas leasing activity offshore and resulting necessary onshore infrastructure, as well as new wildlife information.

"Failure to supplement the 2004 EIS with additional NEPA analysis violates NEPA," the residents argued.

The CD-5 site is located approximately 8.5 miles northwest of Nuiqsut and lies within the National Petroleum Reserve Alaska. CD-5 is a satellite field west of the Alpine field, one of the largest onshore oil fields discovered in North America in the past 20 years, according to ConocoPhillips' website. Initial production from the site is expected in late 2015.

Alpine is located approximately 40 miles west of the Kuparuk oil field. Other Alpine satellites include the Fiord, Nanuq and Qannik fields.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Ithaca Makes Takeover Offer for Valiant Petroleum

North Sea-focused Ithaca Energy has made a $309 million offer for Valiant Petroleum that it expects will result in the establishment of a leading mid-sized oil and gas operator in the region.

Ithaca is focused on production, appraisal and development activities in the North Sea, while Valiant has what Ithaca's management describes as "a balanced portfolio" of assets with a primary focus on the UK and Norway.

Ithaca expects that the acquisition will see a more than doubling of its current forecast for 2013 production to between 14,000 and 16,000 barrels of oil equivalent per day (boepd), increasing to approximately 27,000 boepd in 2015. It would also see Ithaca's 2P reserves double to 74 million boe.

Ithaca reported that the Valiant board of directors, which is advised by Morgan Stanley, considers the terms of the acquisition to be fair and reasonable.

Ithaca Chairman Jack Lee commented in a statement:

"This proposed acquisition represents a significant step forward in the execution of Ithaca's strategy to build a highly profitable 25kboe/d North Sea oil and gas company. The combined assets of the two groups have a strong strategic fit, with the acquisition materially increasing and broadening Ithaca's producing asset base and reserves portfolio."

Valiant Chairman Kevin Lyon added:

"We are pleased to announce Ithaca's recommended offer to our shareholders… The combination with Ithaca will create a leading North Sea oil and gas operator with a diverse production and reserves asset base from which to pursue new and exciting growth opportunities."

In a separate announcement Friday Valiant said that drilling on the Timon prospect in the northern UK sector of the North Sea, on blocks 211/11b and 211/16b, has finished and the well will be plugged and abandoned after Jurassic sands there were found to be poorly developed. Valiant has a 10-percent share in the P1633 license on which Timon is located. 

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Germany Debates Fracking as Energy Costs Rise

Germany Debates Fracking as Energy Costs Rise

BERLIN - Germany is debating whether to allow hydraulic fracturing, a controversial drilling technique to extract natural gas from shale, amid growing concern that rising energy costs in the country could threaten its industrial backbone.

The German public is deeply suspicious of the drilling practice, commonly known as fracking. Many Germans worry that the process, which involves using a high-pressure mixture of water, sand and chemicals to break apart energy-rich rocks, could contaminate underground water supplies.

This week the government unveiled a proposal that it hopes can bridge the gap between pro-fracking advocates in industry and environmentally conscious voters. Through a change to existing laws, the government is proposing banning fracking near any water supply and in all national parks and conservation areas. Drilling anywhere else would be subject to approval based on an environmental-impact study.

The fracking debate comes as Germany is pursuing a radical restructuring of its energy sector. In the wake of the Fukushima nuclear disaster in Japan in 2011, Chancellor Angela Merkel abruptly declared that Germany would abandon nuclear power and transition to renewable energy sources such as wind and solar. As the use of nuclear power declines, Germany is filling the gap with a combination of renewable energy and coal-fired plants.

Yet Ms. Merkel's "energy revolution," as the shift away from nuclear has been dubbed, is having unexpected side effects.

Subsidies for renewable-energy producers that are financed in part through household electricity bills are causing electricity prices for ordinary consumers and industry to rise. Germany's biggest industrial power consumers have seen electricity prices per kilowatt hour rise nearly 40% in the past five years, according to the Cologne Institute for Economic Research, also known as IW. Electricity prices for industry are nearly 15% higher than the average in the 27-nation European Union, IW said.

"We have reached the pain threshold," said Michael Huther, IW's director. He added that data show that energy-intensive industries are already beginning to curtail investment in Germany because of higher electricity charges.

"We are beginning to observe a creeping disinvestment," he said.

As the country turns its back on nuclear power, it is also seeing its carbon emissions rise. Long a leader in cutting CO2 emissions, Germany's emissions rose 1.6% last year, according to the Environment Ministry, the first rise in years.

It is unclear what immediate impact increased natural-gas supplies would have on German electricity bills. Still, the availability of cheaper natural gas could help avert a large-scale return to coal in 2020. That is the year that Germany will shut down about six nuclear power stations and many of the country's coal-fired power plants will also shut down due to age. A plentiful supply of domestic natural gas could provide a better bridge fuel to replace nuclear power as Germany continues to build its alternative energy supply, say analysts.

If fracking is ultimately banned in Germany, analysts warn that Germany could miss out on a broader European energy boom. Eastern European countries like Poland and Ukraine have large shale deposits and are keen to exploit them.

Experts don't believe Germany has the kind of massive shale-gas deposits that are transforming the U.S. energy market. But there could be enough natural gas trapped underground to meet Germany's gas needs for about 50 years, based on the current rate of gas consumption, at costs below what Germany now pays for imported gas, analysts say.

So far, Ms. Merkel has sided with her wary public, expressing doubts about the viability of fracking in Germany and pledging to allow it only if it can be proven entirely safe. Ms. Merkel is trying to please the broader public, which surveys show is frightened by fracking, while not alienating industry, which is lobbying the government to do something about Germany's soaring energy costs.

"The compromise here is to allow for pilot projects to do testing," said Miranda Schreurs, director of the Berlin-based Environmental Policy Research Center and an adviser to the German government on the issue. "The government is trying to keep the door open for fracking to be able to say that if they do it, it will be safe."

Germany's energy industry welcomed the fact that the government has shied away from an outright ban on any fracking. The government's proposals are a compromise between the environment minister, who initially wanted to ban fracking, and the economy minister, who wants to allow it. Industry sees the compromise as a step that would allow for some testing and which could help determine whether fracking is harmful to the environment.

"Only at the end [of testing] will we be able to judge using all relevant criteria whether this makes sense-economically, environmentally, and regarding its acceptance by society," a spokesman for chemical and energy group BASF AG said. "To do that, we need the framework which is now being established."

Germany's powerful environmental lobby says the government's proposals don't go far enough and demand an outright ban. The opposition Green Party called the government's move a smoke screen. "It's like banning skiing in the Sahara," said Oliver Krischer, a Green Party member of parliament. "An environmental-impact study, which is also embraced by the gas industry, will do little."

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

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Ithaca Makes Takeover Offer for Valiant Petroleum

North Sea-focused Ithaca Energy has made a $309 million offer for Valiant Petroleum that it expects will result in the establishment of a leading mid-sized oil and gas operator in the region.

Ithaca is focused on production, appraisal and development activities in the North Sea, while Valiant has what Ithaca's management describes as "a balanced portfolio" of assets with a primary focus on the UK and Norway.

Ithaca expects that the acquisition will see a more than doubling of its current forecast for 2013 production to between 14,000 and 16,000 barrels of oil equivalent per day (boepd), increasing to approximately 27,000 boepd in 2015. It would also see Ithaca's 2P reserves double to 74 million boe.

Ithaca reported that the Valiant board of directors, which is advised by Morgan Stanley, considers the terms of the acquisition to be fair and reasonable.

Ithaca Chairman Jack Lee commented in a statement:

"This proposed acquisition represents a significant step forward in the execution of Ithaca's strategy to build a highly profitable 25kboe/d North Sea oil and gas company. The combined assets of the two groups have a strong strategic fit, with the acquisition materially increasing and broadening Ithaca's producing asset base and reserves portfolio."

Valiant Chairman Kevin Lyon added:

"We are pleased to announce Ithaca's recommended offer to our shareholders… The combination with Ithaca will create a leading North Sea oil and gas operator with a diverse production and reserves asset base from which to pursue new and exciting growth opportunities."

In a separate announcement Friday Valiant said that drilling on the Timon prospect in the northern UK sector of the North Sea, on blocks 211/11b and 211/16b, has finished and the well will be plugged and abandoned after Jurassic sands there were found to be poorly developed. Valiant has a 10-percent share in the P1633 license on which Timon is located. 

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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