Monday, April 15, 2013

Repsol's Upstream Unit Sees Strong Growth

Spain's Repsol reported Thursday that its upstream division saw an improved performance in all metrics during 2012.

Repsol's total production increased 11 percent during the year, with average production reaching 332,435 barrels of oil equivalent per day. The firm's reserve replacement ratio reached a record high of 204 percent.

Repsol said it completed the execution of four of its 10 key projects from its 2012-to-2016 strategic plan, which was announced in May 2012. It added new production from Bolivia (Margarita-Huacaya), the US (Mid-Continent) and Spain (Lubina and Montanazo). The company also added assets in Russia through its AROG joint venture.

The firm also highlighted five new discoveries during the year, including: Pão de Açucar in Brazil, the Sagari discovery in Peru,TIHS1 in Algeria, and Chipirón T2 and Cano Rondón East in Colombia. Repsol said these discoveries mean it has exceeded the annural resources incorporation goal it set in its strategic plan.

Meanwhile Repsol began commercial production at the giant Sapinhoá field in Brazil at the start of this year. It expects this field to reach an output of 120,000 barrels of oil equivalent during the first development phase.

Repsol results for 2012 showed it made a net profit of $2.7 billion – which was down 6.1 percent on 2011 (although the since-nationalized Argentinian subsidiary YPF contributed to 2011's figure). The firm's operating revenue during the year was 13.2 percent greater than that for 2011 at $78 billion.

On Tuesday this week, Repsol reported that it had sold several of its liquefied natural gas assets to Royal Dutch Shell for $6.7 billion. The firm said that the sale of these assets means that it has more than met its asset divestment targets that are part of the 2012-to-2016 strategic plan announced in May 2012.

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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Transocean Confirms $2B of New Contracts

Transocean, the world's largest offshore drilling contractor, confirmed late Friday that it secured new contracts amounting to $2 billion between Oct. 17 2012 through to Feb. 14 2013. Reporting its fourth quarter results for 2012, the firm also said that the backlog of orders from continuing operations stood at $28.8 billion on February 14.

Transocean generated 4Q 2012 revenues of $2.32 billion – down from $2.43 billion in the previous quarter. Contract drilling revenues decreased by $35 million primarily due to the expected increase in "out of service" time, which was partly offset by higher average day rates. Other revenues decreased by $70 million, which was mainly due to lower drilling management services activity.

Operating and maintenance expenses in 4Q 2012 were $1.44 billion (3Q 2012: $1.32 billion), while 4Q 2012 net income came in at $456 million (3Q 2013: $381 million loss).

During 4Q 2012 the firm reclassified its drilling management services operations in the US Gulf of Mexico to the status of "discontinued operations", reducing its revenues for the period by $51 million and operating and maintenance expenses by $50 million.

For 2013, Transocean issued guidance that its fleet average revenue efficiency would be approximately 93 percent (compared with 94.7 percent during 4Q 2012). Operating and maintenance expenses for 2013 are estimated at between $5.7 billion and $5.9 billion.

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New CEO Starts at Lamprell

Oil and gas engineering firm Lamprell announced Monday that James Moffat has now taken up his role as CEO of the group.

The UAE-based company said that Peter Whitbread, who had been acting as interim CEO since October, will continue to sit on its board and will support Moffat in an executive capacity.

Lamprell Chairman John Kennedy commented in a statement:

"I would like to welcome Mr Moffat into the group and I look forward to working closely with him as we re-position the company for renewed growth and profitability.

"We have made significant progress over the last six months, focusing on our core strengths, and we are keen to continue the great work undertaken by Mr Whitbread since his appointment. I would also like to take the opportunity to thank Mr Whitbread for his efforts and I am pleased that he has agreed to stay on and help with the process for rebuilding the business."

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Obama Taps McCarthy to Lead EPA, Moniz to Head Energy Department

Obama Taps McCarthy to Lead EPA, Moniz to Head Energy Department

WASHINGTON - President Barack Obama Monday announced his picks to lead the Environmental Protection Agency and the Energy Department, selecting a veteran regulator and a noted academic to lead a pair of agencies responsible for driving U.S. energy policies.

Mr. Obama selected Gina McCarthy, the current head of the EPA's clean-air office, to lead the environment agency, an administration official said. For the Energy Department, Mr. Obama nominated Massachusetts Institute of Technology physicist Ernest Moniz.

Both Ms. McCarthy and Mr. Moniz emerged several weeks ago as the top contenders for these posts, and both must be confirmed by the Senate.

Mr. Obama said Monday at the White House that the pair would lead efforts to do "everything we can" to combat climate change.

The nomination of Ms. McCarthy, a Boston native who served under Mitt Romney in Massachusetts, reflects Mr. Obama's stepped-up focus on climate change.

Ms. McCarthy has pushed through some of Mr. Obama's most controversial environmental rules, including a set of greenhouse gas standards that critics say go beyond the scope of the EPA's authority. Her office is currently writing a rule to limit carbon dioxide emissions from new power plants. The rule would effectively forestall the construction of coal-fired units unless new technology becomes available.

The confirmation process could be challenging for Ms. McCarthy. The EPA is a polarizing agency that often attracts criticism from Republicans. Ms. McCarthy herself has been at the center of controversial rules that have been challenged in court, including the greenhouse gas standards.

Even before her formal nomination, some Republican lawmakers were expressing concern.

Mr. Moniz, a nuclear physicist of Portuguese descent, served in the Energy Department under President Bill Clinton. He is the director of MIT's Energy Initiative and sits on Mr. Obama's council of scientific advisers.

If confirmed, Mr. Moniz would play a role in deciding whether to allow energy companies to export U.S. natural gas. In his current role, Mr. Moniz was the co-chairman of a 2011 study that found "there are substantial economic benefits to a global natural-gas market" and said "the U.S. should not erect barriers to natural gas imports or exports."

Mr. Moniz would also lead efforts to advance new nuclear power plants, lower the cost of renewable energy, and boost the energy efficiency of U.S. buildings and appliances -- all goals he has promoted in the past.

He will have to defend those efforts before a Congress wary of government spending and skeptical of energy subsidies after the bankruptcies of some U.S.-backed renewable energy firms during Mr. Obama's first term.

Mr. Moniz will be prepared for those battles, said Phil Sharp, a former Congressman from Indiana who is president of the think tank Resources for the Future and served with Mr. Moniz on a presidential nuclear waste commission. Mr. Moniz's previous government posts have acquainted him with both Congress and the "far-flung operations" of the Department of Energy, with its national network of research labs and nuclear weapons sites, Mr. Sharp said. "He brings a preparation that is probably unusual for the Secretary of Energy."

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

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Hess Divests Asian Assets to Focus on Exploration, Production Portfolio

Hess Divests Asian Assets to Focus on Exploration, Production Portfolio

Hess Corp. announced Monday it is further whittling its operations as it aims to turn itself into a pure exploration and production company. But the move failed to quell a rebellious shareholder seeking to break the company up even further and put its own slate of board nominees in place.

Hess said in a letter to shareholders that it is exploring options for its entire downstream business and pruning its Asian portfolio, while also unveiling a share-buyback program of up to $4 billion and more than doubling its quarterly dividend. It also proposed new board members, addressing concerns that the company's board is too close to top management and not experienced enough in the energy sector.

The moves come as Hess continues to battle with hedge fund Elliott Management, which seeks to replace much of the board and argues that Hess could be worth more as two slimmer companies focused respectively on North American and international operations. But Hess Chief Executive John Hess said Monday morning that the changes announced have been in the works for months, and were not prompted by the challenge from the activist shareholder.

"This is not something that just happened overnight," Mr. Hess said Monday in a conference call with analysts. "Elliott got on the train after it left the station," Mr. Hess said.

Shares rose 3.5% Monday morning after the announcement. In a statement Monday, Elliott said the changes did not go far enough, and questioned how long Hess has taken to restructure itself and whether the company will be able to execute the new strategy.

"For a company that has hidden, for 17 years, behind an entrenched board, unfocused strategy, opaque disclosure, and flagrant disregard for its obligations to shareholders, today's promises are neither credible nor sufficient," the fund said in a statement.

Hess said it would divest its Indonesia and Thailand assets, look for a way to monetize its Bakken midstream assets by 2015, and fully exit its retail, energy-marketing and energy-trading businesses. Earlier this year, Hess closed its last remaining refinery in Port Reading, N.J., and said it would sell its network of terminals.

Some of the changes Hess announced Monday are in line with demands made by Elliott, but Hess described the hedge fund's central thesis, that Hess should divorce its holdings in the fast-growing Bakken oil formation in North Dakota from costly international assets, as "little more than financial engineering based on flawed assumptions."

The company said in its letter that Elliott's proposals are shortsighted efforts to run up the value of the stock that ignore long term potential for growth. Elliott didn't immediately respond to requests for comment.

Hess said it expects to increase production by 5% to 8% annually, driven by the Bakken. But it needs cash generated by other assets in the portfolio, which includes operations in the Gulf of Mexico, Malaysia, and Ghana, to fund work in the Bakken and in Ohio's Utica formation. Without that funding, the U.S. shale assets would likely be sold off, the company said.

But Elliott disagreed with Hess's description of its funding model, arguing that the company squandered the income from conventional assets and that it would still have access to credit markets as a more streamlined company.

"Hess's conventional portfolio did not fund the development of the Bakken, rather it funded $4.5 billion of exploration failure and over $4 billion of acquisitions of conventional assets and downstream investments," the fund wrote.

Argus research analyst Phil Weiss said he thinks becoming a pure-play exploration and production company makes sense for Hess.

"When I looked at the Elliott presentation [in January], absent this whole thing about splitting U.S. and international, I thought they made really salient points," Mr. Weiss said.

But questions remain about Hess's cost structure, which Mr. Weiss said is higher than its peers, and how quickly Hess will be able to bring that down. Hess has said its exploration and capital spending will both be lower this year, with more cuts to come in 2014.

Still, Mr. Weiss said, "it feels like they're executing really slowly."

Hess is raising its quarterly common dividend 150% to $1 a share on an annual basis, beginning in the third quarter of this year.

Two slates of board nominees will go head to head at Hess's annual meeting this spring: one group nominated by Hess, and another group nominated by Elliott.

Hess's slate of nominees includes the chief executive of General Electric Co.'s energy business, John Krenicki Jr., and ConocoPhillips's former senior vice president of exploration and production for the Americas, Kevin Meyers. Hess also appointed former Deloitte chief executive, James Quigley, who will stand for election in 2014.

Elliott's nominees to Hess's 14-member board include Rodney Chase, former deputy chief executive at BP Plc, Karl Kurz, former chief operating officer at Anadarko Petroleum Corp., and Harvey Golub, former chief executive officer at American Express Co.

Daniel Gilbert contributed to this article.

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

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Indonesia Extends Pertamina CEO Tenure

JAKARTA - Indonesia's government has extended the tenure of Karen Agustiawan, the president director of state energy company Pertamina, to ensure the continuity of business plans currently being implemented, a minister said Tuesday.

"We extended Karen's period temporarily," State Enterprises Minister Dahlan Iskan told reporters on the sidelines of a meeting. The government may retain her for a full-five year term, he said.

Mr. Iskan said the decision to extend was made last Thursday at a shareholders' meeting.

Ms. Agustiawan's term began in February 2009 and had been scheduled to end on March 5. Tenure at the company's top spot typically lasts five years, but governments in the past have occasionally changed the CEO early.

Achievements during her tenure include a foray into alternative energy such as geothermal and coal-bed methane, and pursuit of assets outside Indonesia.

In a vote of confidence for Pertamina's development under Ms. Agustiawan, investors flocked to the U.S. dollar-denominated bonds the company issued in 2011 and 2012, from which it raised US$3.9 billion.

Pertamina's net profit in 2012 rose 26% to 25.89 trillion rupiah (US$2.7 billion), Ms. Agustiawan said last week.

Output rose to 461,640 barrels of oil equivalent last year from 457,640 barrels.

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

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ROVOP Bolsters Fleet of Subsea Vehicles

Scottish subsea vehicle specialist ROVOP announced Monday that it is bolstering its fleet of remotely-operated vehicles by investing $6 million in two new units.

The latest additions to its fleet have come just weeks after the Aberdeen-based ROVOP announced it had signed $5.3 million of contracts in January, which it said ensure its will have a strong order book in 2013.

ROVOP has bought a new 150 horsepower work class Schilling HD ROV, rated to work in depths of up to 9,850 feet. It also acquired an SAAB Cougar XT ROV system, which the company said it selected for its "powerful yet compact" features.

Visiting the firm Monday, UK Secretary of State for Energy and Climate Change Ed Davey described ROVOP as "a leading specialist in its field".

Davey, who met ROVOP senior management during a trip to Aberdeen to meet energy business leaders, said:

"[ROVOP] is an example of how British companies are playing a pivotal role in ensuring that the UK remains at the global vanguard of the energy industry by capitalising on their expertise and reputation for innovation.”

Supported during its growth phase by both the Scottish and UK governments, ROVOP won the 2012 Business Growth accolade at the Scottish Green Energy Awards in December.

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Global CCS Institute Opens Beijing Office

The Global Carbon Capture and Storage (CCS) Institute Friday opened an office in Beijing, highlighting the important role that China plays in the development of low-emissions technologies.

Founded by the Australian Government, the Global CCS Institute helps carbon-intensive economies accelerate the uptake of CCS technologies, and collects and disseminates expertise to governments and project proponents all over the world.

Minister for Resources and Energy, Martin Ferguson AM MP, said the new office will allow the institute to further enhance its engagement with its members in the China region.

"China accounts for the largest share of projected growth in global energy use, with its demand rising by 60 per cent by 2035," Minister Ferguson said.

"Australia and China rely heavily on coal for power generation, which provides a strong incentive for both countries to work together on the uptake of technologies that reduce carbon emissions.

"China's inherent economies of scale, and world-leading experience in research and development, make it of critical importance to the deployment of clean energy technologies worldwide.

"The lessons learnt and shared by the institute through its work in China will help governments and project proponents from around the world, including Australia, to accelerate the deployment of CCS technologies."

The Global CCS Institute also has regional offices in Europe, North America and Japan.

The Institute has an international Membership base of 368 government, industry, non-government and research organisations from around the world.  The Institute’s Membership covers more than 80 per cent of the world’s CO2 emissions from energy and industrial sources.

In addition to its support for the institute, the Australian Government is investing over $2 billion in a range of measures to assist the development of low-emissions technologies, including the CCS Flagships program.

The International Energy Agency expects fossil fuels to continue to be a significant contributor to meetings the world’s energy needs for the foreseeable future.

As such, the development and deployment of low-emissions technologies, including CCS, is critical to reducing global carbon emissions.

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Ezra to Divest 51% Interest in Lewek Arunothai FPSO

Ezra EOC disclosed late Friday that will sell 51 percent interest in the entities owning and operating the floating production storage and offloading Lewek Arunothai.

Lewek Arunothai has been chartered by Hess Exploration and Production Malaysia for three years, with an option to further extend three years.

Under the agreement, Ezra EOC Friday also entered into a share sale and purchase agreement with Perisai Petroleum Teknologi BHD for the sale of 51 percent of the equity interest in the entities owning and operating the FPSO and the purchase 50 percent of the equity interest in SJR Marine.

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