Norway Reports Lower Hydrocarbon Production for February

Oil and gas production on the Norwegian Continental Shelf declined in February, according to the latest figures from the Norwegian Petroleum Directorate.

Production of oil, natural gas liquids and condensate was down some 88,000 barrels per day at 1.79 million barrels per day during February, while total gas sales for the month fell by 60 billion cubic feet to 310 billion cubic feet.

The NPD explained that the Oseberg, Skarv, Troll and Valhall field had reduced production during February due to a range of technical problems. The Grane field had reduced production during the month because of maintenance work.

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Subsea 7 Says Tendering Levels Remain Strong

International oilfield services firm Subsea 7 said Thursday that levels of tendering remain strong across its markets and that it remains positive about medium and long-term market prospects.

Reporting its fourth quarter results for 2012, Subsea 7 said that despite the strong tender levels delays in project awards and supply chain bottlenecks will temper the firm's rate of progress in 2013. However, it expects both revenue and profit at the EBITDA level to show some progress during the year.

For 2012 Subsea 7 reported a 15-percent increase in its revenue to $6.3 billion, compared with 2011. Adjusted EBITDA for the year came in 13.6-percent greater at $1.1 billion. For 4Q 2012, the firm reported 13.7-percent increase in revenue to $1.6 billion, with EBITDA improving to $270 million (4Q 2011: $227 million).

Subsea 7 warned that its West Africa business will see a period of lower offshore activity in 2013 as operations on SURF (subsea umbilicals, risers and flowlines) contracts awarded in the second half of 2012 and early 2013 are projected to start in 2014.

However, Subsea 7 said that it sees increased tendering in the Gulf of Mexico and strong tendering in both the North Sea and the Norwegian Sea. The firm added that in Brazul demand from Petrobras for flexible pipelay vessels remains strong, while it also recently won its first contract in Mexico – which will require the deployment of its Seven Borealis vessel.

Subsea 7 CEO Jean Cahuzac commented in a statement:

"2012 was another year of significant achievement for Subsea 7. We have delivered strong financial results in line with our expectations. We have built a record backlog, exited non-core businesses and successfully completed the integration process following the Combination in January 2011. Our fleet enhancement program is also on track with the start-up of Seven Borealis in Angola, the ongoing construction of Seven Waves, and the recent order of a new-build diving support vessel for the North Sea.

"Tendering activity increased through the year, in particular in the North Sea, Africa and Brazil, reflecting our clients' ambitious investment plans. We remained disciplined in our bidding approach with a focus on project risk management and profitability, and I am pleased with the quality of our new awards and current level of order in-take."

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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Otto Reports Reserves Increase at Galoc Field

Otto Energy Ltd. provided an update on remaining oil reserve balances at the Galoc oil field in the Philippines as at Jan. 1, 2013.

Otto announces updated attributable Galoc oil field 1P Reserves of 3.4 MMstb and 2P Reserves of 4.3 MMstb.Galoc has Reserves Replacement Ratio of 115 percent on the Proved basis and 98 percent on the Proved & Probable basis.Galoc oil field Reserves are expected to maintain production beyond 2020.Otto expects increased production volume from Galoc Phase II in 2H 2013.Galoc is one of three exploration events planned by Otto in CY2013 along with the Duhat-2 well and SC-55 prospect in the Philippines.

The operator of the Galoc oil field, Galoc Production Company WLL, is a wholly owned subsidiary of Otto. It has commissioned an annual review of remaining oil reserves from RISK, an independent consulting firm.

RISC has reviewed the Galoc oil field reserves in accordance with the SPE, WPC, AAPG and SPEE Petroleum Resource Management System definitions, guidelines and auditing standards.

The reported increases in reserves are attributable to better than expected reservoir performance to date and an extension of field life due to higher prevailing oil prices. The Galoc oil field is expected to remain in production beyond 2020 based on the Galoc Phase I and Phase II well configuration.

"Galoc continues to be a key asset for Otto, delivering valuable cashflow to fund future growth opportunities. I look forward to the delivery of continued reliable production from existing operations and increased production volume from Galoc Phase II in 2H 2013. I am proud of Otto's continued growth as an integrated exploration, development and production company focused on South East Asia and East Africa," Otto's Chief Executive Officer Gregor McNab sai.

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Technip Buys Ingenium

French oilfield services firm Technip announced Wednesday that it has bought Norwegian offshore engineering company Ingenium.

Ingenium designs and develops mechanical and electro-hydraulic tools and equipment for the offshore oil and gas sector, as well as providing engineering services for marine operations, such as the installation of pipes and cables.

With more than 20 engineers employed within its subsea business, Ingenium last year completed the umbilical lay spread on the North Sea Giant for the Goliat project.

Technip Norway Managing Director Odd Strømsnes commented in a company statement:

"Ingenium brings a team with solid experience and engineering capabilities that reinforces Technip's presence in one of the group's key markets. Technip has a long history of working on projects with Ingenium, we are thrilled that they will be joining the group and complementing our competencies to accompany us in taking it further."

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Coast Guard: No Oil Spilled after NOLA Barge Crash; Fire Still Burning

A fire is still burning nearly a full day after a tug pushing a barge crashed into a pipeline in a bayou south of New Orleans Tuesday evening, but the Coast Guard said there is no visible oil in the water.

Earlier Wednesday, the Coast Guard had said a mile-long sheen was visible near the site of the incident, but it now says that was actually ash from the burn of the liquefied gas in the pipeline.

The pipeline fire is now about 30% smaller than it was earlier in the day, the Coast Guard said in a news release.

The barge, which the Coast Guard said is still intact, was carrying 2,215 barrels of oil when the tug crashed into the pipeline in Bayou Perot in Lafourche Parish, about 30 miles south of New Orleans, according to the Coast Guard.

The pipeline, which transports liquefied petroleum gas, is owned by Chevron Corp. and the tug by Settoon Towing LLC, according to the Coast Guard.

A spokesman for Chevron said the company has shut in the pipeline, which connects the Venice, La., gas plant to the pump station in Paradis, La. The company said products are being rerouted to avoid the pipeline, and the company has mobilized emergency crews to help with the response.

The Coast Guard said all crew members were able to exit the tug, though the captain is reported to have suffered second- and third-degree burns.

ES&H, an oil-spill response organization, has deployed thousands of feet of containment boom, a skimmer, and several response vessels, the Coast Guard said. The Coast Guard will fly over the area Wednesday afternoon to assess the damage.

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China to Develop Uzbek Oil Field

China National Petroleum Corporation (CNPC) plans to develop Minbulak oil field in Uzbek region of Namangan, investing $212 million in geological exploration of hydrocarbons next year, CA-News reported with reference to Uzbek government.

As the source noted, "the company has announced a tender for drilling, during the exploration in the license area promising horizons for the development were identified. By the end of 2014 the construction and pilot operation may begin."

In October 2011, CNPC and National oil and gas company Uzbekneftegaz signed an agreement on the basic principles of cooperation on joint development of Minbulak.Under the agreement, the Chinese company will invest $212 million with access to the full capacity of 200 thousand tons of oil per year. The operator of the project is Chinese-Uzbek joint venture Minbulakneft, established in 2008, the source added. Deposit Minbulak was opened in 1992. According to Uzbekneftegaz' data, the recoverable reserves totaled 2 million tons.

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South Sudan Orders Resumption of Crude-Oil Production

LONDON - The government of South Sudan has ordered the resumption of crude-oil production, days after the country and its neighbor, Sudan, came to an agreement over their disputed border.

In an official document, South Sudan's minister of petroleum and mining, Stephen Dhieu Dau, said, "Foreign oil companies and pipeline operators operating in the [Republic of South Sudan] are hereby ordered and instructed...to recommence and re-establish the production of crude oil."

South Sudan ceded from Sudan in July 2011, taking with it most of the region's oil fields. This week's deal will unlock some 350,000 barrels a day that have been shut-in since January 2012 amid a bitter spat with Sudan over oil transit fees and contested oil-rich regions along the poorly marked 1,120-mile border.

A top official in South Sudan's national oil company told Dow Jones on Wednesday that oil exports were expected to reach the international market by May.

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Brazil's QGEP: Oil Royalties Dispute Unlikely to Delay Concession Auctions

RIO DE JANEIRO - Brazilian oil-and-natural gas company QGEP Participacoes said Thursday that an ongoing dispute over the distribution of oil royalties was unlikely to delay a much-anticipated auction of oil and natural-gas-exploration concessions.

The threat of lawsuits by major oil-producing states Rio de Janeiro, Espirito Santo and Sao Paulo to fight the equal distribution of royalties from existing and future oil production between Brazil's 27 states does "raise the risk" of a delay, QGEP Chief Executive Lincoln Guardado said Thursday during a conference call with analysts. The risk, however, has been diminished by recent signs that nonproducing states are willing to negotiate a deal to avoid a protracted fight in the courts.

The deal would reverse changes implemented last week when Brazil's Congress voted to overturn a presidential veto of key portions of new oil-royalties legislation, equally distributing royalties from existing and future oil production between the country's 27 states. Rio, Espirito Santo and Sao Paulo, however, plan to fight the changes by filing lawsuits with Brazil's Supreme Court.

Oil companies are eagerly awaiting Brazil's 11th-round auction of oil and natural-gas-exploration concessions, which is set for May 14-15. The last auction in Brazil was held in December 2008, and oil companies have said they are running out of areas to explore. Given the government's desire to promote the bidding round, even if there is a delay because of a legal tussle the auction, "should still be held in the first half of 2013," Mr. Guardado said.

QGEP has nearly one billion Brazilian reais ($510 million) in cash, giving the company "significant financial flexibility to participate in the auction," Mr. Guardado added.

Not only is QGEP looking toward the auction to improve its portfolio, but the company is also interested in seeing what assets state-run energy giant Petroleo Brasileiro, or Petrobras, makes available in its divestment plan. Petrobras previously said that it would sell off about $15 billion in assets, including some holdings in Brazil.

QGEP, the oil-and-natural-gas exploration arm of local industrial conglomerate Queiroz Galvao, also said it was interested in selling down its 100% stake in the BM-J-2 exploration block. While reducing the company's level of risk "makes business sense," Mr. Guardado said that the Brazilian market is "oversupplied" with opportunities to buy into offshore exploration blocks.

QGEP still doesn't have a timeline for when the company and its partners in the BM-S-8 block will release a volume estimate for the much-anticipated Carcara subsalt discovery, Mr. Guardado said. "We need more data to make an announcement on a range of volumes," he said. The executive, however, said that some estimates of recoverable reserves at about one billion barrels of crude oil and in-place oil volumes of about five billion barrels may be in the range of possibilities.

The estimates were "potential" numbers, but that other estimates also existed and needed to be further evaluated via a well-stem test that is set for the second half of 2013.

Carcara contains an oil column of more than 400 meters, one of the largest discovered in the subsalt region off Brazil's coast where billions of barrels of oil have been discovered under a layer of salt.

Late Wednesday, QGEP said that it recorded a net profit of BRL47.3 million in the fourth quarter of 2012, nearly doubling net profits in the same period the year before. Net profit jumped on higher natural-gas production from the company's Manati field and strong demand for the fuel in Brazil, QGEP said.

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SandRidge Agrees to Either Fire CEO or Give TPG-Axon Control of Board

SandRidge Energy Inc. agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch.

SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital Management LP, which owns 7.3% of its shares.

The company, which is based in Oklahoma City, Okla., said Wednesday that it would review its strategy, costs and certain transactions with entities controlled by relatives of Tom Ward, its chairman and chief executive. The company also cut directors' annual pay to $250,000 from $375,000.

Mr. Ward's prospects of retaining his job appeared to dim. SandRidge said it would decide whether to fire him by the end of June; if he remains, three incumbent directors would resign and TPG-Axon would get another seat on the board, giving the hedge fund, which has repeatedly called for Mr. Ward's ouster, majority representation.

"We believe these actions open a new chapter for SandRidge," its lead independent director, Jeffrey Serota, said in a statement.

A SandRidge spokesman said Mr. Ward had no comment.

In what SandRidge said was a separate development, Matthew Grubb, its president and chief operating officer, said he would resign.

The company's shares jumped sharply late Wednesday afternoon, but ended 4 p.m. EDT trading on the New York Stock Exchange little changed at $5.85, up two cents.

Dinakar Singh, TPG-Axon's founder, said, "We all believe that SandRidge has tremendous asset value, and we expect that the company will relentlessly focus on growing and realizing that value through a particular focus on execution and efficiency."

"Score one for the activists," said Mark Hanson, a Morningstar Inc. analyst.

TPG-Axon and another large shareholder, Mount Kellett Capital Management LP, have questioned SandRidge's transactions with entities controlled by Mr. Ward and his family. SandRidge said Wednesday that a board review of the transactions hadn't found any improper conduct by Mr. Ward, but that it would examine the issue further with the help of a law firm.

The proxy battle is the latest case of a shareholder shaking up the board of an energy-industry company, as activists demand better stock performance and more-generous dividends from laggards. In January, Chesapeake Energy Corp. Chief Executive Aubrey McClendon agreed to step down by April after the company's biggest shareholders took control of the board.

Hess Corp. is tussling with hedge fund Elliott Management Corp., which is opposing the company-backed directors who are up for election with its own slate.

Investor Carl Icahn, who agitated for change at Chesapeake, is now demanding that offshore driller Transocean Ltd. increase its dividend to $4 a share, up from the $2.24 the company plans to pay.

TPG-Axon took aim at SandRidge in November, pointing to poor stock performance and rich executive pay. It also demanded the ouster of Mr. Ward, who founded the company in 2006 after leaving Chesapeake, which he co-founded with Mr. McClendon in 1989.

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