BG, Statoil, ExxonMobil Further Boost East African Gas Resources

LONDON - BG Group PLC Monday said it had completed an appraisal program that further confirmed the natural gas resource and production potential offshore Tanzania, underscoring East Africa's importance as one of the energy industry's hottest new regions.

Separately, Statoil ASA and partner ExxonMobil Corp. announced Monday their third discovery in Block 2 offshore Tanzania.

The mounting volume of gas discoveries off the coast of East Africa has stimulated a wave of interest in the region, culminating in China National Petroleum Corp.'s $4.21 billion acquisition last week of 20% of Eni SpA's giant Mozambique offshore natural gas field.

Anadarko Petroleum Corp. has also attracted interest from several companies including Exxon Mobil, Royal Dutch Shell PLC, India's state-run Oil & Natural Gas Corp. and Oil India Ltd. with the offer of a share of its natural gas discoveries offshore Mozambique, people familiar with the matter told Dow Jones Newswires last week.

BG Group said testing on its Jodari-1 field offshore Tanzania showed better-than-expected reservoir properties, demonstrating that wells could produce at higher rates. BG Group holds a 60% interest in the discoveries offshore Tanzania, with Ophir Energy holding 40%.

"The test results confirm the Jodari reservoir's world-class quality; and the potential for the field to underpin the LNG development," said Nick Cooper, chief executive of U.K.-listed Ophir Energy PLC. Mr. Cooper was referring to a liquefied natural gas terminal that could be part of gas development in Tanzania.

BG Group is in the process of selecting a site for an onshore LNG terminal. The capacity of the terminal will be determined by further exploration and appraisal results across the company's three offshore blocks. BG estimates the total resource in Tanzania at nearly 10 trillion cubic feet.

Statoil said its latest Tanzania find brings recoverable gas volumes now discovered in the country to between 10 trillion and 13 trillion cubic feet. "[This] brings further robustness to a future decision on a potential LNG project", said Statoil's executive vice president for Exploration, Tim Dodson.

Statoil has a 65% stake in the discoveries, with Exxon Mobil holding the remaining 35%.

Eni and Anadarko have also said they are studying plans to build a LNG plant in Mozambique. Analysts say the region is well-placed to serve growing energy demand in Asian markets.

Kjetil Malkenes Hovland in Oslo contributed to this story.

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Production Comes On Stream at Everest East

BG Group announced Monday first production from its Everest East expansion project in the UK North Sea. Everest East is the second of seven projects BG plans to bring on stream in 2013, the company confirmed.

The Everest East expansion comprises two sub-sea wells tied back to the North Everest platform and brownfield modifications to the existing production system. BG expects that the project will provide initial peak production of more than 10,000 barrels of oil equivalent (boe) per day with total gross reserves of 20.6 million boe.

BG Group Chief Executive Chris Finlayson commented in a company statement:

"With first production from the Everest East expansion in the UK North Sea, following the second floating production, storage and offloading (FPSO) vessel coming on stream offshore Brazil in January and the recent restart of Elgin/Franklin, we have now achieved the key production milestones we set for the first quarter of 2013."

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BNK Inks PSA with XTO for Oklahoma Assets

BNK Petroleum Inc. announced that its indirect wholly owned subsidiary BNK Petroleum Inc. (BNK US) has entered into a Purchase and Sale Agreement with XTO Energy Inc., a subsidiary of Exxon Mobil Corporation, for the sale by BNK US of its Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations, for $147.5 million, subject to customary closing adjustments.

Subject to completion of customary conditions, the transaction is expected to close in late April. If the transaction is completed, the proceeds of the sale are expected to be used to accelerate the drilling of Caney wells in the Tishomingo field, the Company's ongoing exploration efforts in Europe and for repayment of the Company's credit facility.

Wolf Regener BNK's President and CEO, stated: "We are very pleased to announce this transaction, which is the culmination of the Company's efforts to maximize the value of our Woodford shale gas assets. The transaction is also structured to preserve our rights in the relatively undeveloped Caney and Upper Sycamore formations in the Tishomingo Field. We believe these intervals represent a promising opportunity to develop new oil reserves and production, in an area in which we have a successful operating history. If completed, this transaction will provide the Company with sufficient funds to accelerate our planned Caney development and flexibility to pursue our exciting European projects on our own or with partners."

Macquarie Capital Markets Canada Ltd. is the lead financial advisor to the Company in connection with this transaction, and has delivered an opinion to the Company's board of directors that, as of the date hereof and based upon and subject to the assumptions, limitations and qualifications set forth in the opinion, the consideration to be received by the Company pursuant to the transaction is fair, from a financial point of view, to the Company.

A drilling rig is currently mobilizing to the next planned Caney well, the Barnes 6-3H well. Once it is rigged up, drilling is expected to begin immediately. The drilling rig has been contracted for two wells with the option for two additional wells.

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Production Comes On Stream at Everest East

BG Group announced Monday first production from its Everest East expansion project in the UK North Sea. Everest East is the second of seven projects BG plans to bring on stream in 2013, the company confirmed.

The Everest East expansion comprises two sub-sea wells tied back to the North Everest platform and brownfield modifications to the existing production system. BG expects that the project will provide initial peak production of more than 10,000 barrels of oil equivalent (boe) per day with total gross reserves of 20.6 million boe.

BG Group Chief Executive Chris Finlayson commented in a company statement:

"With first production from the Everest East expansion in the UK North Sea, following the second floating production, storage and offloading (FPSO) vessel coming on stream offshore Brazil in January and the recent restart of Elgin/Franklin, we have now achieved the key production milestones we set for the first quarter of 2013."

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Brenham Oil, Gas Adds Working Interest in Texas Field

Brenham Oil & Gas Corp., a majority owned subsidiary of American International Industries, Inc., (AMIN) (American), announced it acquired a 10 percent working interest in the Pierce Junction Oil & Gas Field in Houston, Texas.

"The Pierce Junction field is one of the oldest and most prolific fields in the Houston area. This field has been producing oil & gas since 1921 and has produced over 104 million barrels of oil since that time mostly from Miocene, Frio, and Vicksburg reservoirs," Bryant Mook, Brenham's recently elected president, stated.

Brenham's asset acquisition includes eight producing wells with an additional seven wells scheduled for mechanical work-over that should add more oil reserves to Brenham. Additional offsetting acreage can be developed by Brenham on a well by well basis to produce additional oil reserves from several producing horizons.

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TAP, Nabucco Vie In Final Stage To Pipe Caspian Gas to Europe

ATHENS - The two pipeline projects vying to transport Azerbaijan's natural gas to Europe are gearing up for the last stage of a long battle, promoting their plans just months before a decision that will have major consequences for the region's energy policy.

The Trans Adriatic Pipeline AG, or TAP, and rival Austria-based consortium Nabucco Gas Pipeline International GmbH have competed for years to be selected by the companies developing the giant offshore Shah Deniz II gas field in Azerbaijan to carry that gas to the European Union. The winning pipeline would help to diversify Europe's supplies away from dependence on Russian gas.

Kjetil Tungland, TAP's managing director, is increasingly optimistic that his EUR 2.5 billion pipeline will get the nod when the Shah Deniz consortium decides on the winning bidder in just over two months.

TAP is no longer the underdog to Nabucco, Mr. Tungland said. A fresh commitment of support this month by countries most directly involved in TAP--Greece, Italy and Albania--and a change in policy stance by the European Commission have boosted TAP's prospects, he said.

"I think the odds are highly in our favor because we were more in front technically and commercially all the time, but politically we had to catch up," Mr. Tungland said.

Final submissions for the pipeline tender--after years of delay--are now set for the end of March. The Shah Deniz consortium--in which BP PLC, Norwegian state oil company Statoil ASA and Azerbaijan's Socar are the main players--is expected to reach an initial decision in June and a final deal by October. Socar officials declined to comment on whether they were leaning toward one project or the other.

Nabucco, long seen as the favorite, has recently faced challenges. German utility RWE AG has quit the project, while the consortium was forced to almost halve the capacity of its project and reduce the route to 1,300 kilometers from nearly 4,000 kilometers. The newly dubbed Nabucco West project would now run from Turkey's western border to Baumgarten, Austria.

The European Commission had for years thrown its weight behind Nabucco, a consortium of European Union companies including Austria's OMV Gas and Power GmbH, Hungary's MOL Nyrt, Bulgaria's state-owned energy holding company and Romanian state-run pipeline operator Transgaz Medias. Now, however, the Commission says it has no preference for either project.

Nabucco still believes it has a good chance of winning the competition. "We offer the best comprehensive package," said Christian Dolezal, spokesman for the Nabucco consortium. "Nabucco countries have all concluded legislation steps to make our project the priority project" and "there is a lot of willingness in these countries to politically support us," he said.

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New World Gets Govt Nod for Working Interest in Danish Licenses

New World Oil and Gas announced Monday that the Danish Energy Authority has formally approved the assignment to the company of a 25-percent working interest in Licence 1/08 of the Danica Resources Project in Denmark.

Licence 1/08 is located in the productive Western Baltic region of the South Permian Basin in Southern Denmark, totaling 2,479 square miles, according to New World.

The assignment of 25-percent working interest to New World is in accordance with the previous Farm-Out Agreement announced April 17, 2012 and follows the completion of Phase 1 of a 2D seismic acquisition program consisting of 64.26 square miles, and an additional 14.9 square miles 2D seismic acquisition program on two re-confirmed leads.

After this seismic acquisition program, New World estimates that the drill-ready Als prospect has an estimated P50 un-risked prospective recoverable resources of 1.4 trillion cubic feet and 97 million barrels of oil.

Additionally, the firm said four previously-identified Zechstein leads were confirmed on Falster and Lolland Islands from the new seismic data on which a 23.9-mile 2D acquisition program has recently been completed. Results from this 2-D program targeting these large leads which total 13,485 acres will be released in 2Q 2013.

New World CEO William Kelleher commented in a statement:

"We are delighted to have now earned into a 25 percent working interest in both of our Danish projects. In tandem with increasing our interests in these three exciting licenses, we are delivering on our strategy to systematically identify, delineate and de-risk multiple prospects to the point of drilling... With results expected in Q2 2013 there remains tremendous scope to materially add to the P50 prospective resources on the license, particularly bearing in mind the size of Als' volumetrics. I look forward to updating the market on our progress."

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TAP, Nabucco Vie In Final Stage To Pipe Caspian Gas to Europe

ATHENS - The two pipeline projects vying to transport Azerbaijan's natural gas to Europe are gearing up for the last stage of a long battle, promoting their plans just months before a decision that will have major consequences for the region's energy policy.

The Trans Adriatic Pipeline AG, or TAP, and rival Austria-based consortium Nabucco Gas Pipeline International GmbH have competed for years to be selected by the companies developing the giant offshore Shah Deniz II gas field in Azerbaijan to carry that gas to the European Union. The winning pipeline would help to diversify Europe's supplies away from dependence on Russian gas.

Kjetil Tungland, TAP's managing director, is increasingly optimistic that his EUR 2.5 billion pipeline will get the nod when the Shah Deniz consortium decides on the winning bidder in just over two months.

TAP is no longer the underdog to Nabucco, Mr. Tungland said. A fresh commitment of support this month by countries most directly involved in TAP--Greece, Italy and Albania--and a change in policy stance by the European Commission have boosted TAP's prospects, he said.

"I think the odds are highly in our favor because we were more in front technically and commercially all the time, but politically we had to catch up," Mr. Tungland said.

Final submissions for the pipeline tender--after years of delay--are now set for the end of March. The Shah Deniz consortium--in which BP PLC, Norwegian state oil company Statoil ASA and Azerbaijan's Socar are the main players--is expected to reach an initial decision in June and a final deal by October. Socar officials declined to comment on whether they were leaning toward one project or the other.

Nabucco, long seen as the favorite, has recently faced challenges. German utility RWE AG has quit the project, while the consortium was forced to almost halve the capacity of its project and reduce the route to 1,300 kilometers from nearly 4,000 kilometers. The newly dubbed Nabucco West project would now run from Turkey's western border to Baumgarten, Austria.

The European Commission had for years thrown its weight behind Nabucco, a consortium of European Union companies including Austria's OMV Gas and Power GmbH, Hungary's MOL Nyrt, Bulgaria's state-owned energy holding company and Romanian state-run pipeline operator Transgaz Medias. Now, however, the Commission says it has no preference for either project.

Nabucco still believes it has a good chance of winning the competition. "We offer the best comprehensive package," said Christian Dolezal, spokesman for the Nabucco consortium. "Nabucco countries have all concluded legislation steps to make our project the priority project" and "there is a lot of willingness in these countries to politically support us," he said.

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Statoil Confirms Extension to Johan Sverdrup Field

Norway's Statoil reported Tuesday that it has confirmed that the Johan Sverdrup field extends into production license 502 after completing appraisal well 16/15-3.

The well was drilled into production license 502, which neighbors PL265 and PL501 where the Johan Sverdrup discovery resides. Statoil said that well 16/15-3 proved a 44-foot oil column in a high-quality Jurassic reservoir and confirmed communication with the rest of the Johan Sverdrup field, which means additional upside to the field's resources.

Øivind Reinertsen, Statoil's senior vice president for Johan Sverdrup field development, commented in a company statement:

"Results of well 16/5-3 will be integrated in the on-going development work for the Johan Sverdrup field. The PL502 volumes will be included in the total resource estimate for Johan Sverdrup which Statoil as pre-unit operator will communicate by the end of 2013."

Meanwhile, Statoil believes that the results of the well indicate there may be further upside potential in the area. The company's vice president for exploration in Norway, Gro Haatvedt, said that new subsurface data indicates further upside potential west of the current outline of the Johan Sverdrup field.

"Later this year Statoil will drill an exploration well in the Cliffhanger prospect in PL265. This will be an important step to clarify and capture the full potential in the Johan Sverdrup area," added Haatvedt.

Statoil is the operator of PL502, with a stake of 44.4 percent. Petoro and Det norske oljeselskap hold interests of 33.3 percent and 22.2 percent respectively.

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Crude-Oil Futures Settle Up 29 Cents at $93.74/Barrel

Crude-oil futures prices recovered Monday from early concerns over Europe's economic outlook, with the U.S. benchmark inching up to a fresh four-week high.

Oil pries had joined in an early, broad selloff sparked by worries over the potential for new fiscal woes in Europe as Cyprus weighed a controversial bailout plan. As part of a European Union and International Monetary Fund rescue package for its banks, Cyprus is considering a one-time tax levy on accounts held in its banks. Traders said that if such a tax becomes standard in other rescue packages, investors will flee, churning up concerns of a contagion effect in European economics battling sovereign debt crises.

The knock-on fears sent the euro to its lowest level of the year against the dollar, giving investors two strong reasons to flee oil futures. Analysts said fresh trouble in European economies would further cut weak oil demand, while a stronger dollar means crude-oil futures become pricier for investors using some foreign currencies.

An early drop to $91.76 a barrel in U.S. prices appeared to signal that market bulls were losing the clout that pushed prices up near $94 last week, despite rising crude-oil stockpiles and weak refiner demand during seasonal maintenance.

But as the euro steadied, "the fears evaporated and we started to stabilize. All the worries were a little overdone," said Gene McGillian, broker and analyst at Tradition Energy.

Light, sweet crude oil for April delivery on the New York Mercantile Exchange settled 29 cents higher, at $93.74 a barrel, the highest level since Feb. 20.

ICE North Sea crude oil for May ended modestly lower, at $109.51 a barrel, down 31 cents. It traded to an early low of $107.78 a barrel.

Brent has lost ground against the U.S. benchmark in recent days as North Sea crude oil supplies are returning to normal levels.

Michael Wittner, analyst at Societe Generale, said North Sea oil flows in April are expected to rise by 265,000 barrels a day from March, as pipeline and production snags have been resolved. Separately, Statoil ASA said output from the Oseberg field in the Norwegian North Sea was returning to normal after a gas leak and power cut last week. Oseberg is expected to supply 3.6 million barrels of crude in April.

Analysts also noted that crude-oil inventories at Cushing, Okla., declined in the week ended March 8, suggesting that the oil was finding its way down to the key U.S. refinery hub, most likely by increased rail shipments. Greater flows from the midcontinent to the Gulf means U.S. refiners need less imported crude, putting pressure on Brent, the global benchmark.

Early indications from four analysts show U.S. weekly oil data are expected to show crude-oil stockpiles rose last week while refiners kept operations little changed at low levels. According to the survey by Dow Jones Newswires, U.S. crude-oil inventories rose by 1.1 million barrels in the week ended Friday, adding to already high stocks.

In the week ended March 8, the combination of refiner demand and higher supply left inventories at a level sufficient to cover 27.4 days of refiner needs, the highest level since 1992, and compared with the five-year average of less than 24 days of cover.

The closely watched government survey from the Energy Information Administration is due to be released at 10:30 a.m. EDT Wednesday, while the American Petroleum Institute, an industry group, releases its inventory report at 4:30 p.m. EST Tuesday.

Analysts also expect the data to show gasoline stocks dropped by 2.1 million barrels and distillate stocks (heating oil and diesel fuel) fell by 1.3 million barrels.

Refiners are expected to inch operations higher by 0.1 percentage point from the EIA's level of 81% of capacity last week, which was the lowest since Feb. 25, 2011, amid seasonal maintenance work at plants.

April-delivery reformulated gasoline futures settled 3.49 cents, or 1.1%, lower at $3.1289 a gallon, the lowest level since March 7. April heating oil settled 1.23 cents lower at $2.9267 a gallon.

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