Petroceltic Plans Nine Wells over 18 Months

Junior oil and gas firm Petroceltic International outlined plans to drill a minimum of nine wells during the next 18 months when it reported its annual results Monday.

Petroceltic said that its drilling campaign would take place across Bulgaria, Egypt, Kurdistan and Romania.

In Bulgaria, where Petroceltic operates three production licenses including the Galata gas field that it brought into production in 2004, the firm said that its latest exploration well – Kamchia – was spud this month and, if successful, could be rapidly developed through existing infrastructure.

The firm said it was continuing to invest in Egypt, in spite of the high degree of political uncertainty in the country, and that the recent award to it of the onshore South Idku and offshore North Thekah blocks was evidence of its commitment to the country.

In the Kurdistan region of Iraq, a joint venture in which Petroceltic is a part plans to begin drilling two high-impact prospects during the second half of 2013. The firm said that a number of prospects within the joint venture's Shakrok and Dinarta block are assessed to contain prospective resources in excess of 500 million barrels.

During 2012, Petroceltic acquired highly-quality 3D seismic data over the Muridava and Est Cobalcescu blocks in Romania as part of the country's 10th Licensing Round. The firm said it has identified the presence of a variety of potentially material exploration leads and prospects on these blocks, and it plans to drill two of these during 2013 as part of a wider Black Sea campaign. A further four wells are scheduled for 2014.

Meanwhile, Petroceltic has resumed planning for an appraisal well in Italy on the Elsa discovery offshore Abruzzo and was recently awarded the Central Adriatic permit B.R272.EL. Onshore, the firm has made steady progress on the permitting for its Carpignano Sesia well in the western Po Valley.

Petroceltic also said that it has booked reserves for its Ain Tsila assets of 304 million barrels of oil equivalent after a Declaration of Commerciality was made in December 2012.

The firm exceed its production target of 28,000 barrels of oil equivalent per day (boepd) during 2012, with the full-year pro-forma rate coming in at 28,400 boepd.

Petroceltic Chairman Robert Adair commented in a statement:

"Petroceltic has fundamentally transformed its business over the past year. The merger with Melrose in October 2012 has created a significant, regionally focussed, full cycle, independent oil and gas company. This combination has produced a company with stable finances and excellent growth prospects. Petroceltic has the technical expertise and ambition to develop further over the next 12 months while the recent announcement of our new $500 million financing facility represents a strong technical and financial endorsement of the quality of our producing assets and longer term growth ambitions of the group.

"All key objectives set out at the end of last year have been met or exceeded. The Declaration of Commerciality, announced in December 2012, is a significant milestone in the development of our Algerian asset, this has allowed us to book reserves for the Ain Tsila asset for the first time. Looking forward, we have an exciting programme of exploration and appraisal planned over the coming 18 months with a minimum of nine wells planned across our portfolio in North Africa, the Black Sea and the Kurdistan Region of Iraq."

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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Tag Oil Commences Drilling Ngapaeruru Well in New Zealand

Tag Oil Ltd. spud an exploration well in its 100-percent owned Petroleum Exploration Permit 38349 in the East Coast Basin of New Zealand. The Ngapaeruru-1 exploration well is targeting the Waipawa black shale and Whangai source rock formations at a depth of 5,906 feet. The well is designed to test the unconventional discovery potential in this portion of the basin.

"Our strategy has always been to build reserves, production infrastructure, and cash flow from our lower risk conventional assets, leveraging these successes to intelligently pursue high-impact opportunities such as the East Coast Basin," said Garth Johnson, Tag Oil's CEO, in a released statement.

"With TAG's continued success in the Taranaki Basin - and our successful commercialization of these discoveries - we continue to deliver on the first part of this plan. Drilling Ngapaeruru-1 is another step in delivering on our business plan: pursuing higher risk, higher impact exploration wells from a very strong financial position."

Tag Oil has conducted extensive geotechnical work on the company's East Coast acreage, including proprietary 2D and 3D seismic that have confirmed that the source rock parameters in the play compare favorably to commercial unconventional plays throughout the world. The company said  528 million proven Taranaki oil reserves and6.9 trillion cubic feet of proven gas reserves have been discovered to date.

The company is using Webster Drilling's Nova No. 1 drilling rig which was mobilized from the company's Sidewinder oil and gas field in the Taranaki Basin.

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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Premier Strikes Oil at Bonneville

UK independent Premier Oil confirmed a strong start to its 2013 exploration program with the announcement Tuesday that both its Bonneville exploration well, 28/9a-6, and its side track well, 28/9a-6z, in the UK North Sea have discovered oil. The Bonneville prospect – in which Premier as operator has a 50-percent interest – is located around 2.5 miles south of the Burgman discovery on the Catcher license in the central North Sea.

The news comes on the back of the firm's previously-announced exploration success at Luno II, offshore Norway, which is now undergoing testing with results expected before the end of the month. 

Meanwhile, in Indonesia, Premier also reported Tuesday that its Matang-1 exploration well on Block A Aceh has discovered gas and will now be tested.

The Bonneville was drilled to a depth of 4,481 feet and encountered a gross oil column of 66 feet in the Tay interval with an estimated net oil pay of 26 feet. The Bonneville well was subsequently sidetracked to the Bonneville East prospect, and this found 34 feet of net oil pay.

Premier said that the discoveries are in "excellent-quality" reservoirs, with average porosities of approximately 30 percent and that initial sampling indicated that the gravity of the oil is around 25 degrees API.

The estimated oil in place from the Bonneville discoveries is approximately 30 million barrels.

In Indonesia, the Matang-1 well, drilled to a depth of 7,893 feet, penetrated a gross gas column of at least 90 feet. The base of the gas column has not been encountered.

Premier CEO Simon Lockett commented in a company statement:

"We are delighted with the strong start to our 2013 exploration drilling programme with the previously announced discovery at Luno II and now the discoveries at Bonneville and Matang. We look forward to the outcome of the test programmes at Luno II and Matang while the Bonneville discoveries will be tied back to our important Catcher area development, which is targeted for project sanction by year-end."

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Saipem 1Q Suffers from Low-Margin Contracts

ROME - Italian oil services company Saipem SpA Tuesday said its first-quarter profit more than halved due to lower margins in its key divisions, but sought to reassure investors by confirming its earnings targets for the year. 

The steep fall in profit, more than what the market had expected, comes as Saipem has lost more than a third of its market value in the last three months after unexpectedly slashing its 2012 earnings guidance in January. 

Saipem reported a first-quarter net profit of 110 million euros ($143 million) from EUR231 million over the same period in 2012. 

Much of the slippage was due to the poor performance of its engineering and construction divisions which suffered from low-margin contracts signed in a highly competitive market. 

Revenue fell 1.4% to EUR3.09 billion and operating profit slipped 46% to EUR202 million. 

A survey of seven analysts polled by Dow Jones Newswires had expected a net profit of EUR124.7 million on revenue of EUR3.30 billion and an operating profit of EUR221.1 million. 

Milan-based Saipem, which is controlled by oil company Eni SpA, has been in the spotlight in recent months after it announced in December that it was being investigated by Italian prosecutors over alleged corruption linked to some Algerian contracts. Saipem denies any wrongdoing. 

Tuesday, the company confirmed an Algerian court has upheld the freezing of about EUR80 million in one of its accounts held in the country. It also said it has been informed of a possible extension of the ongoing investigation by Algerian prosecutors, although it has no details of the probe's status or the people involved. 

Saipem said that a partial reason of the net debt increase in its accounts of EUR567 million to EUR4.85 billion at the end of March from three months earlier is due to the Algerian investigation which is causing significant delays in the approval of progress reports in the country. 

At the start of 2013, Saipem spooked investors by reducing its 2012 earnings guidance because of a gloomy outlook for this year. This came after months of assurances that the company was optimistic about meeting its targets. 

Saipem is to hold a conference call at 1330 GMT to comment on its results. It will present its operational review Wednesday. 

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Seismic Ops Underway at Petromanas' Albania Blocks

Petromanas Energy Inc. announced late Monday that its 2013 seismic program on Blocks 2 and 3 in Albania is underway.

Petromanas said its contractor, Geotec SpA of Italy, has initiated survey work and the drilling of shot holes. Recording commenced April 15.

Under the terms of the company's farm-out agreement with Royal Dutch Shell plc, Petromanas will be carried on the first $20 million spent on the seismic program, including the test line which was shot in 2012 and which is currently being processed. Any costs in excess of that amount will be shared equally by both parties.

Petromanas also announced that it has cased the Shpirag-2 well in Albania to the top of the main objective carbonate reservoir at a depth of 16,942 feet (5,164 meters). The company set casing from the previous casing depth of approximately 15,584 feet (4,750 meters) to put the lower zone of unstable flysch shale behind pipe. The well is currently drilling ahead in the upper carbonate zone at a depth of approximately 17,060 feet (5,200 meters).

"Successfully casing to this point means we can turn our attention to the carbonate target zone, without having to worry about instability higher in the hole," Petromanas CEO Glenn McNamara said.

"We and our partner remain committed to drilling the target carbonate zone to a sufficient depth so we can run logs and gather sufficient information to assess the potential of this prospect."

Petromanas estimates the total costs to drill the well to date are approximately $60 million, or $17 million net to the firm. The firm's management estimates the total costs to drill the well to the target depth of 19,029 feet (5,800 meters) at approximately $67 million gross. The logistics planning and sourcing for the Shpirag-2 completion/testing program is in the final stages and will be mobilized once the well reaches total depth.

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Macondo Hits Halliburton Earnings

Halliburton Co. reported a $13 million loss Monday for continuing operations for first quarter 2013 after its quarterly income of $624 million was offset by a $637 million after-tax charge related to Halliburton raising its reserve for Deepwater Horizon litigation.

Income for first quarter 2013 was also down from income from continuing operations for first quarter 2012 of $826 million. First quarter 2012 income included a $191 million after-tax charge for a reserve also related to Macondo litigation.

The company is in advanced stages of court-facilitated settlement discussions to resolve a substantial portion of private claims related to the Macondo incident, but has not yet reached a settlement.

"We are pursuing these settlement discussions because we believe than an early and reasonably-valued resolution is in the best interests of our shareholders," said Halliburton Chairman, President and CEO Dave Lesar in a statement.

The most recent offer includes stock and cash, with the cash components payable over an extended period of time. Discussions are in an advanced stage, but a settlement has not yet been reached.

Despite the Macondo-related charges, Lesar said in a statement he was pleased with the company's operational results as total company revenue reached a record $7 billion.

Lesar noted that the decline in the North America rig count and pricing headwinds were more than offset by Halliburton's expanding international business. North American sequential revenue declined 1 percent and operating income grew 30 percent, compared to a 3 percent decline in the U.S. rig count.

The company's Sperry Drilling, Multi-Chem and Baroid produce lines achieved record quarterly revenues, with Baroid and Drill Bits setting quarterly operating income records.

Margins improved approximately 400 basis points as the company started to benefit from lower cost guar, increased customer activity, internal cost efficiencies and higher service intensity.

"For these reasons, we expect margins to continue to expand over the course of the year, and we believe we may see modest pricing increases as customers adopt new technology to improve well production," Lesar commented.

International revenues rose 21 percent in first quarter 2013 compared to first quarter 2012. Significant improvement in the Australia, China and Saudi Arabia markets boosted the company's Middle East/Asia revenue and operating income by 25 percent and 51 percent respectively versus the prior year first quarter.

Higher activity levels in Eurasia, Nigeria and Central Africa boosted Halliburton's Europe/Africa/CIS revenue and operating income by 17 percent and 25 percent relative to first quarter 2012. Halliburton's Latin America revenue was up 21 percent from the same quarter in 2012, but operating income was down 11 percent due to severance costs in Argentina, mobilization costs on contracts in Brazil, and a reduction in the rig count on the company's Mexico projects as Halliburton waits on contracts to be retendered.

Halliburton's North America and international operations beat the expectations of analysts at Tudor, Pickering and Holt research.  In an April 22 research note, analysts noted that the larger than expected Macondo charge will draw questions, but Halliburton's operations should ultimately win out over the higher than expected Macondo resolution price tag.

Analysts said it was unclear how much of the offer would be recovered through the approximately $440 million of insurance that was still unused as of year-end 2012. However, Halliburton's liquidity and balance sheet do not pose concerns.

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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Brent Back above $100/Barrel, Rebounding from Selloff

Oil futures settled higher Monday, with Brent crude above $100 a barrel for the first time in a week, as buyers swooped in following last week's deep selloff.

Light, sweet crude for May delivery, which expired at the close of trading, settled 75 cents, or 0.9%, higher at $88.76 a barrel on the New York Mercantile Exchange. The more active June contract settled 92 cents, or 1%, higher at $89.19 a barrel.

Brent crude on the ICE futures exchange settled 74 cents, or 0.7%, higher at $100.39 a barrel. It was the first time the contract settled above the $100 mark since April 15.

Futures advanced as traders sought to cover short positions or pick up contracts at a discount following last week's selloff that was driven largely by concerns about weakening global oil demand.

"We saw crude oil come under a lot of pressure over the last couple of weeks and I think you saw some bargain hunters come in," said Andy Lipow, president of Lipow Oil Associates, a consultancy.

Signs of weak global oil demand have been a drag on oil prices, following demand-growth downgrades from Organization of the Petroleum Exporting Countries, the International Energy Agency and the Energy Information Administration. A number of Wall Street analysts have also cut their outlook on oil prices, citing demand weakness.

Nymex crude futures have sunk 9.4% from a recent peak reached in late January.

Despite ending the day higher, crude futures shed some of their steepest gains of the day. But oil prices will likely need additional cues before falling much further, some analysts said. Mr. Lipow pointed out overall oil demand continues to increase and stimulus measures around the world will place a floor under prices.

"Energy has a bit more of a positive tilt to it" compared with other assets Monday, said Bob Yawger, analyst at Mizuho in New York, pointing to the tepid day in equities. A drop in the U.S. stock market at one point sent oil futures into negative territory on the day, though prices recovered later.

The Dow Jones Industrial Average was recently up 0.2% at 14575.

Analysts have said any output reduction by OPEC could send prices rallying again. Monday, however, the oil minister of the United Arab Emirates suggested the oil market is balanced at current levels, and analysts say the UAE's view is normally aligned with that of Saudi Arabia, the cartel's biggest producer.

Front-month May reformulated gasoline blendstock, or RBOB, settled 0.3 cent, or 0.1%, lower at $2.7694 a gallon. May heating oil settled 2.18 cents, or 0.8%, higher at $2.8094 a gallon.

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Shell Looks Set for Bab Sour-Gas Contract

ABU DHABI - State-run Abu Dhabi National Oil Co., or Adnoc, said that Royal Dutch Shell PLC has "good standing" in its bid to operate the Bab sour-gas field, the firm's director general Abdulla al-Suwaidi said Monday. 

The company has shortlisted Shell and France's Total SA for the estimated $10 billion deal, but is yet to make an official announcement on the winner. 

"Shell has good standing... in a couple of weeks we will pick one of them," Mr. Suwaidi told reporters in Abu Dhabi. 

Industry sources have said that Shell won the bid, after the two firms presented competitive offers. The main difference between the two bids was their approach in handling the massive amounts of sulfur produced at the field. 

The Bab field, once developed, will produce between 500 million cubic feet and 800 million cubic feet of gas per day, but expertise is required to handle the large amounts of sulfur generated from the estimated 15% hydrogen sulfide content of the gas. 

Shell has recommended exporting the sulfur, while Total submitted a proposal to reinject the sulfur back into the reservoir. 

The deal needs to be signed off by the emirate's highest oil authority, the Supreme Petroleum Council – which includes the most senior leaders in the emirate.

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Encana Swings to First Quarter Loss; CEO Search Continues

Encana Corp. said Tuesday it posted a loss in its first quarter, hurt in part by a hedging-related loss and lower natural gas and liquids prices.

The Calgary, Alberta-based company said it lost $431 million in its latest quarter ended March 31, mainly due to a $266 million hedging-related loss and a loss on foreign-exchange. A year earlier, the natural-gas focused company posted a profit of $12 million.

Opearting earnings fell to $179 million, or 24 cents a share, from $240 mllion, or 33 cents. The Thomson Reuters mean estimate was for a profit of 8 cents a share.

Cash flow was also lower, falling to $579 million, or 79 cents a share, from $1.02 billion, or $1.39 a year earlier.

Encana said its oil and natural gas liquids average production jumped 48% to 43,500 barrels a day in its first quarter, while natural-gas production fell 12% to 2.88 billion cubic feet a day. It said its realized gas price dipped 16%, while its average realized liquids price dropped 17%.

"Our focus remains on reducing costs and increasing our profitability," Clayton Woitas, interim president and chief executive, said in a statement. "We expect the cost reduction efforts we've made at the beginning of this year to have an impact on our financial results during the second half of the year."

Encana said the search for its next president and chief executive is progressing and is expected to be complete by the end of June. Mr. Woitas has held the position on an interim basis since long-time president and chief executive Randall Eresman announced his retirement in January.

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Jubilant Spuds Third Kharsang Well

South Asia-focused Jubilant Energy announced Monday that it has spud the third well of its Phase III Extension development drilling campaign in the oil-producing Kharsang Field in Arunachal Pradesh, India. Jubilant plans six wells in total in this drilling campaign.

The well, designated KPL-3E-6, is located in the central part of the field and is aimed at exploiting untapped hydrocarbons in the infill area between wells KSG No.11 and KSG No.25. The well is targeting the H-00 layer, with the G-00 and I-00 layers as secondary objectives.

The well will be drilled to a target depth of approximately 3,350 feet and is expected to take approximately three weeks to drill.

The second development well, spud March 23, was successfully drilled to a target depth of 3,700 feet. Twelve potentially hydrocarbon-bearing sands have been encountered in the well, with a total net pay of some 165 feet. Seven of these wells appear to be oil bearing, said Jubilant.

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