Thursday, July 25, 2013

Cairn Strikes Spanish Point Farm-In Deal

UK independent Cairn Energy announced Tuesday that it is farming into the Spanish Point Area licenses offshore Ireland. The firm has struck a deal with Chrysaor and Sosina to farm into Frontier Exploration Licence 2/04, FEL 4/08 and Licensing Option 11/2, which are all located in Quad 35 in the Porcupine Basin off the west coast of Ireland.

Under the terms of the deal agreed, Cairn will earn a 38-percent stake in the licenses, and assume the operator role, by paying 63.33 percent of future exploration and appraisal costs for up to two wells.

Another partner in the licenses, Providence Resources, issued a statement of its own Tuesday stating that its stakes in the licenses would remain at 32 percent. Chrysaor and Sosina retain 26-percent and four-percent interests in Spanish Point. 

Providence said that the latest rig scheduling information from Cairn and Chrysaor indicates that the partners now plan to drill the appraisal well at Spanish Point in the second quarter of 2014, with a follow-on well to be drilled at another target at a later date. The partners also expect to carry out extensive 3D seismic work on Licensing Option 11/2.

Commenting on the farm-in, Providence Chief Executive Tony O'Reilly said in a statement:

"We are delighted to welcome Cairn into our partnership in the Porcupine Basin. The arrival of a major independent operator like Cairn, with their deep water experience and their technical and financial strengths, provides further validation of the real potential of the Irish offshore and we look forward to working with them in the upcoming appraisal drilling at Spanish Point in 2014 and subsequent drilling and exploration activities within Quad 35."

Oil sector analysts at London-based Liberum Capital noted that the transaction adds Ireland to Cairn's existing Atlantic Margin interests offshore Greenland and Morocco.

"[Cairn's] deep water experience and technical and financial strengths provider further validation of the potential of Providence's acreage and the Irish offshore," a brief research note from Liberum stated.

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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ExxonMobil, Statoil to Begin Developing Julia Oil Field in Gulf of Mexico

Exxon Mobil Corp. and Statoil ASA have agreed to begin jointly developing the Julia oil field, estimated to hold nearly six billion barrels of resources, in the Gulf of Mexico.

The companies each own a 50% stake in the field, located about 200 miles south of New Orleans, La., and which is expected to take about three years to develop.

Exxon said capital cost for the project, which is expected to begin oil production in 2016, is estimated to be more than $4 billion.

The field will initially produce 34,000 barrels of oil a day and includes six wells with subsea tie-backs to the Jack & St. Malo production facility operated by Chevron U.S.A. Inc.

Two weeks ago, Exxon reported its first-quarter profit rose slightly compared with last year but its production of oil and natural gas fell for the seventh consecutive quarter on a year-over-year basis.

Shares of Exxon slid seven cents to $91.08 in after-hours trading. The stock is up 7.9% over the past 12 months.

Last week, Norwegian oil and gas company Statoil posted 58% lower first-quarter net profit on the year, missing expectations amid lower production volumes and lower prices.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Nigeria Oil Bill Could Deter $109B if Investment

LONDON - Landmark legislation intended to reform Nigeria's oil sector is set to introduce harsh fiscal terms that could deter $109 billion worth of new investment in the coming years, according to Nigeria's oil industry trade body.

The bill, currently under discussion in Nigeria's parliament, would make Nigeria one of the harshest investment climates in the world for the oil industry, said Mark Ward, head of Exxon Mobil Corp.'s (XOM) Nigerian unit in a presentation given Tuesday and seen by Dow Jones Newswires.

Mr. Ward was speaking in his capacity as chairman of the Oil Producers' Trade Section of the Lagos Chamber of Commerce.

According to the presentation, the unfavorable fiscal terms would result in Nigeria's oil production hitting a plateau of about 3 million barrels a day around 2016, and then start to decline as $109 billion in planned new investment would no longer be economically feasible.

Members of Nigeria's oil ministry and National Assembly weren't immediately available to comment, however Oil Minister Alison Madueke said in a statement released Tuesday by the country's state oil company that proposed changes to the oil industry are designed to increase exploration and development activities by creating a more competitive environment.

Nigeria has long planned a thorough overhaul of its oil industry, encompassing everything from tax rates to environmental laws to the structure of the country's state-owned oil company, but the bill has stoked controversy and drawn strong criticism from the oil sector.

Uncertainty over the bill's passage has already taken its toll on the industry.

Last year, Nigeria's Department of Petroleum Resources said the country's recorded reserves had fallen to 36.5 billion barrels from 37 billion barrels in 2010 as a result of a slowdown in investment linked to uncertainty over the bill

Nigeria is West Africa's largest oil producer.

Copyright (c) 2013 Dow Jones & Company, Inc.

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All Hands Aboard for Historic Offshore Hiring 'Spree'

All Hands Aboard for Historic Offshore Hiring 'Spree'

Hiring remains brisk amid the worldwide offshore petro-boom with demand centering upon experienced professionals and rig workers alike.

Key organizations expect the number of available jobs in the offshore drilling sector will keep growing — but at very different rates, depending on the field of specialty.

For example, demand for petroleum engineers will grow at 17 percent between 2010 and 2020, or about as fast as average for all other occupations, according to the U.S. Bureau of Labor Statistics (BLS). 

BLS also expects employment of oil and gas workers to increase, but by less than half the pace of petroleum engineers, or only 8 percent, from 2010 to 2020. 

"Because of higher prices for resources, oil and gas companies are more likely to drill in deeper waters and harsher environments than in the past. These complex operations require more workers," said BLS in its "Occupational Handbook for 2012".

"Higher prices will also encourage oil and gas companies to return to existing wells to try new extraction methods, thereby increasing demand for oil and gas workers. Also, changes in policy could expand exploration and drilling for oil and natural gas in currently protected areas, potentially boosting employment.

"However, new production technologies are expected to dampen overall demand for oil and gas workers," BLS added.

Yet skilled tradespeople with a yen to work in offshore petro-jobs might wish to consider avenues other than direct rig worker jobs. For example, BLS projects iron work employment to soar by an astronomical 49 percent between 2010 and 2020. Other good bets are pipefitting trades at 26 percent growth, construction, 25 percent, and steel at 22 percent. Maritime employment is another related field forecast to rise faster than the average for all occupations, at 20 percent over the period.

Yet U.S. government statistics hardly tell the whole story.

"Globally, the oil and gas market is very buoyant and companies are very active — and struggling — to hire competent, experienced resources. This competition for recruiting the right talent is particularly intense in Australasia, Brazil and the U.S., particularly Houston," observed Didier Beyent, corporate human relations director for Netherlands-based SBM Offshore N.V., a floating production, storage and offloading (FPSO) company.

Demand is especially keen in the following disciplines: engineering, regulatory compliance, health, safety and environmental and project planning, Beyent said.

"With many people about to retire, the industry can expect a mandatory and significant hiring spree in the following three years, certainly more than 20,000 people worldwide," Beyent said. "Required qualities from employees are team spirit, positive attitude and energy, tenacity, mobility [and] company spirit. Together we push the limits of what's possible – particularly in the field of technology."

Noble Corp. experiences a small turnover at the lower levels of the job ladder, due to its $35-million investment in training and benefits that encourage employees to stay  with the company, John Breed, director of investor relations and corporate communications at Noble Corp. said. However, Noble faces considerable "poaching at the upper echelons" of the job ladder by recruiters for other companies and faces "many gaps" in specific areas, Breed added.

"With the addition of an ongoing new-build program industry-wide, competition for the best people is nothing short of extraordinary," wrote President and CEO of Noble Corp. David Williams, in the company's recently released 2012 annual report.

During 2012, Noble recruited more than 1,000 new team members, bringing the total employee headcount to more than 7,600. To speed new hiring, Noble uses a new web-based human resources information system and recruitment modules to identify and assess onboard top candidates at a previously unattainable speed, Williams noted. In addition, existing employees generated more than 2,000 referrals last year.

In response to industry-wide attrition concerns, Noble has stepped up efforts in providing opportunities for development and advancement, with related investments rising by more than 27 percent over 2011, setting a new company record. Offshore employee attrition rates have now dropped for three consecutive years, the company reported.

Fifty-three percent of oil and gas industry employees would consider leaving an employer due to a lack of training and development, according to a recently issued BP plc-study conducted by the Society of Petroleum Engineers (SPE). Seventy-five percent of respondents to a related survey said that training and development was important in their choice of role, while 37 percent felt that a lack of training in previous roles has held them back in their career.

"The Aberdeen jobs market is exceptionally busy for us right now, having clearly returned to pre-2011 levels due to the increased levels of drilling and an increase in available rigs," said Mark Charman, CEO of Faststream Recruitment Group & Faststream Executive Search in a recent issue of the company's quarterly magazine, Streamline. "There is no shortage of jobs, just people to place in them. There are more jobs in Aberdeen than people available to fill them."

All Hands Aboard for Historic Offshore Hiring 'Spree'

"The real challenge is finding experienced people across the board. Companies continually ask for candidates with 10-15 years' experience and this is what less-experienced people can be competing against. This is the bracket where we see a lot of movement too, as the same people get poached from company to company, resulting in an upwards spiraling salary," Charman added.

Based on its projection of worldwide offshore rig count growth in 2013, Faststream thinks that 11,000 more jobs may be added between fall 2012 and this time next year – the largest increase in a decade.

Progression up the ranks for newcomers could be slower now in the wake of 2010's Macondo rig blowout in the Gulf of Mexico, said offshore expert Duncan Weir of Weir International Ltd., an offshore consultancy firm in Scotland.

"The greater complexity of rigs building today compared with, say, fifteen years ago, is significant and requires additional people trained, educated and competent in different skill sets," said Weir.

"The number of new additional people required to man the new rigs while maintaining the crewing levels of the existing worldwide fleet is notable and has generally resulted in the time between promotions being reduced with respect to time. This significant human resource challenge is not only applicable to the drilling sector in the oil and gas industry, but is one which needs to be managed, especially when learnings from incidents like Macondo are to be rigorously applied. In short, historical lessons in the drilling business should not only be restricted to equipment issues  but should embrace the need to allow time for people to become confident and competent at what they do before [being] promoted to a higher position.

"The 'great human resource conundrum' is all the more acute for new-start drilling companies, of which there is a small number," Weir continued. "Such companies are generally characterized by the setting up of a new entity with experienced management, a number of new building rigs and setting out to put them to work with competent personnel in charge offshore. HR challenges for such drilling companies are brought even more into focus in the present days. Similar challenges may also be experienced by drilling contractors attracted to diversify from their core segment of the offshore drilling business in, say jackup rigs, to deep water or ultra-deep water rig operations or by drilling contractors who decide to reactivate stacked rigs. It is considered vital to provide rig operations personnel with classroom training, but also with adequate time with hands-on operating experience on the rig prior to promotion."

It's also important that people  in oil and gas offshore drilling take the time and make the effort to pass on their knowledge for the benefit of people starting out in the industry, since they represent the long term future of the business, Weir said. There are a number of professional development companies able to perform part or all of this function.

lndustry consultant Bill Rehm, of Houston, an expert in well pressure, well control, horizontal drilling and underbalanced drilling, formerly with Dresser Industries and Maurer Engineering, agrees that more hands-on experience will be important.

"Along with the great crew change, there has been a major change in attitude towards supervision and training among the operators in the drilling business. The change has been that supervisors and engineers do not [need] to have several years of hands-on experience. This is following the old Harvard Business School lesson that if you can run a Firestone Tire Store, you have the management skills necessary to manage.

"The problem is that the supervisors, engineers [and regulators] do not have the basic knowledge of the field practice. Hence, while hours of safety training are required, few in the training business, and less of the management, understand the actual practice. On the other hand, while safety efforts have been to a large degree effective and will probably continue so, there always remains the problem of major failures due to lack of supervisory and engineering hands-on knowledge."

Barbara Saunders is an award-winning energy, economics and environmental journalist based in Houston. Email Barbara at bxsaun5155@aol.com.

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GE Expands Technology Portfolio to Address Offshore Drilling Challenges

GE continues to expand its technology portfolio to address the challenges of offshore drilling and production and the rigors of deepwater drilling. Several GE business units are showcasing their latest products and services for the offshore sector in Booth 3163 at the 2013 Offshore Technology Conference (OTC), which is expected to draw nearly 90,000 attendees.

"With one of the industry's most comprehensive portfolios of advanced technology solutions and services, GE Oil & Gas is helping to solve complex challenges all around the world," said Dan Heintzelman, president and CEO of GE Oil & Gas. "GE's global scale and deep R&D experience, combined with cross-business technology sharing and innovations from our recent acquisitions uniquely position us to help our customers be more efficient, productive and competitive."

At the conference, GE Oil & Gas introduced the next-generation SeaONYX BOP surface control system and operator interface. The new system is designed to control a deepwater blowout preventer, which is used to rapidly seal an oil well in an emergency. The technology incorporates for the first time GE's Mark Vle hardware and Proficy software tools—the same proven control systems that have been deployed in a wide range of GE power generation applications worldwide, such as on GE's advanced fleet of wind and gas turbines.

GE Oil & Gas also announced the first application of its latest SeaSmart Offshore Package turbine solution with Statoil. It's designed to power offshore oil rigs but with a substantially smaller footprint and reduced weight, which can be critically important when space is at a premium on an offshore platform. When compared to the package launched in 2009, the new technology reduces the total footprint by 24 percent. The total weight drops by 22 percent, driven in part by the use of new GE composite materials.

Other new technologies from GE Oil & Gas at OTC include:

Driving efficiency in the unconventional gas sector: On a drilling site, a manifold lets an operator control flows, acting much like a switchboard. GE's new skid-mounted modular frac manifolds are designed to safely allow simultaneous drilling operations on multiple well pads. The modular design enables fast installation and allows units to be shipped to and from well sites with GE crane trucks—which reduces freight costs by eliminating the need for "wide load" permitting,

Listening for leaks under the sea: GE Oil & Gas' Measurement & Control business is highlighting two innovative remote monitoring and sensing solutions for the subsea sector. The Acoustic Leak Detection System uses passive, acoustic hydrophone technology to detect and locate subsea oil and gas leaks by discriminating the noise of a leak from other sources of sound. The new Subsea Multi-Domain Condition Monitoring combines specially designed electric emission monitoring and acoustic hydrophones to monitor the operating condition of subsea machinery and processes.

Award winning deepwater technologies: The organizers of OTC have given two "Spotlight on New Technology" awards to GE Oil & Gas. The RamTel Plus system and Remotely Operated Vehicle Subsea Display Panel won for providing real-time, electronic measurements of the position of a blowout preventer's ram, which closes a well, and the pressure required to operate the sealing elements. The Deepwater BOP Blind Shear Ram won for its next-generation technology that is able to slice through today's larger diameter well pipes and casings—which also are stronger due to advanced metallurgy—and seal a well in an emergency.

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OTC: The Chinese Driving Force

By 2020, when China celebrates its hundred-year anniversary, the Chinese GDP will double that of 2010, increasing to 13 trillion, said Consul General of the People's Republic of China Xu Erwen, in Houston at the 2013 Offshore Technology Conference (OTC).

Since China adopted the reform and opened up policy in 1978, the Chinese economy has registered an average annual growth rate of nearly 10 percent, tripling the world average at the same period. By 2011, China's GDP reached 7.5 trillion, contributing 20 percent for the increase of the world's economy while keeping China as the second largest economy in the world.

"China remains the world's largest developing country, which is sustainable development," commented Erwen. "China's development will benefit the whole world."

The western country plans to import 10 trillion goods in the next five years, an amount that has increased each year. In 2011, the country's total volume of import and export reached 3.6 trillion.

Furthermore, China accounts for more than 30 percent of the world's energy demand. The country's crude oil and natural gas output has increased slightly year-on-year, reported the National Development and Reform Commission. Crude oil production stood at 51.2 million tons in the first quarter of 2013, up 2.3 percent from the same period last year.

The country refined 109.48 million tons of crude oil during the first quarter of 2013, up 4.4 percent year-on-year, while refined oil products rose by 4.6 percent to 67.34 million tones, the statement said.

Natural gas output also saw an increase, 6.2 percent to 30.6 billion cubic meters, while natural gas imports surged 34.5 percent to 13.2 billion cubic meters.

"The better China grows, the whole world will continue to benefit including the United States," said Erwen. "Of the past couple of years, U.S. and China's relationship has become the most important bilateral relationship in the world because we are seeking common ground," she said. 

By 2035, it is predicted that the country will outpace the United States. China will use 68 percent more energy than the United States by that year and a lot of it will come from coal, accounting for 76 percent of the increase in world coal use.

The country is also set to lead energy growth. In 2008, China and India made up 21 percent of world energy consumption, and in 2035, it will be 31 percent.

"China is committed in building safe, clean energy and will remain committed to producing the energy that today demands," she said.

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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Brazil Seeks to Expand Oil, Gas Investment with 11th Bidding Round

Brazil Seeks to Expand Oil, Gas Investment with 11th Bidding Round

The director of Brazil's Agencia Nacional do Petroleo (ANP) reports significant interest from operators in Brazil's upcoming 11th bidding round as Brazil pursues its plans to double its oil and natural gas production. The bidding round is the first since December 2008 and the first under the nation's new hydrocarbon law.

ANP will offer 189 blocks across 11 Brazilian states. Ten of these states are located in north and northeastern Brazil in the 11th round, the largest in terms of activity since the ninth bidding round, in an effort to expand oil and gas investment from the southeast to other parts of Brazil, ANP director Magda Chambriard told attendees Wednesday at the 2013 Offshore Technology Conference in Houston.

Sixty-four companies were qualified for the round and 44 companies received bid bonds, and 30 oil and gas companies have already been classified as operators. Companies from 21 countries expressed interest in the round, including a number of new entrants to Brazil. Seventeen Brazilian companies have been qualified as operators, as well as seven U.S. companies, five UK-based companies, five Canadian companies and five Japanese companies.

Chambriard, who has worked in the oil and gas industry for over 30 years and took over as ANP director last year, said she has never seen such possibilities as what is being offered this year. Acreage being offered in Brazil's upcoming 11th bidding round bears similarities to oil producing regions in Africa's Equatorial Margin and the Gulf of Mexico, Chambriard commented. Salt movement seen in acreage in the Eastern Margin area is also similar to that found in the Gulf of Mexico.

The 2011 Zaedyus discovery offshore neighboring French Guyana indicates the potential of Equatorial Margin acreage being offered in the 11th round.

Additional oil and gas investment opportunities for onshore conventional and unconventional gas, mature basins and pre-salt will be offered in two separate bidding rounds later this year. Forty-four companies have applied to participate in Brazil's 12th bidding round, to be held Oct. 30-31, which will include acreage in several basins, including the Parnaiba and Pareas, which are estimated to contain in-situ gas volumes of 64 trillion cubic feet (Tcf) and 124 Tcf.

Requirements for the pre-salt bidding round – scheduled for Nov. 28-29 – call for Petroleo Brasileiro S.A. (Petrobras) to continue to serve as operator for concessions due in part to its experience in drilling pre-salt and safety concerns. Concessions will be awarded to the highest bidder. The company will retain a 30 percent interest if it loses in the bidding round, but can raise that stake higher if it wins a bid. Chambriard remains confident that development plans.

ANP may offer the Libra prospect, which has been initially estimated to contain 18 billion barrels of oil, in the upcoming round.

The 11th bidding round will have the same local content law requirements as seen in previous bidding rounds, but will change for the 12th round. However, Chambriard does not believe these new requirements will pose a significant issue for onshore projects.

Chambriard noted that the production sharing contract (PSC) being offered is similar to that seen in other countries. But in Brazil, the PSC is not negotiable, and concession holders must pay a 15 percent royalty. Concession holders will be able to deduct the royalty from oil production.

While unconventional gas acreage is being offered this year, Petrobras CEO Marcia Foster has said that shale gas is not a priority for Petrobras. Chambriard believes this opens the door for opportunities for other Brazilian and international companies. However, Chambriard thinks that oil and gas companies will pursue conventional gas opportunities first.

"It doesn't matter if it's conventional or unconventional, just as long as it's being produced," Chambriard commented.

Chambriard noted that an estimated $400 billion in supplier opportunities to provide goods and services for the oil and gas activity will be available through the next decade.

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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UK Energy Secretary Lauds Oil, Gas Sector

UK Secretary of State for Energy and Climate Change Ed Davey said Thursday that he expects oil and gas to remain a vital part of the country's energy mix for decades.

Speaking at an Oil & Gas UK event in London, Davey said:

"As we move to a low carbon economy, oil and gas will remain a vital part of the UK's energy mix for decades to come – providing energy security, jobs and investment.

"I want to pay tribute to the oil and gas industry. Operating in some of the toughest conditions anywhere in the world it spearheads revolutionary technology in offshore exploration and production.

"Alongside the many opportunities the North Sea offers, there are of course challenges too. I believe that the joint work by government and industry … will pay real dividends and ensure continuing investment and success."

Oil & Gas UK Chief Executive Malcolm Webb added:

"We are delighted that the country's senior energy policy maker has today shone the spotlight on the UK's valuable and high technology oil and gas industry. Delegates heard first hand about the government's commitment to promoting investment in the UK's oil and gas reserves, building on the Treasury's new approach on tax and the launch of the long-term industrial strategy for oil and gas."

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OTC 2013 Sees Second-Highest Attendance in Show History

Experts from the offshore energy industry around the world came together May 6-9 for the 2013 Offshore Technology Conference at Reliant Park in Houston. Attendance at the conference reached a 30-year high of 104,800, the second highest in show history and up 17 percent from last year.

Attendance surpassed the 2012 total of 89,400 and the sold-out exhibition was the largest in show history at 652,185 square feet, up from 641,350 square feet in 2012. The event had 2,728 companies representing 40 countries, including 244 new exhibitors in 2013. International companies made up 39 percent of exhibitors.

"We had a terrific conference with deep and broad technical coverage, supported by excellent panels and executive keynote presentations," said Steve Balint chairman of OTC. "Technology is at the heart of the offshore industry and it was all here on display at OTC 2013."

This year's event featured nine panel sessions, 29 executive keynote presentations at luncheons and breakfasts, and 298 technical papers. Speakers from major IOCs, NOCs, and independent operators presented their views on the current challenges and future directions of the industry.

OTC's Spotlight on New Technology recognized 15 technologies for their innovation in allowing the industry to produce offshore resources.

Governors (Texas, Alabama, Alaska, Mississippi, North Carolina, and South Carolina) from the Outer Continental Shelf Governors Coalition participated on a panel discussion on offshore energy development and the need for improved cooperation between the states and the Federal government.

U.S. Secretary of the Interior Sally Jewell toured the exhibition floor and held a press conference where she discussed her commitment to work with industry leaders to ensure safe and environmentally responsible offshore oil and gas operations.

Energy ministers and national oil company senior executives participated on a panel where they shared their perspectives on how the industry and its partnership models should adjust to address future supply challenges and what role companies and governments should play to shape the energy future.

Norway's Crown Prince Haakon and his wife, the Crown Princess Mette-Marit attended the Annual OTC Dinner on Sunday to celebrate the 40th anniversary of Norway's participation in OTC. The royal couple toured the exhibition floor where more than 60 Norwegian companies were part of Norwegian Pavilion on Monday.

More than 100 Houston-area classroom teachers and 200 students attended the Energy Education Institute where teachers learned how to teach scientific concepts of energy and its importance in a fun and exciting way. Participating students saw firsthand the exciting opportunities the oil and gas industry can offer. 

The Annual OTC Dinner was attended by more than 1,000 industry leaders and conference attendees, and raised $250,000 for the Offshore Energy Center. OTC also presented its 2013 Distinguished Achievement Award to Ken Arnold; OTC Heritage Awards to James Brill and Dendy Sloan; and the Distinguished Achievement Award for Companies, Organizations, or Institutions to Total's Pazflor deep offshore development at the sold-out event on the floor of Reliant Stadium.

OTC 2014 takes place 5-8 May 2014 at Reliant Park.

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Apache 1Q Profit Falls 10% Amid Weak Commodity Prices

Apache 1Q Profit Falls 10% Amid Weak Commodity Prices

Apache Corp. said it would seek to sell $4 billion in assets this year, doubling its divestiture program as the U.S. oil and gas company tries to pay down debt and boost its stock price.

The move by the Houston company follows similar strategies by Chesapeake Energy Corp. and other independent energy producers, which expanded aggressively during the recent energy boom but now are scaling back. Apache, which engaged in acquisitions in the deep-water U.S. Gulf of Mexico and other places, now plans to focus on production in onshore North America, which it thinks will provide the best return, and jettison land that has turned out less profitable than first hoped. Apache declined to say, however, which assets were on its sales list.

"We've spent the past several months going through assets to see which to keep and which would be worth more to others," Chief Executive Steven Farris said during a call with investors. "The asset list we have generated, at today's prices, would exceed $4 billion."

Apache plans to use the first half of the expected proceeds to pay down its debt. The company reported $11.5 billion in long-term debt for the first quarter, up from $7.4 billion a year ago, partly because of the $3 billion debt-financed acquisition of West Texas energy producer Cordilla Energy Partners III LLC in May 2012 and a $2 billion debt offering in November.

The remaining $2 billion will go toward buying back up to 30 million Apache shares, the company said.

Investors who had been worried that Apache was taking a hands-off approach to share price cheered the announcement. Apache shares climbed 4.2% to reach $81.04 in recent trading, the first highest price since February.

"See, management does care," Wells Fargo analyst David Tameron said in a note to clients.

Apache had been said to be trying to sell properties in the U.S. Gulf Coast, The Wall Street Journal reported in April, citing people familiar with the sales plan. Apache drills globally, with operations in Australia, Alaska, Canada, Egypt and offshore England.

Apache wants to focus more of its efforts on onshore drilling in the U.S., which accounted for more than a quarter of its daily oil and gas output of 781,819 barrels in the first three months of this year, the company said.

Apache's share buyback plan helped turn attention away from what had been a weak first quarter. Apache reported Thursday a profit of $698 million, or $1.76 a share, down from $778 million, or $2 a share, a year earlier. Excluding merger-and-acquisition expenses, asset write-downs and other items, adjusted earnings were down at $2.02 from $3. Revenue fell 10% to $4.08 billion.

Output in Egypt declined by 2%, to 365.6 million cubic feet a day. Mr. Farris told investors The production decline, plus worries about civil unrest in the region, "has had some impact on our stock price."

Analysts polled by Thomson Reuters most recently projected earnings of $2.21 on revenue of $4.31 billion.

Production rose 1.6% to 781,819 barrels of oil equivalent a day, driven by a 45% increase in North American onshore liquid hydrocarbons output.

Copyright (c) 2013 Dow Jones & Company, Inc.

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