Keppel FELS Delivers Two Jackups Ahead of Schedule

Keppel FELS, a subsidiary of Keppel O&M, revealed Monday that it has delivered two jackup rigs ahead of schedule, bagging it a combined bonus of $810,000 (SDG1.5 million).

Transocean Siam Driller was delivered 22 days ahead of schedule, while the second unit – AOD 1 – was delivered 29 days ahead of schedule. Both of the rigs were handed over to their respective owners at the end of January, a spokesperson with Keppel FELS confirmed.

Customized to meet Transocean's requirements, Siam Driller has been contracted to Chevron to work in offshore Thailand, while AOD 1 has been contracted to Saudi Aramco to work in offshore Saudi Arabia.

Siam Driller is built to the Super B Class Bigfoot design, but enhanced with larger spud cans so that it is suitable for drilling where soft soil is predominant. The rig is installed with offline stand building features in its drilling system package, which allows for simultaneous drilling and the preparation of drill pipes to take place. The Super B Class jackup is an enhanced version of the standard B Class; the former is able to drill to a depth of 35,000 feet.

AOD 1 is built to the standard B Class design. The jackup will be able to operate in water depths of 400 feet, drill to a depth of 30,000 feet and accommodate 150 people.

Meanwhile, Transocean has on order a second Super B Class jackup with Keppel FELS. The jackup, Transocean Andaman, is at present under construction and scheduled to be delivered in March this year.

Commenting on the company's performance, Keppel O&M’s Managing Director, Wong Kok Seng said in a statement: "With some 20 rigs to deliver in 2013, we are working hard to maintain our high standards of delivering on time, within budget and without incidents. Of the rigs to be delivered this year, 15 are built to our KELS B Class family of designs, four to our Super A Class design and one to our proprietary semisubmersible drilling tender design."

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Diamond Offshore 4Q Net Falls 17% Amid Lower Day Rates

Diamond Offshore Drilling Inc.'s fourth-quarter earnings fell 17% as lower day rates dampened improved utilization of ultradeep-water and midwater floaters.

Results topped consensus estimates and the contract driller's board once again declared a special cash dividend of 75 cents a share. The board also reiterated its policy of considering the payment of special cash dividends on a quarterly basis.

Diamond Offshore, which is majority owned by Loews Corp. (L), had seen declining revenue over the past year as the offshore-drilling sector struggles with a recovery from 2010's Deepwater Horizon rig explosion in the Gulf of Mexico. U.S. authorities in February 2011 resumed the approval of deep-water drilling programs, which now face heightened scrutiny.

Diamond Offshore reported a profit of $155.7 million, or $1.12 a share, down from $188.5 million, or $1.36 a share, a year earlier. Revenue climbed 0.3% to $750.5 million.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.10 a share on revenue of $740 million.

Operating margin shrank to 26% from 29.2%.

Day rates for ultradeep-water floaters fell 2.2%, while utilization increased to 89% from 70% a year earlier.

For deep-water floaters, day rates dropped 12% while utilization fell to 85% from 97%.

Meanwhile, midwater floaters saw a 1.1% decline in day rates, with utilization improving to 70% from 60%.

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

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Armour Engages Drilling Contractor for 2013 Campaign

Armour Energy revealed Tuesday that it has entered into a contract with Silver City Drilling for a series of wells in the onshore McArthur, Isa Super and South Nicholson basins.

Under the agreement, Silver City will supply a Schramm TX130XD drill rig, equipment, a drilling crew and a management team to carry out Armour's 2013 exploration program in North Queensland and the Northern Territory.

Armour noted that the contract with Silver City has been designed with set criteria to avoid previous problems encountered during its drilling program last year. A statement posted by Armour Sep. 5, 2012, revealed that the company was forced to terminate its drilling contract "on the basis that the contractor was unable to satisfactorily remedy matters relating to the performance of its obligations."

Armour's exploration program is slated to start in late April, with the drilling of three vertical wells and one lateral well at the company's recently granted ATP 1087 permit. These wells target the target the highly prospective shale gas potential of the Lawn Hill Formation, where exploration by Comalco in 1991 encountered gas shows of up to 390 units from a continuous 410 foot (125 meters) shale gas column.

Armour aims to define up to nine trillion cubic feet of resources and reserves in the Lawn Hill Formation; the company said that, if proven, this is a sufficient resource to supply a six million tonne liquefied natural gas facility for more than 20 years.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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PTTEP Aims to Operate Montara Field at 100% of Capacity by June

PTT Exploration and Production (PTTEP) confirmed Tuesday that it is aiming to start operations in the Montara field offshore Western Australia by end-March this year, with a ramp-up of production to 100 percent of capacity expected by end-June.

"Oil production from the Montara field will be in the range of 20,000 barrels of oil per day (bopd) to 23,000 bopd this year," a spokesperson from PTTEP told Rigzone.

The Montara Development Project (MDP) started with the drilling of production wells in March 2008. The installation of the well head platform jacket and topsides was being completed in August 2009. On Aug. 21, 2009, while drilling completion activities were underway, there was an uncontrolled release of gas, oil, condensate and water vapour from the H1 well.

A relief well successfully intersected the H1 well and briefly stopped the well release before the well fluids caught fire Nov. 1, 2009. The well release was stopped and the fire extinguished Nov. 3, 2009.

PTTEP started on replacement works on the project during end-2011 and early-2012. Three production wells and one gas injection well sited in the Montara field were also tied back and completed during the same period. Field development has since been continuing and has included the arrival on site of the Montara Venture floating production storage and offloading facility.

PTTEP noted Feb.1 that it is targeting a sales volume of 310,000 barrels of oil equivalent (boe) for this year, with the bulk of its increased oil sales to be derived from the start of commercial operations at the Montara field. PTTEP's sales volume for 2012 was at 275,923 barrels of oil equivalent. The spokesperson disclosed that PTTEP has already inked sales contracts based on its projected 2013 production from the Montara field.

The MDP, at its maximum level, can produce 35,000 bopd.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Lundin Expects to Produce up to 38,000 boepd in 2013

Sweden's Lundin Petroleum said Monday that it expects to produce between 33,000 and 38,000 barrels of oil equivalent (boepd) per day during 2013.

Releasing an update on its 2P reserves, Lundin CEO Ashley Heppenstall said that the firm expects to exit 2013 with a production rate of 40,000 boepd after its Brynhild field, offshore Norway, comes on stream later this year.

Lundin's 2P reserves are now 201.5 million barrels of oil equivalent, which is down from the 210.7 million barrels reported for the end of 2011. The firm said its 2P reserves have been positively affected by its Bertam field, offshore Malaysia, which has been added to the figure. Further increases resulted from Lundin's main producing assets – the Alvheim and Volund fields, offshore Norway – as well as the Brynhild field.

However, Lundin pointed out that these additions were offset by reserves reductions predominantly on the Gaupe gas/condensate field offshore Norway and producing assets in the Komi Republic in northern Russia.

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Crude-Oil Futures Fall As Commodities, Equities Retreat

U.S. crude oil futures slipped lower Monday, part of a slump across commodities and equities markets as investors grow skeptical that a month-long rally can continue.

Light, sweet crude for March delivery settled $1.60, or 1.6%, lower at $96.17 a barrel on the New York Mercantile Exchange, handing back all of last week's gains and retreating from a four-month high. Brent crude on the ICE futures exchange fell $1.16 to $115.60 a barrel.

Oil prices followed stock markets lower as the Dow Jones Industrial Average dropped back below 14000, the first triple-digit decline this year. Meanwhile, the dollar rose against the euro, which typically results in falling oil prices as it makes crude more expensive for buyers using other currencies.

After strong rallies in oil, stocks and other raw materials since the start of the year, analysts and traders said the markets were due for a correction as investors locked in recent gains.

"We are just having a flight out of commodities, out of equities," said Matt Smith, an analyst at Summit Energy, who attributed the losses to profit taking by investors. "It was bloodletting across the board."

The euro recently traded at $1.3517, down 0.9% from Friday.

Oil prices have been on a tear to start the year. Even with Monday's losses, the market has gained 4.7% in 2013 a investors cheered economic data that showed a better labor market in the U.S. and renewed confidence among businesses and consumers. The stock market has also rallied, and oil traders often use stocks as an indicator of investors' overall economic outlook.

But as oil prices pushed toward triple digits last week, some market watchers said technical indicators suggested that futures were due to retreat.

"We definitely got a boost from the economic optimism, but all good things come to an end," said Phil Flynn, an energy analyst at Price Futures Group. "We've had an incredible run."

Meanwhile, oil traders are also looking ahead to Chinese economic data due later this week. China will begin releasing January data Friday.

As the world's second-largest oil consumer, the reports on inflation and trade will likely keep traders' attention for any signals about the country's oil demand.

Front-month March reformulated gasoline blendstock, or RBOB, settled 4.21 cents lower at $3.0115 a gallon. March heating oil settled 0.66 cent lower at $3.1540 a gallon.

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

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Ithaca Completes Cook Field Acquisition

North Sea-focused Ithaca Energy announced Tuesday that it has completed the acquisition of an additional 12.885 percent of the Cook field via the purchase of the UK-owned subsidiary of U.S. firm Nobel Energy. Ithaca now holds 41.345 percent of the field.

The completion marks the closure of part of a deal arranged by Ithaca in October to buy two subsidiaries from Noble for $38.5 million. The firms also agreed that Ithaca would gain Noble’s 14-percent interest in the MacCulloch field.

Ithaca expects both acquisitions to increase its net proven and probable reserves by 3.4 million barrels of oil equivalent.

The Cook oil field, operated by Shell, lies in Block 21/20a in the central North Sea. The field has been developed as a single well subsea tie-back to the Shell-operated Anasuria floating production, storage and offloading vessel (FPSO). This serves as a host processing facility to several nearby fields, with oil exported from the FPSO via shuttle tankers and gas via pipeline to shore.

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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