Ferguson Group Extends Middle East Presence

The Ferguson Group, specialists in the rental of equipment to the offshore energy industry, has announced the launch of its new Ferguson Middle East Abu Dhabi division.

Ferguson Middle East LLC, based in Abu Dhabi, will support the Ferguson Group's increasing presence in the Middle East that saw the opening of its Dubai office in August 2012.

The new Abu Dhabi division will allow Ferguson Middle East to offer its range of offshore containers, refrigeration containers and its accommodation and, workspace modules to a wider market and range of companies operating within Middle East.

Mike Melville, commercial director for the Ferguson Group said: "The launch of our new office in Dubai last year was an extremely positive move for the company. Having this new office in Abu Dhabi is a great start to 2013 for Ferguson Middle East.

"I am excited about the future plans for our Middle East offices, as the company is able to expand and better support the offshore energy sector in the region."

The new company will be based in the Al Hilal Building in Abu Dhabi. The new division will offer the company's full range of products that include offshore containers, tanks, baskets, refrigeration/chiller containers, accommodation solutions and workspace modules.

Steven Ferguson, Chairman and CEO of the Ferguson Group, said: "We are delighted to launch this second company in UAE, servicing our clients in the Middle East. Our presence in these two key locations demonstrates our commitment to the region, acknowledging how important this market is to the Ferguson Group and recognizing the growing client demand in the region.

"Internationalization is a key aspect of our business and allows us to provide our high quality products across the globe, teamed with short lead times and first class, on the ground support."

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Musings: Hydraulic Fracturing Issue Encounters Protests And Movies

On Friday, January 11, a 30-day public comment period in New York State on the issue of hydraulic fracturing ended, but not without a certain amount of high-drama. The wife and son of the late Beatles star John Lennon, Yoko Ono and Sean Lennon, led a group of protestors on a visit to the Albany office of New York Governor Andrew Cuomo (Dem) and the Department of Environmental Conservation. At the latter stop, the duo, who founded Artists Against Fracking last July, delivered 50 boxes reportedly containing 204,000 comments about hydraulic fracturing.

Around the same time, Ms. Ono had an op-ed published in the Albany Times Union in which she wrote, "My husband, John Lennon, and I bought a beautiful farm in rural New York more than 30 years ago. Like the rest of our state, this peaceful farming community is threatened by fracking for gas. She went on to say, “Governor Cuomo, please don’t frack New York. Don’t allow our beautiful landscapes to be ruined, or our precious and famous clean water to be dirtied."

Sean Lennon has made the point that his father’s home, which was purchased for its beauty and serenity, would be threatened by the possible construction of a pipeline to haul natural gas from Northeastern Pennsylvania (the Marcellus formation) to New York City and New England. While he is not stating that the property would be the site of drilling and fracturing activity, but the pipeline would be needed if fracturing was allowed to occur in the region near their home.

Gov. Cuomo has been wrestling with the fracking issue for over a year while watching upstate New York’s economy languish due to fallout from the financial crisis and resulting recession. In his recent State of the State message, Gov. Cuomo made the following point about the problems of that region. "We need an additional focus on upstate New York. There have been decades of decline in upstate New York. When you look at the job growth in upstate New York, frankly, it is sad and troubling."

The Governor has been reminded of the economic benefits of shale development from a leading Democrat, former Pennsylvania Governor Ed Rendell (Dem), who allowed development of the Marcellus Shale in his state, which has contributed significantly to that state’s economic recovery. The economic benefits of shale’s development were recently pointed out by Rachael Colley and Joe Massaro, field directors with Energy in Depth, a public outreach campaign funded by the Independent Petroleum Association of America, who said, "The ‘state’ of New York State is grim. Natural-gas development could be the light at the end of the gloomy tunnel."

Gov. Cuomo says he is working on an overall energy development plan for the state and suggests that his silence on the issue and reluctance to release an environmental study on the health impacts from hydraulic fracturing should not be taken as a sign that he has reached a decision. He did, however, recently hire Richard L. Kauffman, a former adviser to U.S. Energy Secretary Steven Chu, to serve as New York’s new energy secretary. Some are interpreting the move as an indication that Gov. Cuomo is prepared to take dramatic steps on energy policy.

The Governor should recognize that a decision to support fracturing, even if restricted to just those few New York State counties that border the Pennsylvania shale development activity, will not be popular with many citizens such as those following Ms. Ono and Mr. Lennon. Ms. Ono told supporters and Rolling Stone magazine that "If they do this, there will be a class action, and the class action is going to hit everybody who is doing this. It’s going to go on and on and on. Do we want that?"

We’re not sure whether Gov. Cuomo was holding off his decision in anticipation that Matt Damon’s movie, Promised Land, would bring some clarity to the fracking issue. The much anticipated movie, which released a trailer last fall to tease potential viewers about the message of the film, arrived with a whimper – and not many positive reviews. We’ll leave the acting reviews to Hollywood-types, but having seen the movie during its second weekend of release, we suggest you save your $8 ticket money.

The movie is cute and delivers a twist at the end, which we interpreted as an attempt by Mr. Damon, who both co-authored the script and was the lead actor, to garner sympathy from the anti-fracking people in the audience. It is presented as a morality play with Mr. Damon as the "bad" guy who eventually becomes a "good guy only to suffer at the hands of both the owners of the land whose mineral rights he is trying to lease and his bosses at Global, the $9-billion-a-year natural gas company. The discussions about hydraulic fracturing are incomplete and largely inaccurate, so one should not hold out hope that the topic would be advanced by the movie.

In a movie of this type, you would expect some interesting scenes, characters and dialogue. There were a few, but often we wound up shaking our head at the illogical events and explanations or outright mischaracterization of facts. However, we found one scene early in the movie quite funny. As Mr. Damon and Frances McDormand, playing his assistant, were driving through the Pennsylvania country-side on the way to visit a local farmer, he comments on how the landscape looks like Kentucky. We laughed because when we first saw the scenery, my wife leaned over to me and said “it looks like Kentucky,” based on the farmland of the Whiskey Trail that we drove last year on our way to Rhode Island. Having Mr. Damon make the same claim literally seconds after my wife did was very funny.

The new year will certainly not lessen the focus on shale development and the role played by hydraulic fracturing. President Barack Obama’s emphasis on climate change and environmental stewardship in his inaugural address means the federal government will be energized to resolve the science of fracking and set forth a path to a cleaner and cooler environment. For a president focused on his legacy, this mission offers many opportunities to legislate, if not to govern through executive order, Mr. Obama’s preferred way to deal with an uncooperative Congress. Mr. Obama certainly hopes the message of his second inauguration day will be looked back upon much as how Walter Cronkite used to close his 1950s "You Are There" history shows: "What sort of day was it? A day like all days, filled with those events that alter and illuminate our times … and you were there."

G. Allen Brooks works as the Managing Director at PPHB LP. Reprinted with permission of PPHB.

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Cosco Wins Platform Supply Vessel Contract

Singapore-listed Cosco Corporation disclosed late Monday that its subsidiary – Cosco (Guangdong) Shipyard – has inked a contract with a European ship owner for the construction of platform supply vessels (PSVs).

The contract takes effect Jan.28, and is valued at $54 million.

Under the agreement, which comes with an option for two additional vessels, Cosco is obliged to deliver both of the PSVs by 1Q 2015.

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U.S. M&A Activity Hits 10-Year High in 4Q2012

Merger and acquisition (M&A) activity in the U.S. oil and gas industry hit a 10-year high during the fourth quarter of 2012 with 75 deals, according to PwC US. A number of factors drove this activity, including private equity (PE) interest, foreign buyers, shale plays, and companies looking to get deals done before the end of the year with the looming fiscal cliff and proposed tax changes. In fact, that flurry of fourth quarter activity pushed overall deal volume in 2012 to a ten-year high at 204 transactions (for deals valued at over $50 million), representing $146.2 billion – the second highest total deal value in 10 years.

During the final three months of 2012, total deal value reached $56.2 billion, marking the second highest level seen in 10 years (behind the $79.1 billion total deal value seen during the fourth quarter of 2011).

"M&A activity in the U.S. oil and gas sector was extremely robust in 2012, with the vast majority of that activity happening in the final three months of the year as many deals got pulled forward due to the uncertainty surrounding the fiscal cliff," said Rick Roberge, principal in PwC’s energy M&A practice. "This past year was a watershed moment for the industry, with private equity involvement reaching an all-time high, shale deal volume at a two-year high during the fourth quarter, and a jump in asset transactions as companies have shifted their focus to adding more profitable liquid rich shale plays to their portfolios.

"We expect to see a slight pause in M&A during the first part of 2013 as companies focus on the recent wave of deals announced, but believe 2013 will be another banner year for deals as the U.S. oil and gas industry is ripe for continued consolidation. In fact, our recent PwC Global CEO Survey found that energy CEOs are among the most confident on growth prospects for this year than any other industry."

Private equity deal activity in the oil and gas industry marked an all-time high in 2012 with 34 transactions (which represented $28.4 billion). In the fourth quarter of 2012, there were 11 financial sponsor-backed deals worth $6.9 billion, a slight drop from the 13 PE deals in the fourth quarter of 2011 that totaled $13.6 billion. Additionally, there were 170 strategic deals in all of 2012 that contributed $117.8 billion, compared to 163 strategic deals in 2011 with a total deal value of $136.5 billion. During the fourth quarter of 2012, there were 64 strategic deals, a 64 percent increase from the 39 deals during the same time period last year. Total deal value for strategics was $49.2 billion during the last three months of 2012, a decline from the $65.5 billion in the fourth quarter of 2011.

PwC noted that during 2012, master limited partnerships (MLPs) were involved in 42 transactions, representing more than 20 percent of total 2012 deal activity, continuing the trend of increased MLP involvement over the past two years (MLPs represented 15.6 percent of total deal activity in 2010 and 18.4 percent in 2011).

For deals valued at over $50 million, upstream deals accounted for 53 percent of activity in the fourth quarter of 2012 with 40 transactions, representing $38.0 billion, or 68 percent of total fourth quarter deal value. The number of oil deals within the upstream sector totaled 22, a significant difference compared to five gas deals in the quarter. There were 21 midstream deals that contributed $10.9 billion. Nine downstream deals during the fourth quarter of 2012 added $5.9 billion, while oilfield services contributed five deals worth $1.4 billion.

Asset transactions dominated total M&A deal volume during the fourth quarter of 2012 with 56 deals, a continuation of a trend that PwC noted during the third quarter of 2012, marking the highest volume of asset transactions in at least ten years. Total deal value for those asset transactions represented $27.2 billion, the second highest value in ten years. For all of 2012, there were 158 asset deals worth $89.3 billion.

Also marking a ten-year high, there were 19 corporate transactions (with values greater than $50 million). Those deals had a total deal value of $29.0 billion during the fourth quarter of 2012. For full year 2012, there were 46 corporate transactions that contributed $56.9 billion.

According to PwC, there were 27 deals with values greater than $50 million related to shale plays in the fourth quarter of 2012, totaling $16.3 billion, an increase from the 22 shale-related deals during the fourth quarter of 2011, although total deal value was flat. For all of 2012, there were 77 shale deals that contributed $51.7 billion, an increase of two deals when compared to full year 2011, but a drop from the $72.7 billion in shale deal value from 2011. Included in the shale deals for fourth quarter 2012 were two transactions from the Marcellus Shale with a total deal value of $685 million and one Utica Shale deal worth $372 million.

PwC also noted that the volume of upstream and midstream shale deals increased in the fourth quarter of 2012 when compared to the same quarter in 2011. There were 17 total shale deals in the upstream sector, accounting for $9.0 billion, which was one more deal when compared to Q4 2011, although deal value had decreased from $12.3 billion last year. Midstream shale-related deals totaled 10 for the fourth quarter of 2012, representing $7.3 billion, an increase from the six midstream deals worth $4.0 billion during the fourth quarter of 2011.

"Throughout 2012, we continued to see a fair amount of repositioning and realignment with companies around midstream assets in the Marcellus Shale and Utica Shale as they looked to build the infrastructure needed to transport the extracted oil and gas," said Steve Haffner, a Pittsburgh-based partner with PwC’s energy practice. "Given the disparity in commodity prices, we expect to see continued movement during the year from the Marcellus to the Utica, as the Utica is a more attractive play due to its higher liquid content."

The most active shale plays for M&A with values greater than $50 million during the fourth quarter of 2012 include the Bakken in North Dakota, which had seven deals with a total value of $4.1 billion, followed by the Eagle Ford in Texas with six deals representing $3.1 billion.

"As we look out at the deal landscape throughout 2013, we believe the fundamentals are in place for continued transactions, including the potential for some very large deals to get done,” added Roberge. “The combination of independents who still control the majority of resources and the majors who have strong balance sheets and financial muscle may result in consolidation, as the capital requirements to develop shale plays continues to grow. We also expect PE to remain active in new investments."

Foreign buyers announced nine deals in the fourth quarter of 2012, which contributed $3.2 billion, versus seven deals valued at $10.4 billion during the same period last year.

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Crux JV Receives Retention Lease Offer from Joint Authority

Nexus Energy disclosed Wednesday that the Crux joint venture has received an offer from the Joint Authority for the issuance of a retention lease, with respect to Production License AC/L9, for five years.

The Crux JV applied for the retention lease with the National Offshore Petroleum Titles Administrator following completion of the consolidation of the Crux assets with Shell Development (Australia), Oaska Gas Crux and Nexus Energy on Oct. 25, 2012.

"The Crux JV will now review the attaching conditions to the retention lease offer and has up to 30 days to formally accept. The detailed work program and associated defined timelines include technical studies of a range of development options, including a standalone development concept, and exploration drilling of the Auriga prospect targeted for 2014," Crux said in a statement.

The development options currently under consideration for the Crux field include a tie-in to Shell's Prelude floating liquefied natural gas (FLNG) vessel or a standalone FLNG project.

Under the Crux JV agreement, Shell is operator of the Production License AC/L9, with an 80 percent interest. Nexus and Osaka Gas hold a 17 percent and 3 percent interest respectively.

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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Keppel O&M to Deliver First Jackup for 2013 Ahead of Schedule

Keppel Offshore & Marine (Keppel O&M) is aiming to deliver its first jackup for 2013 - Dynamic Vision (300' ILC jackup) - to Vision Drilling by the end of January, two months ahead of schedule, a company spokesperson confirmed with Rigzone Monday.

Under the original contract inked, Keppel FELS – the shipyard allocated to build the jackup – was required to deliver the unit by March 2013. The shipyard's ability to deliver ahead of schedule garners Keppel O&M an early delivery bonus of $1 million.

Dynamic Vision will be chartered to India's Oil and Natural Gas Corporation (ONGC) for five years, the spokesperson added.

Built and optimized to meet the unique requirements of India, Dynamic Vision – a KFELS B Class jackup – is capable of operating in water depths of 350 feet and drilling down to 30,000 feet. Keppel O&M’s fully-automated high capacity rack and pinion elevating system, and self-positioning fixation system have been incorporated into the jackup’s design.

Commenting on the company's performance, Keppel O&M's Managing Director, Wong Kok Seng said in a statement released on Saturday: "We are pleased to be able to deliver our first rig of 2013 two months ahead of schedule. It augurs well for the rest of the 19 rigs that we are expected to deliver this year."

Keppel FELS is slated to deliver 20 offshore rigs this year, a record number for any shipyard worldwide. 

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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Crude Tops $97/Bbl as Economic Data Boost Demand Hopes

NEW YORK--U.S. crude futures rose 1.2% Tuesday, pushing above $97 a barrel for the first time in more than four months as investors wager that signs of an improving economy will translate into higher fuel demand.

Oil has rallied 9.7% since early December, gaining momentum in recent days on a stream of data that pointed to improving economic conditions in the U.S., the world's largest oil consumer.

On Tuesday, Standard & Poor's Case-Shiller home-price index showed a 5.5% increase from last year. Last week, applications for unemployment benefits fell to a five-year low. Stock markets, used by oil traders to gauge economic sentiment, have also rallied to start the year. The Standard & Poor's 500 is up 5.7% in 2013.

Vikas Dwivedi, global oil and gas economist at Macquarie, forecast oil demand will rise by 875,000 barrels a day in 2013. But a speedier recovery of the global economy, due in part to the U.S., will mean a sharper rise in fuel use, he said.

"If in 2013 the various big economies of the world hit their stride, we could be well over a million barrels a day of demand growth. Then you have a pretty interesting market," Mr. Dwivedi said.

Light, sweet crude for March delivery settled $1.13 higher at $97.57 a barrel on the New York Mercantile Exchange, the highest since Sept. 14. Brent crude on the ICE futures exchange settled up 88 cents, or 0.8%, at $114.22 a barrel.

After a pipeline issue in the U.S. crimped oil's gains last week, analysts and traders said the focus has shifted back to the global economy. The outlook looks rosier--compared to last year when Europe's debt crisis and concerns about tax hikes and spending cuts in the U.S. made investors wary of betting big on economic growth.

"We're over the fiscal cliff and that kind of stuff, so the market is starting to go up on this economic optimism," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Investors have piled into bullish bets over the past two months, according to data from the Commodity Futures Trading Commission. Money managers' net-long position in oil futures and options is at the highest level since March.

Of course, some traders believe the market has rallied too quickly amid a still-tepid recovery, particularly as U.S. prices move back toward the key $100 a barrel level.

"We might see $100, but I don't think we'll hold above $100 in the short term," said Mark Waggoner, head of Excel Futures. "Demand just isn't there. There has got to be a stopping point."

Meanwhile, in the U.S. new pipelines are helping to bring oil stuck in the middle of the country to refineries on the coast, which is beginning to relieve a supply glut that has depressed U.S. crude prices compared to Europe's Brent crude.

The premium for Brent crude futures fell under $17 Tuesday.

Investors will be looking ahead to weekly data on U.S. oil and fuel stockpiles from the U.S. Energy Information Administration, due Wednesday at 10:30 a.m. EST, for further signs of oil demand.

Oil stockpiles are expected to rise by 2.7 million barrels, according to a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen rising by 200,000 barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 900,000 barrels.

The American Petroleum Institute, an industry group, is due to report its own stockpiles data at 4:30 p.m. EST Tuesday.

Front-month February reformulated gasoline blendstock, or RBOB, settled 3.86 cents higher at $2.9734 a gallon. February heating oil settled 4.76 cents higher at $3.1092 a gallon.

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

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