Mexico's Grupo R Orders Additional Jackups from Keppel FELS for $820M

Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), has secured contracts from Mexican drilling company, Grupo R, to build four jackups worth $820 million.

The jackups will be built to Keppel's proprietary KFELS B Class design and are scheduled for delivery progressively from 2Q 2015 to 4Q 2015.

When completed, Keppel FELS will have built ten KFELS B Class jackups for Mexican customers since 2012, including two for PEMEX.

Wong Kok Seng, managing director (Offshore) of Keppel O&M and managing director of Keppel FELS, said, "Mexico is an important market for us and we are glad that Mexican operators have chosen the KFELS B Class as their preferred rig design and Keppel as the preferred shipyard. We look forward to support Grupo R as they expand their fleet of premium jackup rigs for the Mexican market, with safe, on time and on budget deliveries."

Customized to Grupo R's requirements, the rigs will be able to operate in water depths of up to 400 feet and drill to depths of 30,000 feet.

PEMEX, the Mexican national oil company has announced investment plans of $25.3 billion for 2013, of which $20 billion will be targeted at upstream activities. On a visit to Keppel FELS on 30 January 2013, Mr Emilio Lozoya Austin, CEO of PEMEX, said that the company is embarking on its most ambitious drilling program in decades and plans to add between eight and 12 offshore platforms to its fleet.

Ramiro Garza V., CEO of Grupo R said, "PEMEX have indicated their aim to operate the biggest fleet of jackup rigs in the world and Grupo R is well positioned to support them with four premium jackup rigs. We chose the KFELS B Class jackup design for our first shallow water rigs because of their high specifications and their proven success for PEMEX. In choosing Keppel FELS, we are also partnering a shipyard which is able to meet the needs of our customers in terms of cost-effectiveness, time, technology, quality, and safety with environmental considerations. This will further enhance our capabilities as the leader in Mexico's onshore and offshore drilling industry."

Developed by Keppel's technology arm, Offshore Technology Development, the KFELS B Class rigs incorporate Keppel's advanced and fully-automated high capacity rack and pinion jacking system, and Self-Positioning Fixation System. It provides maximum uptime with reduced emissions and discharges. For its environmental-friendly features, the KFELS B Class design was bestowed the prestigious Engineering Achievement Award from the Institution of Engineers Singapore in 2009.

The above contracts are not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

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TNK-BP Boosts Production, Reserves

Russia's TNK-BP reported results for 2012 Thursday in which the firm revealed that its oil and gas production increased by 1.8 percent during the year to 2,023 million barrels of oil equivalent per day. The firm said that its total proved reserves reach 9.8 billion barrels of oil equivalent, representing a 210-percent reserve replacement ratio.

Chief Financial Officer Jonathan Muir commented in a statement:

"We have been successfully moving our Yamal greenfields to the execution stage, with Suzunskoye the first field ready for launch and the Rospan natural gas project moving to Phase 1 full-field development."

Muir added that all of TNK-BP's international projects showed "positive momentum" with incremental production being achieved in Vietnam and Venezuela, along with gas discoveries in Brazil.

"We continue to focus on business fundamentals and bottom line enhancement and will carry out our operations safely and with minimum damage to the environment," he said.

The takeover of TNK-BP by Rosneft is scheduled to be complete by the end of this month now that the Russian state oil company has bought out BP and the Alfa-Access-Renova consortium, which together previously owned the business.

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Hess Closes ACG Stake Sale with ONGC Videsh

Hess Corporation announced it has completed the sale of its 2.72 percent interest in the Azeri, Chirag and Guneshli Fields (ACG) and its 2.36 percent interest in the associated BTC pipeline to ONGC Videsh Ltd. for $1 billion. Adjusting for net cash flow received since the Jan. 1, 2012 effective date of sale, after tax net proceeds are $884 million.

The BP operated ACG fields, located in the Caspian Sea approximately 62 miles (100 kilometers) east of Baku, commenced production in 1997.

"This sale is another step in the execution of our strategy to become a more focused, higher growth, lower risk pure play exploration and production company," said Chairman and CEO John B. Hess. "Consistent with our announcement on March 4, the after tax net proceeds from this sale will be used to pay down an equivalent amount of short term debt."

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New World Raises Funds for Denmark, Belize Drilling

New World Oil and Gas has raised the money it needs to drill two wells during the next 12 months on its Danica Jutland project in Denmark if it decides not to proceed with west testing on its Rio Bravo No.1 well in Belize, the firm reported Thursday.

New World said that it has successfully placed 315 million shares in order to raise $9.5 million, the net proceeds of which it intends to use to test and appraise the Rio Bravo No.1 well subject to a successful well-logging program. To date all operations to do with the well are on schedule and under budget, the firm added, with a total depth of 8,800 feet – targeting the Upper Jurassic Margaret Creek Formation – expected to be reached by late April.

However, New World also said that if the Rio Bravo No.1 well is not tested and appraised the funds will be used for the drilling of two wells targeting the Harboe and Jelling prospects at the company's Danica Jutland project in Denmark, as well as for the seismic interpretation and competent person's report costs of the project.

The Harboe prospect has been assigned P50 un-risked prospective resources of 351.2 billion cubic feet of gas. The Jelling prospect has been assigned P50 un-risked prospective resources of 166.4 billion cubic feet.

New World added that drilling is also continuing at its West Gallon Jug prospect in Belize. This is targeting a P50 un-risked prospective resource of 113 million barrels of oil.

New World Chief Executive William Keller commented in a statement:

"Thanks to the support and interest of both existing and new shareholders, we are now in a position where we can test and appraise the Rio Bravo No. 1 well which the company is currently drilling in Belize (assuming a successful well logging programme) or, in the event the well is not tested, we are funded to drill two wells in the forthcoming 12 months on our highly exciting Danica Jutland project, targeting the Harboe and Jelling prospects, each of which could be transformative for the company.

"In all, three wells are expected to be drilled over the next 12 months targeting combined gross P50 volumetrics of 200 million barrels of oil equivalent with a success case valuation for all three of $3.62 billion net to the company's interest. These figures represent just three out of over 40 prospects/leads identified across our portfolio to date. We are delivering on our objective of exposing our shareholders to meaningful potential upside through the systematic identification and de-risking of multiple prospects to the point of drilling. We believe that it is just a matter of time before we make a commercial hydrocarbon discovery and, in the process, create significant value for all our shareholders."

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Sources: Petrobras to Auction $5 Billion of Nigeria Oil Assets

Brazilian oil company Petrobras is to auction off its stakes in Nigerian oil fields to raise cash for domestic projects, a deal that may fetch up to $5 billion, sources close to the deal said.

The state-controlled company, formally known as Petroleo Brasileiro SA, has hired Standard Chartered to run the process, which will kick off in the next two months, banking and oil industry sources said.

Asian state oil companies are expected to bid in the hopes of adding more production assets to their portfolios. Private equity funds are also interested, banking sources said.

Standard Chartered and Petrobras declined comment.

The decision to sell the Nigeria assets marks a retreat away from foreign markets once considered strategic in favor of realizing the government's goal for Brazil to become self-sufficient in energy.

Petrobras will sell its 8 percent stake in the Nigerian offshore Agbami blocks, which are operated by U.S. energy major Chevron and its 20 percent share of the offshore Akpo project, operated by France's Total.

Crude oil production from the Agbami field fields began in 2008. Output from the project can reach 250,000 barrels per day (bpd), and it holds estimated reserves of 900 million barrels.

Akpo began production in 2009 and has plateau output of 175,000 bpd of light condensate oil and 9 million cubic meters of gas. It has proved and probable reserves of 620 million barrels of condensate and more than 28 billion cubic meters of gas, according to Total.

Petrobras began operations in Nigeria in 1998 in the deep waters off the coast of the Niger Delta.

Petrobras is divesting assets and redirecting investment towards higher-return activities such as exploration and production to finance a five-year, $237 billion capital spending plan, the world's largest corporate investment program.

Petrobras hopes to more than double current oil and gas production by the start of the next decade to about 5.2 million barrels of oil equivalent a day and also help Brazil become self-sufficient in refined products as well. 

Copyright 2013 All Africa Global Media. All Rights Reserved

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Crawford: Brownwood Preparing for Oil Boom Benefits

People are asking when "it" is going to "hit," but based on oilfield activity to the west, it appears "it" has already "hit" — and Brownwood, while not in the middle of the current oil boom, is preparing for the results.

That was the message of Brownwood Economic Development Director Emily Crawford, who gave a brief report to city council members Tuesday about the city's presence at last week's Southwest Energy Summit in Sweetwater.

Crawford and Brownwood Area Chamber of Commerce Marketing Manager Ray Tipton manned a booth at the two-day summit on behalf of Brownwood. The summit included sessions on oil and natural gas, wind energy, nuclear energy, workforce and regional infrastructure, transportation and coal.

Brownwood's message at the summit: the city has land available for development, it is centrally located to most active oil and gas fields in the state and it has existing industries in the energy sectors.

"We recognize although we don't have a lot of wells being drilled or explored, we are actually geographically in the center of the state and we are able to reach most of the active oil and gas fields from about a three- hour proximity," Crawford told council members.

"We want to let suppliers and service companies that would like to service more than one of the clay shales or oil fields that they can do that from Brownwood and be geographically in the center."

Crawford said it was "very good for us to hear fact versus fiction of what's really happening in the Permian Basin and the Cline Shale."

Snyder and Sweetwater have developed new industrial parks within the past year, and Sweetwater is getting a rail extension, Crawford said; Snyder is getting five new hotels and has broken ground on a workforce housing project for 1,000 workers.

"So there really is a tremendous amount of activity happening just to the west of us," Crawford said. "People continue to ask when is 'it' going to 'hit' and I would say that 'it' has already 'hit' because of this activity that's already going on.

"However, we don't know how big it will get and how far it will reach. So we will continue to poise Brownwood for our existing businesses and for new businesses to relocate."

Mayor Stephen Haynes asked if it is believed the Cline Shale will extend into Brown County.

Runnels County has seen some drilling permits, but because the Cline Shale is large and has not been fully explored, "we really don't know how far east it will go," Crawford said.

She said she's been told the shale is not likely to extend to Brown County, but the activity in Runnels County "brings it even closer to Brown County."

There could be an influx of oilfield workers who are looking for housing in Brownwood, Crawford said. "A person driving 90 miles a day to commute is not unheard of," she said. "We are looking at attempting to get more of a housing inventory so that we can be ready if indeed that does happen."

Crawford said a group had done a study on the impact of wages and jobs created in the Eagle Ford Shale, and it is hoped the group will do a similar study on the Cline Shale. 

Copyright 2013 Brownwood Bulletin, American Consolidated Media Distributed by Newsbank, Inc. All Rights Reserved

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For CEOs Like McClendon, Buyout Game Can Be Second Act

As Aubrey McClendon's days as Chesapeake Energy Corp.'s chief executive tick down, he's exploring ways to remain in the energy game.

Less than two months after agreeing to leave Chesapeake under pressure from shareholders over his free-spending ways, Mr. McClendon is meeting with private-equity investors and others to discuss potentially teaming up for new ventures, according to several people familiar with the discussions.

Mr. McClendon also has spoken with energy executives who in the past worked with buyout shops. At this juncture, Mr. McClendon is asking more questions than he is sharing details of future plans. Among his queries: How much autonomy and control would he have if he received financing from a Wall Street firm, according to one person he's spoken with.

Mr. McClendon, 53 years old, has some employees for his next venture, according to a person familiar with the matter, and secured office space in a six-story, glass-and-concrete building in Oklahoma City. His new digs are about a mile east of the sprawling, university-like campus he helped design for Chesapeake, the energy power he co-founded in 1989.

Mr. McClendon declined to comment.

If Mr. McClendon ends up in private equity, he will be following a path trod by other high-profile executives who have landed on their feet in the private-equity world.

Robert Nardelli, the former chief executive of Chrysler Group LLC and Home Depot, in 2009 joined private-equity firm Cerberus Capital Management LP. He left a year ago to focus on his own investment firm, he said at the time. He declined to comment.

Lord John Browne, who resigned as chief executive officer of BP in 2007, joined Riverstone Holdings LLC. He couldn't be reached for comment.

The relationship can be symbiotic: Private-equity firms crave the expertise and Rolodexes of former top managers, while the executives like working away from public scrutiny and the tyranny of quarterly earnings.

Performance isn't judged on "what happens from quarter to quarter, it's about what happens to the fund over the life of the fund," said David B. Miller, who co-founded private-equity firm EnCap Investments LLC after running an energy company, Maze Exploration Inc.

One challenge, Mr. Miller said, is that institutional investors tend to have lower risk tolerance than shareholders in public stock markets.

Set to step down from Chesapeake by April 1, Mr. McClendon is leaving on a low note. After building Chesapeake into the nation's second-biggest natural-gas producer after Exxon Mobil Corp., his last year at the company was marred by a wrong-way bet on natural gas that left the company exposed to a collapse in prices.

Meanwhile, Mr. McClendon's personal borrowing practices ignited a governance controversy last year. Shareholders soured on his spending amid the stock's recent disappointments, leading to his ouster. Some private-equity investors said the controversy might reduce the enthusiasm of some to work with the Chesapeake co-founder.

Still, Mr. McClendon is regarded by some as a visionary who helped lead a revolution in American energy extraction.

"I think he'll likely have several opportunities to partner with private-equity firms interested in energy," says Scott Sperling, co-president of Thomas H. Lee Partners. "After a few months out of the news, people probably will just remember that he was a guy who did some pretty interesting things" rather than someone who left his company amid negative headlines.

Any foray by Mr. McClendon into energy would be complicated by his contractual restrictions not to compete with Chesapeake.

Mr. McClendon's contract with Chesapeake bars him from using confidential information he acquired there for a year. It also prohibits him from acquiring, or helping someone else acquire, oil and gas interests immediately adjacent to the company's holdings while he continues to receive severance payments. Chesapeake has drilling rights to 15 million acres nationwide, spanning some of the country's most prolific oil-and-gas-producing zones, which could make it difficult for Mr. McClendon to operate in the same regions-even if he weren't directly involved.

"He can't do indirectly what he can't do directly," said Michael P. Maslanka, a partner at Dallas-based Constangy Brooks & Smith LLP who specializes in employment law. "You can wall him off, but the question becomes, 'How effectively did you wall him off?'"

Though Chesapeake said it would pay him a severance of nearly $50 million over four years, Mr. McClendon's next move will likely require other people's money. The executive once owned 33.5 million Chesapeake shares-worth $2.3 billion at their 2008 peak--and pledged them as collateral for loans to buy more shares. When Chesapeake's stock tumbled later that year, the value of his collateral fell below the level required and he was forced to sell most of his shares. Much of his personal fortune, including a 19.2% stake in the Oklahoma City Thunder basketball team, has been pledged as collateral to secure loans.

Through a controversial perk, Mr. McClendon can choose whether to invest in every well Chesapeake drills. The disclosure of his borrowing--he pledged his interests in the wells to secure up to $1.4 billion in loans from a private-equity group that also did business with Chesapeake--triggered shareholder lawsuits. The Securities and Exchange Commission is investigating the arrangement.

Chesapeake's board said in February it found no "intentional misconduct" by Mr. McClendon, who agreed to terminate the perk in June 2014.

T. Boone Pickens, whose own wrong-way bet on natural gas-prices in the 1990s led to his ouster at the energy company he had built, later went on to found a hedge fund. He says he recently met with Mr. McClendon, a fellow Oklahoma native, and that his friend's problem was having more ideas than money to finance them.

"He tried to buy the world," said Mr. Pickens, whose hedge fund sold all of its half-million Chesapeake shares last year.

Still, he said Mr. McClendon won't have any trouble raising money. "I'd invest with him," he said.

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

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