Daily Archives: November 8, 2011

USA: Hornbeck Plans to Build Sixteen New Generation Offshore Supply Vessels

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Hornbeck Offshore ServicesBoard of Directors has approved a new vessel construction program for its wholly-owned subsidiary, Hornbeck Offshore Services, LLC. The Company plans to build sixteen U.S.-flagged 300 class DP-2 new generation offshore supply vessels (OSV) for its Upstream business segment with options to build an additional 16 substantially similar vessels should future market conditions warrant their construction.

This will be the Company’s eighth vessel newbuild program since its inception in 1997, and its fifth newbuild program involving state-of-the-art, technologically advanced new generation OSVs.

The Company expects the aggregate cost of the first 16 vessels under this program to be approximately $720 million, excluding construction period interest. Construction costs will be funded with cash on-hand, projected free cash flow from operations, other external financing and, if necessary, available capacity under the Company’s currently undrawn and recently expanded $300 million revolving credit facility.

Delivery of the first 16 vessels to be constructed under this program is expected to occur on various dates during 2013 and 2014, which should coincide with the delivery of approximately 145 incremental floaters and high-specification jack-up drilling rigs, currently under construction worldwide, during the same timeframe. Upon completion of the first phase of this OSV newbuild program at the end of 2014, the Company projects that the weighted-average age, based on deadweight tons, of its pro forma 67-vessel fleet of new generation OSVs will be seven years. The Company is now in the process of finalizing negotiations with selected domestic shipyards and expects to enter into definitive contracts in the near future.

These new 300 class OSVs are particularly well-suited for the increased demands of deepwater and ultra-deepwater customers for high-specification vessels, while maintaining an overall size that maximizes efficiency from an operating cost perspective. These vessels will be built in the United States, which qualifies them for coastwise trade in the U.S. Gulf of Mexico, or the GoM, under the Jones Act; however, the Company expects them to service the anticipated increase in deepwater and ultra-deepwater drilling activity in all three of the Company’s core geographic markets of the GoM, Brazil and Mexico. The 300 class DP-2 vessel design contemplated by this newbuild program features 6,000 deadweight tons and 20,000 barrels of liquid mud carrying capacity. The length and high load capacity of these OSVs also make them ideal candidates for conversion into deepwater construction service and for subsea inspection, repair and maintenance work. The Company expects these new 300 class vessels to offer double the deadweight tons and more than double the liquid mud capacity of its 240 class OSVs, which should allow the 300 class OSVs to command higher dayrates commensurate with their increased size and capabilities.

Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels primarily in the U.S. Gulf of Mexico and Latin America, and is a leading short-haul transporter of petroleum products through its coastwise fleet of ocean-going tugs and tank barges primarily in the northeastern U.S. and the U.S. Gulf of Mexico. Hornbeck Offshore currently owns a fleet of 80 vessels primarily serving the energy industry.

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USA: Telemark, Clipper Results Excite ATP

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ATP Oil & Gas Corporation yesterday announced an operations update:

Drilling operations at the fourth Telemark Hub well at Mississippi Canyon (MC) Block 942 #2 are complete. ATP encountered 167 feet of new net pay sands above pre-drill estimates. These sands are in addition to the 72 feet of logged net oil pay seen in the original target sand. With this additional pay sand, ATP is modifying completion plans for MC 942 #2 and now expects to complete both hydrocarbon sands and establish production in late January 2012. ATP believes that these new pay sands will have a positive effect on production by extending the production life and third-party reserve estimates associated with MC 942.

Operations continue at the second Clipper well at Green Canyon (GC) Block 300 #4, where ATP has encountered oil pay sands. The well encountered 56 feet of logged net oil pay confirming reserves already booked. Completion operations are underway. Production at Clipper is still scheduled to begin in the third quarter of 2012 upon the completion of a pipeline, which is already under contract.

Third quarter production was 24,200 barrels of oil equivalent (BOE) per day, representing an increase of 14.7% over the same period a year ago.

ATP Chairman and CEO T. Paul Bulmahn stated, “ATP is excited with the drilling results from both the fourth Telemark Hub well, where we have encountered additional net pay sands above our projections, and the second Clipper well, which has now reached its total depth with completion operations underway. This development success demonstrates ATP’s commitment to advancing the company’s production growth, cash flow and asset base. ATP expects to begin production from the fourth Telemark well in the beginning of 2012, followed by additional planned production at Clipper and Gomez projects later in 2012, Entrada in 2013/2014 and Cheviot in 2014. We also look forward to drilling our first deepwater well at Shimshon in offshore Israel in 2012.”

Telemark Update

ATP encountered 167 feet of additional net pay sands above pre-drill estimates. These sands are in addition to the 72 feet of logged net oil pay seen in the original target sand at the Morgus well located at MC 942 #2

Because of the considerable additional hydrocarbon-bearing sands, ATP is adjusting its completion plan to include two new gravel packs which will extend the projected completion time to late January 2012, and ATP expects a positive effect on production by extending the production life and third-party reserve estimates associated with MC 942.

The MC Block 942 #2 well, located in approximately 4,000 feet of water, was completed at a measured depth of 21,400 feet in the Miocene S sand at ATP’s deepwater Telemark Hub in the Gulf of Mexico. It is the fourth well that will be tied back to the ATP Titan floating drilling and production platform located at MC Block 941. ATP operates the deepwater Telemark Hub with a 100% working interest and owns 100% of the subsidiary that owns the ATP Titan and associated pipelines and infrastructure.

Clipper Update

ATP has encountered oil pay sands at the second Clipper well located at GC 300 in the deepwater Gulf of Mexico. The GC 300 #4 well, located in approximately 3,450 feet of water, encountered 56 feet of logged net oil pay confirming reserves previously booked. The 9-5/8 inch casing has been set at 15,778 feet measured depth through the pay intervals. The well will now be completed and tested. In July 2011, ATP successfully completed and flow tested the first Clipper well, GC 300 #2 ST #1, at a rate of 45.6 MMcf per day and 4,656 Bbls per day. The pipeline lay barge for the Clipper wells is contracted for third quarter 2012 and will tie in both the GC 300 #4 and #2 wells to the Murphy Oil operated Front Runner production facility. ATP operates Clipper and presently owns a 100% working interest.

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