Daily Archives: April 3, 2012

Coastal Energy Encounters Net Pay Offshore Thailand

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Coastal Energy, an international oil and gas exploration and production company with assets in Thailand announces the successful Miocene discovery in the Bua Ban South A-04 well.

The Bua Ban South A-04 well was drilled to a depth of 3,250 feet TVD on the eastern flank fault block at Bua Ban South, approximately 1.5 miles south of the Bua Ban Main A-11 well. The A-04 well encountered 42 feet of net pay in the Lower Miocene M75 and M100 sands with 29.5% average porosity. The M75 is a newly discovered pay sand in the Lower Miocene. Initial results indicate that this is an extension of the Miocene reservoir which was encountered in the Bua Ban Main A-11. The A-11 well has been producing since September 2010 and is currently producing over 500 bopd. The minimum areal extent of the closure is approximately 550 acres.

Randy Bartley, President & Chief Executive Officer, commented:

“We are greatly encouraged by the successful Miocene results in the A-04 well. We have now discovered oil in three different Miocene intervals between Bua Ban Main and Bua Ban South. This new discovery is very positive for the Miocene remaining potential across the entire basin as well as supporting the potential of recent Oligocene discoveries in the Bua Ban South area. The Bua Ban South A-03ST#1 well has been spudded and will test the Eocene objective. We are currently evaluating locations for Miocene appraisal wells and will begin drilling those following the A-03ST#1.”

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Niko’s Drilling Program in Indonesia Kicks Off

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Niko Resources Ltd. has announced start of its exploration drilling program in Indonesia and participation in the company’s twenty-first block in the country.

Niko will partner with Zaratex N.V. in the 5908km2 Lhokseumawe PSC in western Indonesia. The block is located directly adjacent to the giant Arun field (>3.1BBOE) and associated LNG plant. A 3865km2 3D program was acquired on the block and a number of high impact prospects were subsequently identified. Drilling is to commence in the shallow water portion of the block in April with two wells. The Candralila-1 and Ratnadewi-1 prospects will be drilled back to back and if successful will be monetized relatively quickly by accessing the existing extensive local infrastructure.

Niko’s deep water rig, the Diamond Ocean Monarch, is scheduled to arrive in Lhokseumawe in September to drill the Jayarani-1 well. This will be the first well in Niko’s planned program of more than 25 deep water wells in Indonesia. In addition, in the North Ganal PSC in which Niko is a participant, operator Eni will be using the Transocean Seven Seas to drill the Lebah-1 well in the second half of 2012. The Lebah prospect will test the extension of the Jangkrik and Jangkrik-NE discovery trend (>400MMBOE of reserves to date). Eni has already filed a POD for the development of these discoveries and first production is expected in 2015.

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Insiders: SAS banker quits after market abuse fine

A JP Morgan senior banker has quit his job after being fined for abuse of insider information about Heritage Oil.

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by Michelle McGagh on Apr 03, 2012 at 10:35

A JP Morgan chairman has quit after being find £450,000 by the City regulator over abuse of insider information relating to a new oil find by Heritage Oil and an offer for the company.

Ian Hannam, chairman of capital markets at JP Morgan Cazenove, has been fined by the Financial Services Authority (FSA) after it discovered he had disclosed inside information in two emails sent in September and October 2008 to a prospective client.

Hannam will appeal the FSA’s decision but has resigned because it would be ‘an unfair distraction to my clients and colleagues’, according to the Guardian.

The information related to Heritage Oil (HOX.L), which was an existing JP Morgan client for which Hannam was the lead adviser.

In the September email, Hannam said of a potential acquisition: ‘I thought I would update you on discussions that have been going on with a potential acquirer of [Heritage Oil chief executive] Tony Buckingham’s business.

‘Tony, advised by myself, has deferred engaging with the client until Thursday of next weeks although we know they are very excited about the recent drilling results of Heritage Oil…I believe that the offer will come in in the current difficult market conditions at £3.50-£4.00 per share. I am not trying to force your hand, just wanted to make sure you aware of what is happening.’

In the second email, Hannam discloses information about a potential oil find, he said: ‘PS – Tony has just found oil and it’s looking good.’

A Fortune article last year described Hannam as a working-class South Londoner, the son of a council worker. He joined the Territorial Special Air Service (SAS) at 17 – one of the youngest men to pass the selection process. Hannam went on to gain a civil engineering degree at Imperial College before going into construction where his first assignment was building roads in Oman.

Hannam then went to business school and embarked on a training programme at Saloman Brothers in New York and worked his way up the corporate ladder – getting caught in the Robert Maxwell fiasco along the way.

The Fortune article said: ‘From Congo to Columbia, from Iraq to Sierra Leone, Hannam and his small team of soldiers-turned-bankers and advisers did business with oligarchs, gem deals, and former mercenaries.’

The FSA said it accepted that Hannam did not deliberately set out to commit market abuse. Hannam has referred the decision to the Upper Tribunal where he and the regulator will state their cases. The Tribunal will determine whether to uphold, vary or cancel the FSA ruling.

Tracey McDermott, acting FSA director of enforcement and financial crime, said: ‘Inside information is extremely valuable and must be handled with care to ensure that it is properly controlled and that appropriate safeguards are observed.

‘This applies to all market participants but is particularly important for senior practitioners who will regularly interact with a wide circle of contacts.’

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Obama Will Shred The Paul Ryan Budget In Today’s Big Speech

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WASHINGTON (AP) — In an election-year pitch to middle-class voters, President Barack Obama is denouncing a House Republican budget plan as a “Trojan horse,” warning that it represents “an attempt to impose a radical vision on our country” that would hurt the pocketbooks of working families.

Obama, in a speech to newspaper executives, is sharply criticizing a $3.5 trillion budget proposal pushed by Rep. Paul Ryan, R-Wis., which passed on a near-party-line vote last week and has been embraced by GOP presidential hopefuls. The plan has faced fierce resistance from Democrats, who say it would gut Medicare, slash taxes for the wealthy and lead to deep cuts to crucial programs such as aid to college students and highway and rail projects.

“It’s a Trojan horse. Disguised as deficit reduction plan, it’s really an attempt to impose a radical vision on our country,” Obama said in excerpts of his speech released Tuesday. “It’s nothing but thinly veiled social Darwinism.”

Obama’s message comes as Republican Mitt Romney looked to solidify his grip on his party’s presidential nomination in primary contests in Wisconsin, Maryland and Washington, D.C. The White House has appeared increasingly focused on Romney, with Obama’s campaign criticizing the former Massachusetts governor by name in an energy ad as the president’s team seeks to frame the election as a referendum on the economic security of middle-class voters.

White House advisers billed the speech — to be delivered during The Associated Press luncheon of editors and publishers — as an important marker for the president as he seeks re-election. Senior administration officials said the address would build upon themes the president delivered in Kansas last fall, in which he called the nation’s economic challenges a “make-or-break moment” for the middle class, and in his State of the Union address, in which he laid out his election-year agenda.

Ryan’s proposal aims to slash the deficit and the size of government while offering sharply lower tax rates in return for eliminating many popular tax breaks. GOP front-runner Mitt Romney and his Republican rivals have said they would support Ryan’s budget plan, which has little chance of passing the Democratic-controlled Senate but lays out the GOP’s fiscal priorities.

Obama was making the case that whoever wins the White House will face an economy still recovering from the “worst economic calamity since the Great Depression” and many Americans will still be looking for jobs and lacking financial security. By next year, “a debt that has grown over the last decade, primarily as a result of two wars, two massive tax cuts and an unprecedented financial crisis, will have to be paid down,” Obama says in the prepared remarks.

He argues that Ryan’s budget plan would stall the economic recovery. “By gutting the very things we need to grow an economy that’s built to last — education and training, research and development — it’s a prescription for decline,” he says.

On taxes, Obama is also expected to call for economic fairness encapsulated by the so-called “Buffett Rule,” arguing that the wealthy shouldn’t pay a smaller share of their income in federal taxes than middle-class taxpayers. Many wealthy taxpayers earn investment income, which is taxed at 15 percent, and Obama has proposed that people earning at least $1 million annually — whether in salary or investments — should pay at least 30 percent of their income in taxes.

Obama planned to note that “broad-based prosperity has never trickled-down from the success of a wealthy few. It has always come from the success of a strong and growing middle class.”

The focus on tax reform has brought attention to the effective tax rate of Romney, a millionaire who is paying 15.4 percent in federal taxes for 2011 on income mostly derived from investments. The top nominal rate for taxpayers with high incomes derived from wages, not including investments, is 35 percent.

Obama was speaking at a luncheon of 900 editors and publishers following The Associated Press’ annual meeting. William Dean Singleton, outgoing chairman of the AP Board of Directors and chairman of MediaNews Group Inc., will pose questions to Obama following the president’s remarks.

Read more: BI

Namibia: Spectrum Starts Seismic Survey in Luderitz Basin

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Spectrum, in partnership with the National Petroleum Corporation of Namibia (NAMCOR), has commenced a new project in the Luderitz basin following the successful completion of an extended 2D Multi-Client seismic survey covering the deep water Orange Basin, offshore Namibia.

The Orange Basin program acquisition has been completed with additional lines now extending the program to over 8,000 km of long offset data. The vessel has now commenced a new regional program in the Luderitz Basin consisting of 4,400 km plus a potential infill of 1,200 km.

Seabird Exploration is providing the acquisition services through their Northern Explorer vessel which performed exceptionally well during January and February. Nearly 4,000 km of high quality data was acquired in February and the extended survey was completed ahead of schedule. Further prefunding has enabled Spectrum to add additional lines to the Orange Basin program and to commence the new Luderitz Basin survey.

There is considerable attention in the area at this time. The new survey is located immediately between the recently announced BP farm-in to the Serica 2513 A&B blocks and the potential in the Petrobras/BP/Chariot 2714A block. Very little seismic data is available over these blocks  and Spectrum’s survey will provide both Operators and potential Partners with a good quality regional dataset to evaluate this almost unexplored area.

The Orange Basin survey is now in processing with final deliverables expected to be available in June 2012. The Luderitz basin survey will be available in August.

Over 35,000 km of high-quality 2D multi-client data is now available through Spectrum from offshore Namibia in ten individual surveys. Each survey has been designed to target key plays within the offshore area. The data vintages range from the 1989 regional survey, through to detailed block specific surveys including the 2003 survey acquired around the Ondjou prospect in the northern Walvis Basin. There is also a comprehensive suite of surveys around the Kudu field, as well as covering the Orange and Luderitz Basins.

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USA: ETE Units File with FERC for Proposed Lake Charles Liquefaction Project

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Energy Transfer Equity (ETE) today announced that its Trunkline LNG Company, Trunkline LNG Export, and Trunkline Gas Company subsidiaries have filed with the Federal Energy Regulatory Commission to build the previously announced natural gas liquefaction project under development in Lake Charles, La.

The Lake Charles liquefaction project is being developed to liquefy domestic supplies of natural gas for export to foreign countries in order to meet the growing world-wide demand for LNG. Exporting LNG to the world market will provide a wide range of economic and employment related benefits for the United States.

Energy Transfer and its subsidiaries continue to work closely with its customer BG Group in the development of the project, ETE said in a statement.

As part of the project, Trunkline Gas Company plans to extend its interstate natural gas pipeline approximately half a mile to provide feed gas to the liquefaction facility. The project is currently planned to export up to 15 million metric tons of LNG per year, which is the equivalent of approximately 2 billion cubic feet per day of natural gas. Pending regulatory approvals, Trunkline LNG Export currently expects to begin project construction in 2014 and is anticipating the project to be in service in the spring of 2018.

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World’s Largest Solar Plant, With Second Largest Ever Department of Energy Loan Guarantee, Files For Bankruptcy

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Submitted by Tyler Durden
04/02/2012 20:14

Solyndra was just the appetizer. Earlier today, in what will come as a surprise only to members of the administration, the company which proudly held the rights to the world’s largest solar power project, the hilariously named Solar Trust of America (“STA”), filed for bankruptcy. And while one could say that the company’s epic collapse is more a function of alternative energy politics in Germany, where its 70% parent Solar Millennium AG filed for bankruptcy last December, what is relevant is that last April STA was the proud recipient of a $2.1 billion conditional loan from the Department of Energy, incidentally the second largest loan ever handed out by the DOE’s Stephen Chu. That amount was supposed to fund the expansion of the company’s 1000 MW Blythe Solar Power Project in Riverside, California. From the funding press release, “This project construction is expected to create over 1,000 direct jobs in Southern California, 7,500 indirect jobs in related industries throughout the United States, and more than 200 long-term operational jobs at the facility itself. It will play a key role in stimulating the American economy,” said Uwe T. Schmidt, Chairman and CEO of Solar Trust of America and Executive Chairman of project development subsidiary Solar Millennium, LLC.” Instead, what Solar Trust will do is create lots of billable hours for bankruptcy attorneys (at $1,000/hour), and a good old equity extraction for the $22 million DIP lender, which just happens to be NextEra Energy Resources, LLC, another “alternative energy” company which last year received a $935 million loan courtesy of the very same (and now $2.1 billion poorer) Department of Energy, which is also a subsidiary of public NextEra Energy (NEE), in the process ultimately resulting in yet another transfer of taxpayer cash to NEE’s private shareholders.

As Bloomberg notes: “The company joins Energy Conversion Devices Inc., a U.S. solar manufacturer that suspended production last year; LSP Energy LP, the owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc., maker of lithium-ion batteries for plug-in electric cars; solar-panel maker Solyndra LLC; and energy storage company Beacon Power Corp. (BCONQ) in bankruptcy.”

And so central planning fails again, and again, and again, and again. But it sure will be better with the centrally planned monetary (and in the absence of a working Congress – also fiscal) policy. Because this time it really will be different.

From Reuters:

Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.

Blythe is about 220 miles (354 km) southeast of Los Angeles.

“We have been working with Solar Trust of America for a couple of years in getting this project going,” David Lane, Blythe’s city manager, said in an interview. “Although the project is not in the city limits, we are the only city within 100 miles. My sense is that with the large investment in what was to have been the world’s largest solar power plant, someone somewhere will buy it and build it.”

At least someone’s reputation will be tarnished as a result of this latest epic failure of the Obama administration to misallocate capital :

Solar Millennium said it has been sued by former Chief Executive Utz Claassen over public statements by company representatives that he claims have damaged his reputation and left him unable to find a job. Solar Millennium said the lawsuit would not directly affect its insolvency proceedings.

Two people, however, who won’t be humiliated at all are California Governor Jerry Brown, and Secretary of the Interior Ken Salazar, who reprise the role of Joe Biden, last seen praising not only MF Global’s Jon Corzine, but that other epic administration failure: Solyndra. Watch them praise the groundbreaking for the Blythe facility.

Epic embarrassment. And not even a full year ago.

But before that, of course, we had the funding of the plant with a $2.1 billion loan guarantee from the US Department of Energy, the second largest ever, smaller only than Georgia Power’s $8.33 billion loan guarantee.

From the DOE:

U.S. Energy Secretary Steven Chu today announced the offer of a conditional commitment for a $2.1 billion loan guarantee to support Units 1 and 2 of the Blythe Solar Power Project, sponsored by Solar Trust of America, LLC. The concentrating solar thermal power plant includes two units comprising a combined 484 megawatt (MW) generating capacity, an eight-mile transmission line and associated infrastructure. The project will be built adjacent to the City of Blythe in Riverside County, California and is expected to create over 1,000 construction jobs and approximately 80 operations jobs. The plant is estimated to avoid over 710,000 tons of carbon dioxide emissions annually, equivalent to the annual greenhouse gas emissions from over 123,000 vehicles.

Loan guarantees play an important role in facilitating the development and deployment of innovative technologies at massive scope and scale,” said Secretary Chu. “Continued investments like this project make solar power more efficient and cost competitive while creating thousands of jobs and strengthening the economy.”

“California is the national leader in clean energy, and our great state is poised to become the world leader in renewable energy generation,” said Governor Jerry Brown. “I commend President Obama and Secretary Chu for making another major investment in California.”

“This clean energy project will create more than 1,000 jobs and strengthen the economy of Riverside County. Investments like this one are critical to reducing America’s dangerous dependence on foreign oil, protecting our children from pollution and creating clean energy jobs here in California,” said Senator Barbara Boxer.

And while we do not know just how much the government will have to pay out of pocket, we do know that STA had at least $50 million in debt at filing.

What we do know for sure is that at least the firm’s financial advisors made money on the deal. From the company’s Investors page:

World-Class Financial Advisors


In October 2009 Solar Trust engaged Citigroup Global Markets Inc. and  Deutsche Bank Securities, Inc. as advisors to assist in securing more than $6 billion in financing for construction of the company’s solar  power plants in California and Nevada. Citigroup and Deutsche  Bank are also providing advisory services for Solar Trust’s efforts to  develop models for debt and equity project financing for  its solar power plant projects.

Great job there Citi and Deutsche: can you please advise us how much in taxpayer cash you received as part of your incalculable “advice” please?

Also, as noted earlier on, as part of its first day filings, the company was prompt announce the procurement of DIP funding (link), which will come in the form of a $22.3 million secured loan (against what assets?) at Libor + 800bps, courtesy of NextEra Energy Resource, LLC. The same NextEra featured in the following press release:

NextEra Energy Resources’ subsidiary closes on $935 million financing and secures a DOE loan guarantee for its Genesis solar project

JUNO BEACH, Fla. – NextEra Energy Resources, LLC, announced that its subsidiary, Genesis Solar, LLC, has closed on construction and term financing consisting of $702 million in project bonds, a $150 million project term loan facility and an $83 million project letter of credit facility. The U.S. Department of Energy has provided a loan guarantee of 80 percent of the principal and interest on the project bonds and project term loan under its Financial Institution Partnership Program. Proceeds from the financing will be used primarily for the construction of the Genesis project, a 250-megawatt utility-scale concentrating solar thermal generating facility featuring proven parabolic trough solar thermal technology, located in Riverside County, Calif.

“This financing marks a significant milestone in the development of the Genesis project,” said Armando Pimentel, executive vice president and chief financial officer of NextEra Energy, Inc., the parent of NextEra Energy Resources. “We are very pleased with both the strong investor reception for this financing, which we view as a validation of our solar development efforts, and the receipt of a loan guarantee from the Department of Energy Loan Programs Office.”

That’s right: one ward of the state, bailing out another ward of the state, all to reduce those evil carobn emissions. Although that is not all. NextEra is also a subsidiary of the publicly traded, albeit with very private investors, NextEra Energy (NEE). Which means that every dollar extracted out of Solar Trust via the DIP, and ultimately via a Credit Bid in which NextEra will acquire the STA assets at pennies on the dollar, will go straight to NEE’s shareholders. Who are these shareholders you ask? Here they are: spot the odd one(s) out.

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And that is how in crony America taxpayer money goes from one insolvent pocket, to another, to Wall Street, all under the guise of idealistic pursuits and clean energy.

There is more to this story but we will stop here as we have had enough.

For those interest here is the first day affidavit, as well as the DIP term sheet. And the last time we saw an Org Chart this fun, the company’s name started with En and ended in ron.

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