Royal Dutch Shell plc announced it has agreed to sell its 50% working interest in the Holstein Field, comprised of Green Canyon Blocks 644, 645 and 688 in the Gulf of Mexico, to Plains Exploration & Production (PXP) for approximately $560 million, subject to closing.
Shell received an unsolicited offer from PXP for Shell’s working interest. The transaction is effective October 1, 2012 and is expected to close by year-end 2012.
Holstein is a mature deepwater asset and the sale is consistent with Shell’s continuing practice of reviewing our existing portfolio and evaluating new opportunities.
The Holstein Unit is centered on a spar platform anchored in 1350 meters (4400 feet) water depth and first produced in December 2004. Shell’s 50% interest represents about two percent of the company’s overall Gulf of Mexico net production and had a 30-day net average production of 7.4 kboe/d prior to Hurricane Isaac.
Shell retains a major Gulf of Mexico presence and is a leading deepwater producer. The company recently noted three successful appraisal wells at the Appomattox and Vito fields, which are expected to begin producing in the second half of the decade.
Stone Energy Corporation has acquired Anadarko’s 25% working interest in the five block deep water Pompano field in Mississippi Canyon, a 22% working interest in Mississippi Canyon Block 29, and a 10% working interest in portions of MC 72.
The purchase price under the agreement is $67 million in cash plus the assumption of asset retirement obligations, subject to customary closing adjustments. Current net production from the Pompano field attributable to this acquisition is approximately 1,000 barrels of oil per day and 3 million cubic feet of natural gas per day.
Stone’s estimate of proved reserves attributable to this acquisition is approximately 5.9 million barrels of oil equivalent at December 31, 2011.
In late December 2011, Stone Energy also bought BP’s 75% operated working interest in the Gulf of Mexico located field.
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NZOG (New Zealand Oil & Gas Ltd) has executed an agreement to take a 40% stake in a Tunisian concession that contains an oil field which could be brought into production as early as 2014. The Cosmos Concession in the Gulf of Hammamet, offshore Tunisia, contains the Cosmos South oil discovery. The concession was held by a joint venture comprising Storm Ventures International (80% and Operator) and Tunisia’s state-owned oil company L’Enterprise Tunisienne d’Activites Petrolieres (ETAP) (20%).
Storm is a wholly owned subsidiary of Toronto exchange-listed Chinook Energy Inc, and will reduce its share of the concession to 40% under the farm-in agreement.
A formal signing of the agreement by NZOG and Storm has been completed in Tunis.
Under the terms of the farm-in agreement, NZOG is paying a US$3m contribution to past costs, securing the right to participate and earn an interest in the development of the Cosmos concession.
A development plan is in preparation. If the development is approved through a Final Investment Decision (FID), NZOG will pay the first US$19m of Storm’s share of the development costs.
Independently evaluated proved and probable oil reserves of 6.3 million barrels have been attributed to the Cosmos South block, with additional potential from adjacent lobes. Further work on assessing the recoverable oil resource will take place ahead of FID.
The development plan is currently based on three wells, a small platform and a floating production and storage offtake vessel (“FPSO”), with initial production rates of 15,000-20,000 barrels of oil per day.
The partners intend to decide on FID in mid-2012. If the project proceeds, first oil production is anticipated in mid-2014.
NZOG CEO Andrew Knight says Cosmos is a good fit for NZOG.
“NZOG’s initial cost exposure is relatively small. If the numbers stack up we will commit to the Final Investment Decision and will be able to comfortably fund the capital commitment from our balance sheet. This is a near term, low risk development opportunity, with both production upside and exploration potential. This is a promising step forward in the expansion of our overseas interests.”
BP revealed on Friday the agreement to sell its interests in the Pompano and Mica fields in the deepwater Gulf of Mexico to Stone Energy Offshore, LLC, a subsidiary of Stone Energy Corp. for $204 million in cash.
The agreement includes the sale of BP’s 75 per cent operated working interest (WI) in the Pompano field and assets and 50 per cent non-operated WI in the Mica field, together with a 51 per cent operated WI in Mississippi Canyon block 29 and interests in certain leases located near the Pompano field.
Completion of the sale is subject to the pre-emption rights of various co-working interest owners. The companies expect to complete the sale in 2012.
BP group chief executive Bob Dudley said: “We continue to make progress in our divestment programme as we focus on BP’s areas of strength around the world. The sale of these mature assets will allow us to concentrate our efforts on the major production hubs and significant growth opportunities that BP has in the Gulf of Mexico.”
On completion of the transaction BP will continue to operate seven production platforms in the Gulf of Mexico, producing from some of the largest deepwater oil and gas fields ever discovered. Among BP’s Gulf of Mexico assets are the giant fields Thunder Horse, Atlantis and Mad Dog, each of which have long production profiles and development programs.
The Pompano Field is eight miles long, located within water depths ranging from 1,100 feet to 2,200 feet. Given the distance and depth range, the Pompano owners elected to use proven technology and placed a fixed platform in shallow water at the northern end of the field.
Both the Pompano and Mica fields produce oil and gas through the Pompano platform, approximately 120 miles southeast of New Orleans. First oil was produced from the Pompano field in October 1994 after being discovered by BP and Kerr-McGee in 1985. The Mica field, tied back to the Pompano platform some 29 miles to the north west, began production in 2001.
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“With this increase in its stake, Siemens is strengthening its activities in ocean power generation. We will actively shape the commercialization process of innovative marine current power plants,” said Michael Axmann, CFO of the newly founded Solar & Hydro Division within Siemens’ Energy Sector.
Marine Current Turbines (MCT) has evolved from a pioneer to a technology leader in horizontal axis marine current turbines and now has 25 employees. In February 2010 Siemens acquired a minor stake in the Bristol-based company and thus entered the marine tidal current market. Financial details of today’s announcement are not disclosed.
Ocean power is emerging with strong growth rates driven by global CO2 reduction commitments. Until 2020, experts anticipate double-digit growth rates for the ocean power market. Based on further estimates the global potential for power generation using tidal power plants is 800 terrawatt-hours (TWh) per annum. For comparison, that is equivalent to between three and four percent of power consumption worldwide.
Dr Andrew Tyler, CEO of MCT said: “Through the expansion of the partnership with Siemens, we have further strengthened our position in the tidal energy market. We have the increased backing of a major industrial player which is essential to support the commercialization of our proven technology. We are about to approach investors to secure funding for our first two tidal array projects, and Siemens’ increased investment as well as UK Government support should give investors the confidence that we have the necessary backing to deliver these crucial projects and the ones to follow.”
MCT plans to present two Project Investment Prospectuses to the market within the next month for its 8 megawatts (MW) Kyle Rhea project in Scotland and its 10 MW Anglesey Skerries project in Wales. For both projects, applications for leases from The Crown Estate have already been approved. The UK Government’s recent ROCs Banding announcement (October 20) will support these projects with 5 ROCs per megawatt hour proposed for tidal energy.
In addition, MCT is planning to deploy a tidal system into the FORCE facility in Canada’s Bay of Fundy and has an approval for a lease from The Crown Estate to deploy a 100 MW tidal farm off Brough Ness, on the southern most tip of the Orkney Islands in Scotland.
MCT has already successfully implemented its first commercial scale demonstrator project SeaGen in Northern Ireland’s Strangford Lough. Since November 2008, SeaGen’s two axial turbines, with a combined capacity of 1.2MW, have been feeding power into the grid to supply the equivalent of around 1500 homes. SeaGen has to date generated over 2.7GWh of electricity to the grid, the largest amount of electricity in the whole of the ocean power sector.
Marine current turbines generate electricity by utilizing tidal current flows. The SeaGen turbine is fixed on a structure and is driven by the flow of the tides with a key advantage that the generated power is precisely predictable in the tidal cycle. This technology effectively is similar to that of a wind turbine with the rotor blades driven not by wind power but by tidal currents. Water has an energy density of more than 800 times that of wind. Twin rotors rotate with the movement of the tidal flow and pitch through 180 degrees to optimally track tidal current direction and speed.
Marine current turbines are part of Siemens’ Environmental Portfolio. In fiscal 2010, revenue from the Portfolio totaled about EUR28 billion, making Siemens the world’s largest supplier of ecofriendly technologies. In the same period, Siemens’ products and solutions enabled customers to reduce their carbon dioxide (CO2) emissions by 270 million tons, an amount equal to the total annual CO2 emissions of Hong Kong, London, New York, Tokyo, Delhi and Singapore.
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Energy Partners, Ltd. yesterday announced it has executed a purchase and sale agreement to acquire oil and natural gas assets in the shallow-water central Gulf of Mexico (GOM) from a subsidiary of Stone Energy Corporation for $80.0 million.
The transaction involves additional interests in the Main Pass (MP) 296/311 complex that was included in the assets EPL purchased from Anglo-Suisse Offshore Partners, LLC (ASOP) in February 2011, along with other unit interests in the MP complex and an interest in a MP 295 primary term lease. The assets are currently producing approximately 900 net barrels of oil equivalent (boe) per day, about 96% of which is oil. EPL estimates the proved reserves as of the November 1, 2011 effective date totals approximately 2.6 million boe, consisting of 96% oil and 100% proved developed producing. The Company also estimates the asset retirement obligation to be assumed in the acquisition is expected to total approximately $4 million.
Gary Hanna, EPL’s President and CEO commented, “The original ASOP property acquisition was an excellent transaction for EPL, and the acquisition announced today will more than double our interests in the MP complex. This purchase adds another layer of long-lived oil production to our current asset base, and additional upside without incremental overhead. We plan to increase our activity levels in this prolific area that we believe holds untapped potential. Post transaction, we will maintain substantial liquidity through our expanded revolving credit facility and the generation of free cash flow. Today’s announcement is representative of the type of acquisition we seek as an acquirer of quality assets in the central GOM.”
EPL intends to fund the acquisition with cash on hand, currently estimated to be in excess of $90 million. Additionally, the Company has worked with its lenders to expand the borrowing base under its undrawn senior secured credit facility from $150 million to $200 million, which maintains substantial liquidity for the Company. EPL has begun implementing additional oil hedges to provide further downside protection in conjunction with the acquisition. The purchase is subject to preferential rights-to-purchase held by the operator of the properties, and the closing of the transaction is subject to customary closing conditions and adjustments. The economic effective date is November 1, 2011, with closing expected in November.
Founded in 1998, EPL is an independent oil and natural gas exploration and production company based in New Orleans, LA and Houston, TX. The Company’s operations are concentrated in the shallow to moderate depth waters in the Gulf of Mexico focusing on the state and federal waters offshore Louisiana.
Tap Oil Ltd. said Monday it will consider selling its 10% stake in the Zola gas discovery offshore Western Australia before any liquefied natural gas development occurs, and has already received several enquiries about its plans.
“Tap has recently received several enquiries from large overseas industry players about Tap’s plans for Zola,” the company said in a statement to the Australian Securities Exchange.
The Zola-1 exploration well in the WA-290-P permit area in the Carnavon Basin discovered a mean contingent resource of 378 billion cubic feet of natural gas. The block is operated by U.S. producer Apache Corp. .
The entire Zola structure–located south of the giant Gorgon gas field being developed by a Chevron Corp.-led consortium–contains a mean 2.33 trillion cubic feet of gas, according to a report by independent experts RPS Energy Services Pty Ltd.
“It is appropriate for a company of Tap’s size and funding capabilities to consider monetizing an asset like Zola prior to the incurrence of the large scale LNG development costs which are likely required to bring the asset into production in a timeframe of at least five years,” Tap said.
Tap, which has a market value of A$170 million, said it is “confident that it can maximize the value of Zola by monetizing the asset on attractive terms at the right time.”
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The decision comes just days after Chevron and its Wheatstone foundation partners, including Apache Corp, sanctioned development of a two-train 8.9 million tonne a year LNG operation near Onslow. The partners have regulatory approval for five trains.
The Zola-1 well, which is thought to have hit a field containing up to two trillion cubic feet of gas, is located within striking distance of the path of the Wheatstone trunk line, which will link the project’s fields with the Onslow LNG plant.
Apache (30.25 per cent) is the operator of WA-290-P.
Santos (24.75 per cent), OMV (20 per cent) and Nippon Oil Exploration (15 per cent) are the other equity holders and expected to be interested in Tap’s 10 per cent stake. It is unclear whether the WA-290-P partners hold pre-emptive rights over each other’s stakes.
Tap managing director Troy Hayden would not discuss his WA-290-P plans but pointed to the portfolio restructure that he started since joining the company in December.
“We are always trying to add value,” he said yesterday.
Zola’s attractiveness to other gas players will have increased now that Chevron has sanctioned Wheatstone because it provides a tangible development option for Zola’s gas. However, any go-ahead for Zola’s development, as part of Wheatstone’s expansion, is not expected for several years. The necessary delay is thought to have prompted Tap to try to realise its stake in the permit now.
By Peter Klinger, The West Australian
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