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PTTEP to Buy Murphy Oil’s Malaysian Business for $2.1 Billion Matt Zborowski, Technology Editor Thailand’s PTT Exploration and Production (PTTEP) is doubling down on Malaysian oil and gas in an effort to broaden its reach in its native South-east Asia. PTTEP has agreed to acquire Murphy Oil’s Malaysian business for $2.1 billion in an all-cash deal. PTTEP also announced that it was awarded two Malaysian exploration blocks in the Malaysia 2018 bid round. The assets to be purchased produced 48,000 BOE/D net to Murphy last year, of which 62% were liquids, and consisted of proved reserves of 468 Bcf of natural gas and 51 million bbl of liquids. The deal includes five petroleum exploration and production projects—Sabah K, SK309 and SK311, Sabah H, SK314A, and SK405B—in the shallow and deep waters off the Malaysian states of Sarawak and Sabah. Global Oilfield Services Market Won’t Recover Until 2025 Trent Jacobs, JPT Digital Editor It has been a tough few years for the world’s oilfield service sector and, according to a new report, the best of times are on hold for a few more. This is according to Rystad Energy, which says the sector is on pace to capture $920 billion in revenue by 2025. The Norwegian market research firm has highlighted the figure as the high-water mark reached in 2014, a year that ended with crude prices falling by more than 40%. “This will be the longest slump faced by the oilfield service industry since the 1980s, with about $2.3 trillion in revenues lost along the way,” said Audun Martinsen, Rystad Energy’s head of oilfield service research. Martinsen continued by noting: “On the bright side, in only 3 years’ time, activity levels will be higher than they were in 2014, although the cost cuts achieved in the sector means spending levels will only be 80% of what was seen in that peak year.” ExxonMobil, Chevron Target Nearly 2 Million BOE/D in Permian Production Matt Zborowski, Technology Editor ExxonMobil and Chevron revealed plans that would result in combined production from the US majors of nearly 2 million BOE/D from the Permian Basin of West Texas and southeastern New Mexico by the mid-2020s. ExxonMobil revised upward its Permian production outlook by almost 80% to reach 1 million BOE/D by as early as 2024. The operator said its resource base in the basin totals 10 billion BOE. Chevron expects its output from the basin to rise to 600,000 BOE/D by year-end 2020 before hitting 900,000 BOE/D by yearend 2023. The company said it has added some 7 billion BOE in Permian resources over the last 2 years. Shale Pioneer: Hard Ceiling On Production Growth Coming Trent Jacobs, JPT Digital Editor The central debate today in the US shale business is how long productivity growth will continue. According to one of the most influential voices in the sector, the answer is not much longer. “I am not particularly optimistic that, over the next 5 years, the industry is going to be able to show the year-over-year improvements in well recoveries that we’ve seen over the past 10 years,” said Mark Papa, chief executive officer of private-equity-backed shale producer Centennial Development Resources. Papa said the two biggest factors at play are frac hits, or parent-child well interference, and a shrinking inventory of high-quality drilling locations. Shale CEO on Parent-Child Challenge, Well Declines: We Know Matt Zborowski, Technology Editor Much has been made recently about the disparities in production between parent and child wells in US shale basins. The increased attention on the issue is part of broader concern among investors about the ability of operators to maintain high levels of output over the next few years. However, Doug Suttles, Encana president and chief executive officer, assures that shale executives are acutely aware of the parent-child challenge. His company has been “very public about this for 5 years now,” he said before an audience largely consisting of the investor community at CERAWeek by IHS Markit this week in Houston. He ultimately doesn’t think it’s “a big threat” to the shale sector. ExxonMobil Makes Huge Gas Discovery Offshore Cyprus ExxonMobil has made what it says is the world’s third-largest natural gas discovery in 2 years off the coast of Cyprus in the eastern Mediterranean Sea. Based on preliminary interpretation of the well data, the discovery could represent an in-place natural gas resource of up to 8 Tcf. The Glaucus-1 well, located in Eastern Mediterranean Block 10, encountered a gas-bearing reservoir of approximately 436 ft. The well was safely drilled to a depth of 13,780 ft in 6,769 ft of water. Industry consultants Wood Mackenzie told Reuters news agency that it estimated recoverable resources of Exxon’s field to be 4.55 Tcf. That compares with its 6.4 Tcf estimate for Calypso, found by Italy’s ENI and France’s Total last year.
- North America > United States > Texas (1.00)
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- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
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Price-Plunge Fallout: Let’s Make a Deal Lynnmarie P. Flowers, Technology Editor In efforts to preserve cash and repair busted balance sheets in reaction to depressed prices, companies are continuing to withdraw capital and curtail investments worldwide. Oil and gas companies are selling off assets with recoverable reserves of more than 5 billion bbl of liquids and 7.5 billion BOED of natural gas, Rystad Energy estimates. While some divestments were announced before the COVID-19 crash, more were added in its aftermath. The research and consultancy group examined divestment opportunities announced since the fourth quarter of 2019 that exclude unconventional and US onshore assets. ONGC Awards 49 Marginal Fields to 7 Companies The Oil & Natural Gas Corporation (ONGC) has invited bids for partnership to raise production from 64 marginal fields that were given to the company by the government without bidding. As they are small in size, these fields are uneconomical for a larger company. The 49 marginal producing oil and gas fields, spread across 13 onshore contract areas, were awarded to seven companies. The deals were made under a government plan to raise production from these acreages that are not economical for the state-run flagship explorer. Revenue will be shared on incremental production over and above the baseline production under business as usual. The selected contractors will not be required to reimburse any expenditure on the fields already incurred by ONGC. These contracts will be for a period of 15 years, with an option to extend by 5 years. Neptune Exits Deal With Energean for North Sea Assets Neptune Energy will terminate its agreement to acquire Edison E&P’s UK and Norwegian subsidiaries from Mediterranean-focused Energean Oil and Gas. Neptune would have paid about $250 million for the North Sea producing, development, and exploration assets and now has to pay Energean $5 million for cancelling the deal. Energean said it is in talks with Edison E&P to further amend its agreement to exclude the Norwegian subsidiary of Edison from the deal. The acquisition had been contingent on the closing of Energean’s acquisition of Edison, which has not yet happened. Lower Natural Gas Production Predicted for 2020 In its May 2020 Short-Term Energy Out-look, the US Energy Information Administration (EIA) forecast US-marketed natural gas production to decrease by 5% in 2020. Production is expected to average 94.3 Bcf/D in 2020, down from 99.2 Bcf/D in 2019. Before the economic downturn, the agency expected natural gas production would flatten in 2020 as natural gas production growth outpaced demand growth. The US set annual natural gas production records in 2018 and 2019, largely because of the increase in drilling in shale and tight-oil formations. This increase in production led to higher volumes of natural gas in storage and a decrease in natural gas prices. Petrobras Books $11.2-Billion Impairment Petrobras has taken a 65.3-billion Brazilian real ($11.2-billion) impairment on its exploration and production (E&P) assets, warning investors that changes in consumer behavior resulting from the coronavirus pandemic would likely be permanent. The impairment led the firm to book a first-quarter net loss of 48.5 billion reais. The company wrote off the entire value of its shallow-water assets and said it did not expect to resume production at six high-cost production assets currently for sale. Total impairments came to 57.6 billion reais for its deepwater assets, including the massive Marlim Sul oil field, and 6.6 billion reais at its shallow-water fields. Other unspecified assets comprised the remaining 1.1 billion reais of writedowns. Qatar Petroleum To Acquire Two Exploration Blocks in Côte d’Ivoire Qatar Petroleum entered into a farm-in agreement with Total E&P to acquire a 45% participating interest in two blocks located in the Ivorian-Tano basin, offshore the Republic of Côte d’Ivoire. The two blocks, covering some 3,200 km, present multitarget hydrocarbon prospects in water depths ranging from 1000 to 2000 m, 35 km from shore and about 100 km from nearby Foxtrot, Espoir, and Baobab fields. The farm-in agreement is subject to customary approvals by the Côte d’Ivoire government. Total Puts the Brakes on Oil Deal With Occidental Total has called off a deal to acquire Occidental Petroleum’s assets in Ghana after it was not able to acquire Occidental’s assets in Algeria in May. The French oil company was to buy a package of assets from Houston oil producer Occidental Petroleum, which acquired Anadarko Petroleum in August 2019 for $38 billion. Total had agreed to spend $8.8 billion to pick up Anadarko’s stakes in Algeria, Ghana, Mozambique, and South Africa. That deal fell through when the global demand for fuel went bust. NOCs To Slash Over a Quarter of Exploration Budgets National oil companies (NOCs) globally are estimated to cut exploration budgets by over a quarter on average in 2020, said Wood Mackenzie. The analysis is based on announcements and well plans for 11 top-spending NOC explorers, including three Chinese NOCs, PTTEP, Petronas, ONGC, Qatar Petroleum, Rosneft, Gazprom, Petrobras, and Pemex. Their combined original budgets may be reduced by about 26% or $5 billion, to around $14 billion this year. Wood Mackenzie Senior Analyst Huong Tra Ho said, “Most NOCs consistently spent between 12% and 35% of their upstream budgets on exploration, an average of about 17% over the 2015-2019 period. This is significantly higher than the majors’ average spend of 8% of upstream budgets on exploration.”
- North America > United States (1.00)
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- Government > Regional Government > North America Government > United States Government (1.00)
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- South America > Brazil > Rio de Janeiro > South Atlantic Ocean > Campos Basin > Marlim Sul Field > Macae Formation (0.99)
- South America > Brazil > Rio de Janeiro > South Atlantic Ocean > Campos Basin > Marlim Sul Field > Lago Feia Formation (0.99)
- Oceania > Australia > Western Australia > North West Shelf > Browse Basin > Caswell Basin > Ichthys Field (0.99)
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E&P Notes North Sea Discoveries Highlight Rebound in the Slumbering Sea Stephen Rassenfoss, JPT Emerging Technology Senior Editor BP announced two North Sea discoveries, adding more energy to the rebound of what once looked like a moribund play. The Capercaillie and Achmelvich discoveries were made last year in established areas with nearby pipelines and platforms, which could make it possible for BP to put them into production relatively quickly. While BP officials will not say if the discoveries justify development, the company sounds optimistic. “We are hopeful that Capercaillie and Achmelvich may lead to further additions to our North Sea business,” Mark Thomas, BP North Sea regional president, said in a news release, adding that, “These are exciting times for BP in the North Sea as we lay the foundations of a refreshed and revitalized business that we expect to double production to 200,000 B/D a day by 2020 and keep producing beyond 2050.” Chevron, Total Log Big Discovery in Deepwater Gulf of Mexico Matt Zborowski, Technology Writer A sidetrack well is under way in the deepwater Gulf of Mexico to assess the Chevron-operated Ballymore prospect following a big oil discovery. The Ballymore discovery well reached total depth of 8898 m and encountered 205 m of net oil pay in a high-quality Norphlet reservoir, partner Total said. The prospect lies in 2000 m of water and 120 km off Louisiana on four blocks in the Norphlet formation, including Block MC 607 where the discovery was made. Norphlet includes Shell’s Appomattox discovery, which is expected to produce oil by the end of the decade. Shell’s other Norphlet discoveries include Vicksburg, Rydberg, and Fort Sumter. UK Shale Horizontal Drilling Under Way, Fracturing To Follow Matt Zborowski, Technology Writer Cuadrilla Resources has started drilling the UK’s first horizontal shale well at its exploration site at Preston New Road, Lancashire, and hopes to begin hydraulic fracturing of two wells in the second quarter. No wells have been fractured in the UK since 2011, when a Cuadrilla well triggered small earthquakes in Lancashire. Advancement of the drilling program comes as the operator recovered data suggesting “excellent rock quality for hydraulic fracturing and a high natural gas content in several zones” of the Bowland shale. Cuadrilla drilled a vertical pilot well to 2.7 km through the Upper and Lower Bowland shale rock intervals, taking 375 ft of core samples from three separate intervals. Wireline logs retrieved data across the entire Bowland shale section. Majors To Feature Heavily in Global Upstream M&A Activity in 2018 Matt Zborowski, Technology Writer Major operators with freshly repurposed portfolios and sanctioned projects may soon begin looking to pounce on opportunities that would build up their long-term growth prospects. “The majors have done a lot of work getting themselves in good shape at $50/bbl,” said Greig Aitken, Wood Mackenzie principal mergers and acquisitions (M&A) analyst, during a webcast on the topic. “As a result of that, they are looking generally pretty solid from a balance sheet perspective, and they have got pretty solid near-term growth outlooks. And, on that basis, the primary order of business should be normal portfolio management. “But, with these strong balance sheets and improved cash generation, they have got the strength to target the longer end of production outlooks, so we can expect to continue seeing some larger acquisitions from these companies targeting the long end of production growth,” he said. Another Outlook for Industry Predicts Healthy 2018 Joel Parshall, JPT Features Editor The global oil industry appears poised for stronger performance in 2018, having benefited from the financial discipline and cost-cutting innovation driven by several years of low oil prices and looking ahead to somewhat more stable market conditions. While oil prices have recently risen above $60/bbl, likely reflecting a number of short-term supply disruptions and concerns over Middle East tensions, forecasts generally call for prices to fluctuate sustainably between $40/bbl and $60/bbl and end the year in the higher part of that range. “Higher prices in or above that range will increase supply as countries lessen compliance with production quotas and United States shale production keeps increasing,” said Moody’s Investors Services in its 2018 industry outlook. E&Ps Hedging Production To Support Cash Flow and Returns Goals Stephen Whitfield, Senior Staff Writer Nodding to increased investor pressure, a new report from IHS Markit indicates that North American exploration and production (E&P) companies were more hedged than usual entering 2018. The report, IHS Markit Comparative Peer Group Analysis of North American E&Ps, showed that a group of 43 companies studied had hedged 25% of oil production, or 1.37 million BOPD, at $53.40/bbl by the end of 3Q 2017. The companies had also hedged 36% of gas production, or 12.37 Bcf/D, at $3.13/MMcf. This is an increase from 12% of oil and 31% of gas production hedged at the end of 2Q 2017. Paul O’Donnell, principal energy analyst at IHS Markit and author of the analysis, said in a statement that the hedging from the E&P peer group suggests a shift in strategy, as companies are taking advantage of the initial oil-price rally to the low-$50s/bbl range last year. ExxonMobil Plans To Triple Permian Output Matt Zborowski, Technology Writer Bolstered in part by recent cuts in the US corporate tax rate, ExxonMobil plans to triple its production from the Permian Basin of West Texas and southeastern New Mexico to 600,000 BOE/D by 2025, including a fivefold increase in tight oil output from the Delaware and Midland Basins. The Irving, Texas-based supermajor, which expects to lift its Permian horizontal rig count by another 65% over the next few years, notes that it has doubled its footage drilled per day on horizontal wells in the basin since early 2014 while reducing its per-foot drilling costs by 70%. At the end of the third quarter of 2017, the firm had 20 operated rigs working in the basin but said it intended to increase the count to 30 by year end 2018.
- North America > United States > Texas (1.00)
- Europe > United Kingdom (1.00)
- North America > United States > Gulf of Mexico > Central GOM (0.28)
- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
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E&P Notes CNOOC, Several International Firms Sign Agreements for Areas Offshore China China National Offshore Oil Corporation (CNOOC) has signed strategic cooperation agreements with nine international firms for two offshore areas in the Pearl River Mouth Basin off China. State-owned CNOOC said the agreements—which include Chevron, ConocoPhillips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation, and Total—are a first step in establishing what could be long-term cooperation on exploration and development of offshore Areas A and B. Each international firm has existing upstream operations in China. The 15,300-sq-km Area A lies in 80–120 m of water. Firms are open to explore its deep layers below the Paleogene Enping formation. The 48,700-sq-km Area B lies in 500–3,000 m of water. Firms can explore each layer beneath the surface of that area. How Does Vaca Muerta Stack Up vs. US Shale? Data Tell the Tale Matt Zborowski, Technology Writer For what seems like forever, the upstream universe has awaited the emergence of Argentina’s Vaca Muerta Shale as the international answer to US shale. In many regards, it already holds its own. In others, there is still much work to be done. Either way, 2018 and 2019 will mark a promising step forward for the play, according to data from research and consulting firm Rystad Energy. US shale plays grew exponentially during their development phases, with the number of horizontal wells completed shooting up year-to-year in their first 5 years of relevancy. Vaca Muerta shows potential for a similar activity surge given geology “as good or better than the majority of the US plays,” noted Ryan Carbrey, Rystad senior vice president, shale research, during a recent Vaca Muerta-focused webinar. Global Oil and Gas Exploration, Project Sanctions Expected to Rise in 2019 Matt Zborowski, Technology Writer Global discovered oil and gas resources and big project sanctions are expected to remain on the upswing through next year, according to separate industry outlooks from Rystad Energy and Wood Mackenzie. Internalizing lessons from a difficult last few years, operators are choosing investments more wisely and are now better prepared to deal with volatile oil markets, the consultancies concluded. “Oil and gas companies can cope with whatever is thrown at them in 2019,” said Tom Ellacott, Wood Mackenzie senior vice president. “Portfolios are set to weather low prices, and the recent slide in prices justifies the sector’s conservative mindset.” Straight Out of OPEC, Qatar Flexes Global Ambitions Trent Jacobs, JPT Digital Editor Fresh on the heels of its announcement to leave OPEC, Qatar is positioning itself to become an increasingly active player in global energy projects through minority partnerships with big explorers. Its most recent acquisition involves a 35% stake in Italian operating company Eni’s interest offshore Mexico. Late last year Qatar said that it would withdraw its 57-year membership in the Organization of Petroleum Exporting Countries and focus on increasing its natural gas production. Qatar is currently the world’s third-largest supplier of liquefied natural gas (LNG) behind Australia and the US. ExxonMobil Makes 10th Discovery Off Guyana, Lifts Resource Estimate by Another Billion Barrels Matt Zborowski, Technology Writer ExxonMobil’s Pluma-1 well off Guyana encountered 37 m of high-quality hydrocarbon-bearing sandstone reservoir, marking the firm’s 10th discovery in South America’s newest oil powerhouse. Located 27 km south of the Turbot-1 discovery on the southeast portion of the 26,800-sq-km Stabroek Block, Pluma-1 was drilled to 5,013 m in 1,018 m of water by the Noble Tom Madden drillship, which spudded the well 1 November. The major now estimates that its discovered recoverable resources for the block total 5 billion BOE, up 1 billion BOE from its previous estimate made over the summer, around the time that it announced its eighth discovery, Longtail, also on the southeast part of the block. Its ninth discovery came via the Hammerhead-1 well to the west. Mexico’s Giant Zama Discovery Gets New Interest Owner Matt Zborowski, Technology Writer Germany’s DEA Deutsche Erdoel AG has agreed to acquire privately held Sierra Oil & Gas, interest owner in six blocks in Mexico, including the giant Zama discovery. Sierra holds a 40% nonoperated interest in the 465-sq-km Block 7 containing much of the shallow-water Zama discovery, where appraisal drilling is under way. Zama is estimated to hold 400–800 million BOE of recoverable resources with estimated peak output of 150,000 BOE/D. Production is expected to start up by 2022–2023. Talos Energy is operator and Premier Oil is the other partner. Total Begins Production From Nigeria’s Giant Egina Field Total advanced its global deepwater campaign 29 December with the launch of production from the Egina Field 150 km offshore Nigeria. The Egina floating production, storage, and offloading vessel, which Total says is its largest ever, will be connected to 44 subsea wells and produce up to 200,000 B/D of oil. The field lies in 1600 m of water on Oil Mining Lease (OML) 130. Total says the project was developed 10% under budget, resulting in savings of more than $1 billion, driven in large part by a 30% reduction in average drilling time per well. The French major’s operating costs in Nigeria have been slashed by 40% during the last 4 years, Arnaud Breuillac, Total president, exploration and production, said in a news release. Oil Prices Take a 2014-Size Hit Stephen Rassenfoss, JPT Emerging Technology Senior Editor Oil prices fell sharply in late 2018, similar to 4 years ago, but this time around oil companies seem better able to make money at these price levels. The US Energy Information Administration (EIA) made those observations in a new report released in December, after a day of trading in which the benchmark US price closed at $47.20/bbl. Brent closed at $56.49/bbl. Companies that survived the price downturn that began in 2014 are in better shape now. “Most measures of profitability and balance sheet fitness indicate companies should be able to weather the recent price downturn,” the EIA report said.
- South America (1.00)
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- Financial News (0.86)
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- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- South America > Guyana > North Atlantic Ocean > Guyana-Suriname Basin > Stabroek Block (0.99)
- South America > Brazil > Campos Basin (0.99)
- South America > Brazil > Brazil > South Atlantic Ocean > Santos Basin (0.99)
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- Reservoir Description and Dynamics > Unconventional and Complex Reservoirs > Shale oil (1.00)
- Reservoir Description and Dynamics > Unconventional and Complex Reservoirs > Shale gas (1.00)
- Reservoir Description and Dynamics > Reservoir Characterization > Exploration, development, structural geology (1.00)
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Could 2019 be a bumper year for offshore energy development? In just the first few weeks of this year, four discoveries in the UK North Sea and offshore Guyana and South Africa found 1.3 billion BOE--25% of the approximately 5.3 billion BOE high-impact volume discovered globally in the whole of 2018--according to Westwood Global Energy Group. Westwood has identified another 78 high-impact exploration wells either currently being drilled or planned for the remainder of 2019. The expected gross unrisked volume of oil and gas from the 78 wells is 23 billion BOE. More than half the wells are in deep water (Figure 1).
- Asia > Middle East (1.00)
- Europe > United Kingdom > North Sea (0.88)
- South America > Suriname > North Atlantic Ocean > Guyana-Suriname Basin (0.99)
- South America > Guyana > North Atlantic Ocean > Guyana-Suriname Basin > Stabroek Block (0.99)
- South America > Brazil > Brazil > South Atlantic Ocean > Santos Basin (0.99)
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