Falklands : Hydrocarbons Weekend Record (28 to 30 September 2007)
Submitted by Falkland Islands News Network (Juanita Brock) 01.10.2007 (Article Archived on 15.10.2007)
Crude prices are artificially high and could lead to a mass "Greening" of energy generation.
HYDROCARBONS WEEKEND RECORD: 28 TO 30 SEPTEMBER 2007
Compiled by J. Brock (FINN)
By J. Brock (FINN)
Though Falkland Islands exploration company boss Howard Obee has clearly stated that his company is willing to work with other firms operating there to develop a joint drilling campaign, he is limited in his choice when it comes to exploration drilling.
Mr. Obee, chief executive of Borders and Southern Petroleum, which just recently hired PGS for a 1,500 sq. km 3D seismic survey campaign over its licences to the south of the Falklands, says his company is preparing an environmental impact statement in preparation for drilling, and indicated his willingness to share a rig.
“With respect to accessing drilling rigs, it is the company’s intention to participate in any joint drilling activity with the other Falkland Island operating companies and we will continue to work with these companies to progress this,” Obee said.
However, the deep waters of the South Falkland Basin where Borders & Southern are prospecting are suitable only for a drill ship and not a rig. Even rigs enhanced to drill in deeper waters are not yet suitable for Borders & Southern’s depths. They could be in due course, as technology is advancing as this is being written. Rockhopper Exploration and Desire Petroleum are currently working their own prospects for possible drilling off the Falkland Islands.
They are exploring in water that is at a shallower depth than are FOGL and Borders & Southern whose waters are clearly 750 to 1000 metres deeper.
Obee went on to state: “The next 12 months will be an exciting time for the company as we get greater clarity on the value of our acreage and prepare the groundwork for the drilling phase.”
Borders and Southern has indicated to the Falkland Islands News Network that it has identified a number of high-graded leads on its acreage, some of which encompass areas of more than 50 sq. km (20 sq. miles).
Borders and Southern expects PGS to start its 3D South Falklands survey next month.
Today the company reported its interim results for the first half of the year, and disclosed a £362,015 loss on operations for the six months to June, similar to the £361,22 loss reported for the first half last year. Losses on ordinary activity after tax were £117,158, for the first half of 2007, down from £182,010 last year. Friday, September 28, 2007
28 September 2007
Rockhopper Exploration plc (the “Company”)
Total Voting Rights:In conformity with the Transparency Directive's transitional provision
6, the Company
notifies the market of the following:
As at the date of this announcement, the Company's issued share capital consists of
75,665,285 ordinary shares with a nominal value of 1 pence each (“Ordinary Shares”),
with voting rights. The Company does not hold any Ordinary Shares in Treasury.
Therefore, the total number of Ordinary Shares with voting rights is 75,665,285.
The above figure of 75,665,285 Ordinary Shares may be used by shareholders in the Company
as the denominator for the calculations by which they will determine if they are required
to notify their interest in, or a change in their interest in, the share capital of the
Company under the FSA's Disclosure and Transparency Rules.
Friday, 28 September 2007 Light Sweet Crude was trading at $81.66 down $1.22 on the New York Mercantile Exchange. Brent Crude was trading at $80.78 up 75 Cents on London’s ICE Futures Market.
Analysis: Friday, 28 September 2007:
Another session of profit taking in the US has caused the price of Light Sweet Crude to decline today. Many analysts feel that the price of crude is uncontrollable with $90 and $100 oil being threatened. The market might not sustain higher prices with the economy cooling. Demand for gasoline is declining and indications are that there is enough supply of distillates to keep prices steady.
RELEVANT SHARE PRICES 28 SEPTEMBER 2007:
TLW: 596.00 up 11.00, DES: 28.25 up 0.75, FOGL: 170.00 up 22.50, RKH: 50.50 unchanged, BOR: 37.00 down 1.00, PRE: 13.75 unchanged, GBP: 8.63 unchanged, GPK: 420.00 unchanged.
LAST WEEK’S CRUDE PRICES:
Monday, 24 September 2007 Light Sweet Crude was trading at $80.95 down 67 Cents on the New York Mercantile Exchange. Brent Crude was trading at $78.91 down 39 Cents on London’s ICE Futures Market.
Tuesday, 25 September 2007 Light Sweet Crude was trading at $79.53 down $1.42 on the New York Mercantile Exchange. Brent Crude was trading at $77.52 down $1.59 on London’s ICE Futures Market.
Wednesday, 26 September 2007 Light Sweet Crude was trading at $80.30 up 77 Cents on the New York Mercantile Exchange. Brent Crude was trading at $77.43 down 19 Cents on London’s ICE Futures Market.
Thursday, 27 September 2007 Light Sweet Crude was trading at $82.88 up $2.58 on the New York Mercantile Exchange. Brent Crude was trading at $80.03 up $2.60 on London’s ICE Futures Market.
Monday, 24 September 2007:
Profit taking was the cause of today’s decrease in crude prices.
Tuesday, 25 September 2007:
Refineries damaged in the Gulf of Mexico are now back online. This and stock market declines helped to decrease the price of crude today. Limited profit taking also caused today’s decrease in crude prices.
Wednesday, 26 September 2007:
The US Department of Energy Administration reported a drop in refinery capacity this week and this helped to increase the price of Light Sweet Crude today
Thursday, 27 September 2007:
Now it is storage capacity causing the price of crude to increase. Apparently the Cushing Storage facility in West Texas is not filled to capacity and is down 209,000 barrels. It won’t take long now before people will get fed up and vote for energy change with their pocketbooks. Already there are trends towards smaller, more energy-efficient vehicles in the United States. With the slow down in the US economy fuelled by declines in the housing market, there will be more people switching to alternative energy as well. You might have the best gasoline going but if people can’t afford to buy it the price will either come down or the product will simply sit in storage at the expense of those who have profited from higher hydrocarbons prices.
BRIEF INVENTIRY REPORT FOR WEEK ENDING 21 SEPTEMBER 2007:
Crude: up 1.8 million barrels to 320.6 million barrels
Gasoline: up 600,000 barrels to 191.4 million barrels
Distillates: up 1.6 million barrels to137.1 million barrels
Refinery Capacity: down 2.7% to 86.9%
LAST WEEK’S REGIONAL DEVELOPMENTS:
Environmental authorities in Argentina environmental has slapped restrictions on a Petrobras fuel storage complex on the Riachuelo River because it is leaking sewage and chemicals as it flows past Buenos Aires’ historic La Boca district. Two weeks ago the authorities shut down a near-by refinery operated by Royal Dutch Shell PLC over pollution claims. Shell was allowed to reopen its refinery after presenting a cleanup plan.
(Brazil and Venezuela)
Venezuela’s President, Hugo Chavez, has said that there are problems with the Southern Gas Pipeline. He and Brazil’s President Luiz Inácio Lula da Silva last week discussed the problems but have not been able to resolve them. Newspapers quote: "there are some problems between (state oil firms) Petrobras and Petróleos de Venezuela (Pdvsa). They have not managed to reach an agreement." It seems that the problems are technical ones between the two state-run energy companies.
The price of unregulated natural gas in Colombia is increasing to US$3.50-4.00 per million cubic feet. Regulated natural gas is still around US$2.50 million cubic feet. Most new contracts signed with state hydrocarbons regulator ANH allow producers to sell gas on the domestic market at unregulated prices. The export natural gas is allowed but reservoir reserves need to last at least six years. Natural gas prices in neighbouring countries are artificially high and this may lead Colombian companies to consider LNG projects. Reservoirs would have to be found containing at least 4Tf3 (113Bm3) to make projects profitable over the typical 20-year lifespan of an LNG degasification plant.
According to the website, OPEC has cut Venezuela's crude production ceiling to 2.47million barrels per day. Venezuela is currently producing 2.4 million barrels a day - a decrease of more than 1million barrels a day. HDR has reported that PDVSA wanted to increase production to 5.8 million barrels a day by 2012. Nonetheless, OPEC announced a global decrease in production of 500,000 barrels a day as of 01 November 2007.
(Spain and Argentina)
Spanish oil company Repsol YPF SA, is seeking to become less dependent on Latin America and has delayed its plan to sell its Argentine YPF unit until 2008. Technical reasons caused by YPF's bylaws have slowed the process down until then. Repsol aims to keep control of YPF but could sell as much as 25 percent to private investors and 20 percent on the stock exchange.
(Argentina and Venezuela)
Venezuela would like to purchase Exxon Mobil's assets in Argentina. According to Luis Vierma. vice-president of the Venezuela’s state oil company, PDVSA. Months ago Exxon decided to leave Venezuela due to nationalisation of the Orinoco oil belt. Now the Company is selling all of its assets in Argentina and plans to quit operations in other South American countries. Exxon Mobil's operation in Argentina is estimated to be USD 200 million.
LAST WEEK’S LOCAL DEVELOPMENTS:
Borders & Southern Petroleum PLC
(“Borders & Southern” or “the Company”)
3D Seismic Agreement and Subscription for New Ordinary Shares
Borders & Southern is pleased to announce that it has signed a Seismic Agreement with Petroleum Geo-Services ("PGS") to conduct a 3D survey within its South Falklands Basin Production Licences. PGS is a technology focused oilfield service company principally involved in the worldwide provision of a broad range of geophysical and reservoir services including seismic data acquisition, processing, interpretation and field evaluation. The Agreement is on attractive terms and represents the most extensive 3D seismic study ever conducted in this area.
The 3D survey area will measure approximately 1,500 sq km and will be located over some of the Company’s high-graded leads that were identified on the earlier 2D seismic data. The 3D will provide detailed information on the reservoir distribution and structural integrity of the leads and will allow the Company to assess some of the amplitude anomalies associated with the structures. Ultimately the 3D will allow the Company to rank its prospects and define drilling locations.
PGS will be using its vessel Ocean Explorer, with six solid streamers, to acquire the survey. It is anticipated that the survey will commence in October this year and, depending on weather conditions, last approximately four months.
Separately, the Company announces that it has signed a Subscription Agreement with PGS under which PGS has subscribed for 16,656,670 new ordinary shares of 1 pence each (Ordinary Shares) in the Company to raise $10 million. The subscription price was 30p per share (the same price as the Company’s recently completed Placing that raised £15 million). Following the Subscription, there will be 194,344,170 ordinary shares outstanding in the Company which will result in PGS holding 8.57% of the total.
Chief Executive Howard Obee commented, “We’re delighted to have signed a Seismic Agreement with one of the world’s leading geophysical services companies at a price we believe to be competitive. This is a large and complex 3D survey which will allow us to fully evaluate some of the exciting prospects that have been identified on our 2D data. We’re also very pleased that PGS have been sufficiently impressed by our acreage that it has chosen to subscribe for a material equity stake in the Company. We look forward to a fruitful working
Rune Eng, Group President PGS Marine, commented “Equity stakes in smaller exploration companies like Borders & Southern Petroleum PLC have proven to be one effective way of leveraging our seismic capabilities. We are very excited to work with Borders & Southern on this project and we hope to help them uncover valuable new technical information in their held acreage area.”
EXTRACTS FROM A FOGL PRESS RELEASE:
Note: The full press release can be seen on http://www.fogl.com.
24 September 2007
The last six months have seen significant progress as the Company has carried out its exploration programme designed specifically to de-risk the prospects on its acreage and produce a prioritised list of drilling prospects. The Controlled Source Electro-Magnetic survey (“CSEM”), as well as the infill 2D seismic survey have been completed Initial indications have been encouraging and we expect to announce the results of these surveys later in the year.
CSEM survey: This survey commenced in February and involved the acquisition of seven lines in two phases by Offshore Hydrocarbon Mapping plc. The second phase which involved three lines over six prospects was completed in late August. Processing of these data is expected to take six to eight weeks. Initial results from both phases of the survey are very encouraging with positive CSEM anomalies being recognised over a number of the Company’s best prospects.
2D Seismic survey
FOGL commenced its most recent 2D seismic survey in December 2006 and this was carried out by Wavefield InSeis AS. The survey which was completed in May 2007 has led to the acquisition of a further 9,950 km of seismic data. Processing of these data has already commenced, but it will take several months to complete; early indications are that the data that has been gained in this survey will provide much higher definition of the Company’s high-graded prospects. The Company now has a total of 32,500 km of 2D over its acreage.
Sea Bottom Coring
Sea Bottom Coring is planned to take place in the 4th Quarter of 2007. The forward plan is to integrate the results of these surveys with the Company’s existing data in order to produce a prioritised list of the best prospects for drilling.
During the half year, exploration expenditure amounted to £8.4 million and total cash outflow during the period was £11.3 million. Cash balances at 30 June 2007 amounted to £7.9 million (31 December 2006: £14.9 million). The expenditure was funded by the reduction in the company’s cash balances and by further draw downs totalling £4 million from RAB Special Situations (Master) Fund Limited (“RAB SSMF”) under the £8 million Convertible Loan Note Agreement announced last year. The last remaining tranche of £2million due under the Agreement will be drawn down in September 2007.
Post Balance sheet events
On 23 July we announced that we were in advanced discussion with a major company with a view to them gaining an interest in the Company’s assets. These discussions are still progressing and we hope to be able to provide an update in due course.
FOGL is also pleased to announce that it now holds a 100% stake in the Falkland licences granted in 2002 which now amount to 14,500 sq km, after Tullow Oil plc relinquished its 22.5% stake which it gained through its acquisition of Hardman Resources in 2006. Under the terms of the Joint Operating Agreement this interest reverts to FOGL without any payment. The increased stake provides us with further flexibility in dealing with our licences in which we will have an undivided 100% interest.
Borders & Southern have announced that Petroleum Geo-Services (PGS), an oilfield service company, has purchased 8.57% or 16.7million shares in the company at 30 pence each for $10million USD. Petroleum Geo-Services will conduct a 3D survey in Borders & Southern’s acreage in the South Falklands Basin. The press release went on to say that Borders & Southern has signed a seismic agreement with PGS to conduct a 3D survey within its South Falklands Basin. This be 'the most extensive 3D seismic study ever conducted in this area.
The 3D survey area is about 1,500 sq km and located over some of the company's best prospects that were identified using earlier 2D seismic data. The survey should start in October. The finishing time depends on the weather and sea conditions.
Borders & Southern Petroleum PLC
("Borders & Southern" or the "Company")
Subscription of new ordinary shares by PGS
Application has been made for the 16,656,670 new ordinary shares in the Company recently
agreed to be subscribed by PGS Overseas AS to be admitted to trading on AIM, with admission
and completion of the subscription expected to take place on 2 October 2007. Following such
admission, the total number of ordinary shares in issue will be 194,344,170. Borders &
Southern further announces that following the subscription the holdings of the directors
who hold more than 3% of the Company's issued share
Please visit the London Stock Exchange Website for full details.
Desire Petroleum plc
Holding in Company
The Company was notified on 25 September 2007 that, on 25 September 2007, MF Global
UK Limited disposed of 260,000 ordinary shares taking its holding to 8,867,547 ordinary
shares, representing 3.92 per cent. of the issued share capital of the Company.
Source: The London Stock Exchange