Falklands : Hydrocarbons Daily Record (10/10/06)
Submitted by Falkland Islands News Network (Juanita Brock) 10.10.2006 (Article Archived on 24.10.2006)
The threatened OPEC production cuts did not have the desired result and the price of crude dropped today.
HYDROCARBONS DAILY RECORD: TUESDAY, 10 OCTOBER 2006
By J. Brock (FINN)
At 1800 LMT Tuesday, 10 October 2006 Light Sweet Crude fell $1.01 Cents to stand at $58.95 on the New York Mercantile Exchange and Brent Crude lost .93 Cents to stand at $59.61 on London’s ICE Futures Exchange.
TRENDS
The price of crude dropped today when the US released figures to show it overestimated the demand for winter heating fuel. This is despite the letter sent by OPEC’s President to all members about how the 3% should be cut from that organisation’s production. It is thought tat the planned production cut of 3% would not affect the price of crude that much. What will affect it is if OPEC decided on further cuts.
THE MARKETS
FTSE
At the close of play today, the FTSE 100 was up 41.82 points to settle 6,072.70 and the FTSE 250 gained 92.22 to end at 10,244.50. FTSE Small Cap closed up 25.47 points to settle at 3,599.40.
DOW JONES AND NASDAQ
Quarterly earnings statistics are due out shortly and Wednesday could be a different day but for now economic indicators are good.
At the end of play today the Dow Jones Index gained 9.36 points or 0.08% to settle at 11,867.17 and the NASDAQ gained 3.66 points or 0.16% to settle at 2,315.43
DEVELOPING FACTORS
(Uganda)
Heritage Oil, the operator of the Kingfisher-1 exploration well in Uganda, in which Tullow Oil plc (Tullow) is a 50% partner, today announced that it is preparing to production test the Kingfisher-1 exploration well in Block 3A, Uganda. The Company is planning to test up to four intervals with a total net pay of 37 meters in a stacked sand and shale sequence that is typical of the basin. In order to do so, drilling operations have been temporarily suspended.
The well was drilled to a depth of 2,125 meters, and wire-line logs, formation pressure testing and sampling have evidenced encouraging indications of hydrocarbons. Heritage anticipates that it will commence testing of the Kingfisher-1 well within a month and the testing program is scheduled to take up to three weeks. More results show that the well encountered hydrocarbons within a section above the primary objective. Drilling to the primary objective is planned to recommence after this initial well testing operation has been completed. It is estimated that it could take a further 60 days to reach target depth of between 3,000 and 4,000 meters. Further details about Heritage's exploration activities in Uganda will be announced when the results of the initial test program are available. Heritage is the Operator of Block 3A in Uganda with a 50% equity in the license, with Tullow Oil holding the remaining 50% interest.
(United States)
Alaska’s proposed Gas Reserves Tax is due to be voted on during US mid-term elections on November 7th this year. According to several press reports published on 10 October the tax would provide temptations for the owners and operators of Prudhoe Bay as well as other North Slope oilfields to violate Alaska’s Conservation Commission ruling that prevents waste and ensures the greatest possible recovery of hydrocarbons from that State’s North Slope fields. Technical advice shows that natural gas helps to boost oil recovery at Prudhoe Bay as well as other North Slope fields. Nonetheless the Commission has ruled that BP cannot send natural gas down the pipeline unless it grants permission. This is a developing story that will be watched on a regular basis.
DEVELOPING REGIONAL FACTORS
(Chile)
Further to Monday’s report, though ENAP knew about sizable gas reserves in Magallanes for at least 20 years, the price of gas has risen high enough to make E&P in the region financially viable. ENAP began E&P works on the Lago Mercedes block in 2005. The Bermuda energy firm Geopark holds a special hydrocarbons operating contract (CEOP) for the Fell block in Region XII. Otherwise, the region's gas reserves remain largely untapped. Chile's state oil company, and their mining and energy ministry are planning rules for bidding for three blocks in Region XII's Magallanes basin. It is hoped the tender process for Joint Venture exploration works will be launched before year-end, according to Energy Minister Karen Poniachik. Ten exploration companies have expressed interest in the three blocks in the far south of the country, called Coirón, Caupolicán and Lenga. Technological and financial support are sought and are two factors behind Chile's decision to seek partners.
(Falkland Islands)
Share prices at the close of play on Tuesday, 10 October 2006
Desire Petroleum Plc ended unchanged on the day to settle at 32.25.
Falkland Oil and Gas Limited (FOGL) ended up 3.50 points or 4.29% on the day to stand at 85.00.
Rockhopper Exploration ended down 0.50 points or 1.25% on the day to settle at 39.50.
Borders & Southern ended down 0.25 points or 0.65% on the day to stand at 38.00
Tullow Oil ended up 22.50 points or 6.11% to stand at 391.00
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