Chevron makes natural gas discoveryin Exmouth Plateau area of Carnarvon Basin offshore Western Australia

Chevron Corp. has made a natural gas discovery in the Exmouth Plateau area of the Carnarvon Basin offshore Western Australia. The Brederode-1 exploration well is located within the WA-364-P permit area approximately 217 miles northwest of Onslow. Situated in 4,550 feet of water, the well was drilled to a depth of 9,022 feet and encountered approximately 49 feet of net gas pay.

Jim Blackwell, president, Chevron Asia Pacific Exploration and Production Co., said the Brederode-1 discovery, which follows the 2009 Kentish Knock discovery in the same area, extends the gas resources farther offshore Australia and continues to grow the company's discovered gas portfolio in Australia.

Chevron's Australian subsidiary is the operator of WA-364-P with 50% interest. Shell Development (Australia) also holds 50%.

Seadrill subdisidiary Seawell to acquire Allis-Chalmers in $890 million transaction

In a move that will create one of the largest independent well services companies, Seadrill Ltd.'s majority owned subsidiary Seawell will acquire Allis-Chalmers in a transaction valued at US$890 million.

The combined company will have approximately 6,500 employees and is projected by equity research analysts to have an estimated revenues of US$1.3 billion and a contribution to capital or EBITDA of US$195 million in 2010.

The combined company will operate its Drilling and Well Services in more than 30 of the world's key oil and gas regions including the US, Gulf of Mexico, Brazil, Argentina, North Sea, Middle East, Africa and Southeast Asia / Pacific.

The merger is conditioned, among other things, on the listing of Seawell on the Oslo Børs or the London Stock Exchange and Seawell raising no less than an additional US$100 million in equity.

Upon completion of the merger, Jørgen Peter Rasmussen will be the combined company's new CEO and president, and a member of the board of directors. The new company's COO and executive vice president will be Thorleif Egeli who is currently the CEO of Seawell Management AS. The non-executive chairman of Seawell Ltd. will be Saad Bargach of Lime Rock Partners and Tor Olav Trøim will continue as vice chairman.

Lime Rock Partners V LP has agreed to entered into an agreement with Seawell pursuant to which Lime Rock has, among other things, agreed that if it votes in favor of the merger, it will elect to receive Seawell common shares in respect of the Allis-Chalmers preferred and common stock that it holds. Pursuant to this agreement, Lime Rock has also agreed to vote its Allis-Chalmers shares against any alternative transaction for a period of nine months following any termination of the merger agreement.

The companies anticipate that the transaction could close as soon as the end of the calendar year.

Alpha Corporate Finance and Goldman Sachs International are acting as Seawell's financial advisors. Seawell's legal advisors are Skadden, Arps, Slate, Meagher & Flom LLP, and Wiersholm, Mellbye & Bech, advokatfirma AS. Andrews Kurth LLP and Thommessen are legal advisors for Allis-Chalmers. RBC Capital Markets Corp. is acting as Allis-Chalmers' financial advisor and rendered a fairness opinion to its board of directors.

After opposition, Kosmos, ExxonMobil cancel Ghana asset sale

After the deal met with resistance, US-based Kosmos Energy and ExxonMobil cancelled a Share Purchase Agreement that would have resulted in oil major Shell acquiring nearly US$4 billion in Ghana assets.

According to the Energy Ministry of Ghana, the major challenges regarding the upstream petroleum sector is sustainably developing the industry while judiciously managing the revenue received from the industry in a way that "will ensure maximum benefits to the people of Ghana."

Ghana National Petroleum Corp., the state oil company, opposed the transaction on the grounds that it violated the country's laws in that it was not offered first right of refusal.

In a press release, Brian F. Maxted, Kosmos' COO, said that the company "will continue to work with our block partners and the Government of Ghana to develop these resources," noting that, "first oil from the Jubilee Field phase one development is fast approaching."

Dallas-based Kosmos Energy, established in 2003, chose West Africa as its operational venue because of its high-quality exploration prospects (OGFJ, September 2008, p. 26).

Oil production from the Jubilee Field phase one development is expected to start at the tail-end of 2010 and reach a production plateau of 120,000 barrels of oil per day during the first half of 2011.

On the Deepwater Tano Block, drilling continues on the side track of the Owo-1 discovery well to gather additional geological data and test a lower objective. The Oninya exploration prospect, also on the Deepwater Tano Block, will be drilled immediately following completion of the Owo-1 side track.

"Our focus is to ensure that Kosmos is well-positioned operationally and financially to fulfill its roles as operator of the West Cape Three Points Block, technical operator for development of the Jubilee Field, and partner in the Deepwater Tano Block," Maxted added.

Kosmos Energy is the operator of the West Cape Three Points Block in which it holds a 30.875% interest. Partners in the block are Anadarko (30.875% working interest), Tullow Oil plc (22.896% working interest), Ghana National Petroleum Corp. (10% participating interest), E.O. Group (3.5% working interest), and Sabre Oil and Gas Ltd. (1.854% working interest).

The company also holds an 18% interest in the Deepwater Tano block. Partners in the block are Tullow Oil plc (49.95% working interest), Anadarko (18% working interest), Ghana National Petroleum Corp. (10% participating interest), and Sabre Oil and Gas Ltd. (4.05% working interest).

The US firm is backed by private equity investors Warburg Pincus and Blackstone Capital Partners. — Mikaila Adams

Tests from two discoveries, appraisal well, total 8,855 barrels of oil, 4.9 MMcf/d for Apache

Apache Corp. has reported two new oil discoveries and a significant appraisal in the Faghur Basin in the far southwest of Egypt's Western Desert oil and gas province.

• The Pepi-1X, drilled approximately 6 miles (10 km) south of Apache's Phiops Field, test-flowed at 4,216 barrels of oil and 4.9 million cubic feet (MMcf) of gas per day from a 68-foot gross interval in the Lower Safa formation.
• The Buchis South-1X, also about 6 miles south of Phiops, logged 131 feet of pay in several Cretaceous zones, including the Kharita and Alam El Buieb (AEB) sands. A test in one AEB zone flowed 1,647 barrels of oil per day.
• The Faghur-8X step-out appraisal extended the Faghur Field by 1.6 miles (2.7 km) to the east. The well logged 79 feet of stacked Cretaceous pay in multiple AEB sands. A well test in one AEB sand flowed at an average rate of 2,992 barrels per day.

The Pepi and Buchis discoveries set up several additional exploration drilling opportunities on trend, and the Faghur-8X significantly increased the size of the field and set up a number of follow-up development drilling opportunities.

Current gross production from the Faghur Basin is approximately 24,000 barrels of oil per day. Additional infrastructure projects are expected to bring processing and transportation capacity from the basin to 40,000 barrels of oil per day before year-end 2010. In the second quarter, Apache's gross production in Egypt totaled approximately 181,000 barrels of oil and 789 MMcf of gas per day; Apache's net production during the period totaled approximately 98,500 barrels of oil and 388 MMcf of gas per day.

Apache has drilled five discoveries among eight exploration wells in the Faghur Basin during 2010. Drilling is under way on two wells - WKAL I-3X and Nebra-1X - and five additional exploration wells are planned. Apache continues to evaluate 3-D seismic surveys - including a recently completed 155-square-mile survey - to identify additional exploration opportunities in the basin.

OGX finds hydrocarbons in Campos Basin offshore Brazil

OGX SA has identified the presence of hydrocarbons in the Albian and Santonian sections of well 1-OGX-18-RJS, located in the BM-C-40 block, in the shallow waters of the Campos Basin offshore Brazil. OGX holds a 100% working interest in this block.

"The OGX-18 well is located 2 kilometers away from OGX-14, the Peró prospect. The proximity of these discoveries, combined with the fact that the Albian section of this well is structurally 56 meters higher than at OGX-14, points to a potentially superior column than the one already encountered in this block," commented Paulo Mendonça, general executive officer of OGX.

To date, an oil column of approximately 12 meters was encountered in carbonate reservoirs in the Albian section of well OGX-18, also known as Ingá. The well was in a hydrocarbon zone when drilling was interrupted due to sampling. Drilling continues to determine the total column and net pay.

Additionally in the Santonian section, high porosity sands with hydrocarbons were encountered. The drilling of well OGX-18 is still in progress and is expected to continue to a maximum final depth of approximately 2,800 meters.

The OGX-18 well, located in the BM-C-40 block, is situated approximately 95km off the coast of the state of Rio de Janeiro at a water depth of approximately 105 meters. The rig, Diamond Offshore's Ocean Lexington, initiated drilling activities there on July 29.

For more information on the oil and gas industry in Brazil, turn to the Special Report on p. 54.

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