Occidental adds West Texas, Piceance acreage, set to develop Abu Dhabi oil, gas fields

Occidental Petroleum Corp. has signed a number of deals recently. One gives the company additional acreage in West Texas, and the other sets the company up for development in Abu Dhabi.

In October, the company signed a definitive purchase and sale agreement with Plains Exploration & Production Co. for all of PXP’s interests in the Permian Basin of West Texas and New Mexico and Piceance Basin of Colorado for $1.25 billion.

Current production (net to Occidental) from the properties being acquired is roughly 4,300 barrels of liquids and 52 million cubic feet of gas per day (MMcfd); for a total of 13,000 barrels of oil equivalent per day (boe/d). The properties have nearly 92 million boe of proved reserves (net to Occidental); of which nearly 69% are natural gas and 45% are developed.

In the Piceance basin in the first half of 2008, Occidental produced in excess of 50 MMcfd. Occidental expects this to grow to at least 200 MMcfd in 2010, including this acquisition. Occidental’s net acreage position in the Piceance Basin now totals 129,000 acres.

In a transaction that was announced last year, Occidental acquired a 50% interest in these properties, and is purchasing the remainder in this transaction.

In another recent transaction, the company signed a preliminary agreement with Abu Dhabi National Oil Co. (ADNOC) to appraise and develop Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi. Oxy will operate both fields and hold a 100% interest in newly created concessions.

The Jarn Yaphour field is located onshore near the capital city of Abu Dhabi. Development activities at the field will commence immediately and first production from the field is expected in 2009. Gross production from the initial development is anticipated to be around 10,000 boe/d.

The Ramhan discovery, located in very shallow water near the Abu Dhabi refinery, was tested in 1992 and flowed at a combined rate of 1,750 barrels of oil and 14 MMcfd from one well.

Appraisal activities will commence immediately and, if technically and commercially successful, production from the Ramhan initial development is also expected to be in the 10,000 boepd range. First production from the field could commence as early as 2011.

Total capital investment in both development projects is expected to be in the range of $500 million over the next three to four years.

Financial market uncertainty delays EnCana’s creation of Cenovus Energy

EnCana Corp. is revising the original schedule for its proposed split into two independent energy companies focused on unconventional resources – an integrated oil company to be named Cenovus Energy Inc. and a pure-play natural gas company, which will retain the name EnCana Corp.

Given the uncertainty and volatility in the global financial markets, EnCana is choosing to delay the timing of a shareholder vote, originally planned for December, until clear signs of stabilization return to financial markets.

“We remain committed to creating Cenovus and we are continuing to work on reorganizing our company’s structure so that we are ready to move forward with the transaction at the appropriate time,” said Randy Eresman, EnCana’s president and CEO.

Eresman noted that the reasons for creating the integrated oil company Cenovus, and establishing EnCana as a pure-play natural gas company, still make sense, but that the timing is not right at this time. “There is currently too much uncertainty in the global debt and equity markets to proceed with external approvals at this time.

Price risk managed with hedges

Over the next year, EnCana has a substantial portion of expected future production hedged. About 80% of EnCana’s total production is natural gas. For the 2009 gas year, EnCana has about 2.5 bcf/d – about 60% of current production – hedged at an average price of US$9.15 per thousand cubic feet.

Cash flow, production on track, balance sheet maintained

EnCana targets a net debt-to-capitalization ratio between 30% and 40% and a net debt-to-adjusted-EBITDA multiple, on a trailing 12-month basis, of 1 to 2 times. EnCana maintains a fairly conservative capital structure with roughly 78% of its outstanding debt set at a fixed-rate with maturities between 2009 and 2038.

Upcoming debt maturities of $250 million in August 2009 and $200 million in September 2010 are deemed modest, according to the company, relative to its financial capacity and cash flow. EnCana has committed bank credit facilities of roughly $4.8 billion, of which $2.7 billion was available at the end of September.

Anadarko makes pre-salt discovery at Wahoo prospect offshore Brazil

Anadarko Petroleum Corp. has made a pre-salt discovery at the Wahoo prospect offshore Brazil in the Campos Basin. The 1-APL-1-ESS well, drilled by the drillship Deepwater Millennium, is located on block BM-C-30 in nearly 4,650 feet of water roughly 25 miles southeast and syncline separated from Petrobras’ previously announced pre-salt discoveries at the giant Jubarte field.

Preliminary results at Wahoo, based on wireline logs, indicate at least 195 feet of net pay with similar characteristics to the nearby Jubarte 1-ESS-103A well, which is Brazil’s first producing pre-salt field having recently achieved reported initial rates of approximately 18,000 b/d of light oil.

Anadarko senior vice president, worldwide exploration Bob Daniels noted, “It’s still early in the process, and we plan to continue drilling toward additional targeted objectives to a total depth of approximately 20,000 feet. The positive results so far provide encouragement and validate our decision to relocate the Transocean Deepwater Millennium drillship to Brazil to execute our ongoing pre-salt exploration program, which includes at least four additional wells in the deepwater Campos and Espirito Santo basins through the middle of next year.”

The Wahoo well is currently drilling at approximately 18,400 feet. The partners plan to conduct additional logging, including pressure and fluid sampling, once the well reaches total depth, with the potential to conduct a drillstem test at a later date. Following operations at Wahoo, Anadarko anticipates moving the Deepwater Millennium drillship to the Serpa prospect (30% working interest) on BM-ES-24 to re-enter the prospect where the initial well encountered pre-salt hydrocarbon-bearing zones in secondary objectives and did not reach the primary objective because of rig limitations.

Anadarko, through a wholly owned subsidiary, holds a 30% working interest and is the operator of BM-C-30. Devon Energy Corp. holds a 25% working interest, EnCana Brasil Petroleo Limitada, a wholly-owned subsidiary of Bharat PetroResources Ltd. and Videocon Industries, holds a 25% working interest, and SK do Brazil Ltda. holds the remaining 20% working interest.

Chevron achieves full production from Tengiz expansion projects

Chevron Corp.’s affiliate, Tengizchevroil LLP, has completed a major expansion at the Tengiz Field in Kazakhstan that is expected to almost double production capacity. The completion of the expansion brings Tengizchevroil’s daily crude production capacity to 540,000 barrels. The first phase of expansion, accomplished earlier this year, increased daily capacity from nearly 310,000 barrels to 400,000 barrels.

Guy Hollingsworth, president of Chevron Europe, Eurasia and Middle East Exploration and Production noted, “The scale of this project is incredible. SGP is the largest single-train sour gas and crude processing unit in the world, and SGI is now returning sour gas to the reservoir at the highest concentrations of hydrogen sulfide and highest pressures ever accomplished.”

Chevron has a 50% interest in Tengizchevroil. Other partners are KazMunaiGas, 20%; ExxonMobil Kazakhstan Ventures Inc., 25%; and LUKArco, 5%.

BPZ completes tests from CX11-20XD

BPZ Resources Inc. has completed test results from the CX11-20XD well in the Corvina field of the offshore Block Z-1 in Northwest Peru. The company completed two drill stem tests (DST) on four sets of oil sands in the well testing a cumulative flow rate of 10,268 b/d.

Tests on the oil zones produced 100% oil with no water. The first DST achieved stabilized rates of 4,965 b/d with choke of 60/64, while the second DST achieved stabilized rates of 5,303 b/d with a similar choke size. The well will now be completed as an oil producer under the long-term testing program currently ongoing at the Corvina field. Re-completion with dual production strings will take place when the gas is needed for the company’s gas-to-power project.

Manolo Zúñiga, president and CEO stated “At 10,268 bopd, the 20XD has exceeded our expectations for initial test rates and will likely meet our three objectives of drilling our best oil producer to date, enhancing Corvina’s oil-in-place estimates and, consequently, increasing oil reserves.”

“The next well, the CX11-15D, will be spud as soon as the rig is moved to the corresponding slot. It is important that we move forward with the 15D, the final well in this initial Corvina drilling program from the CX11 platform, so that we can move on to Albacora where internal estimates show oil-in-place to be approximately three times the size of Corvina,” he added.

AGR Field, flexlife form partnership

AGR Field Operations and flexlife Ltd. have formed a partnership to provide a new application to the subsea sector of the oil and gas industry.

The application is set to help prevent the failure of flexible risers and flexible flow lines, thereby minimizing lost production and associated environmental impact of a leak.

Aberdeen-based flexlife devised the solution to scan flexible risers in situ and detect annulus flooding anywhere along their length, while AGR Field Operations has the ROV capability to deliver it through the Neptune system.

flexlife director Carl-Petter Halvorsen said, “This is the first time it has been possible to scan any flexible pipe in situ without access to the end fitting meaning any potential failures can be identified and dealt with more quickly than was possible previously. Neptune is fast, reliable and can go down to 6,000 metres so the technology can go anywhere in any environment meaning the potential cost savings and environmental benefits are immense.”

AMEC expands into offshore decommissioning with SeaMetric partnership

AMEC, the international engineering and project management company, and the marine heavy lifting company SeaMetric International AS, have paired up to provide a new international offshore decommissioning service to the maturing offshore oil and gas facilities.

AMEC will provide project management and technical support to SeaMetric’s Twin Marine Lifter (TML) projects in Asia and Latin America.

“The market for the decommissioning of offshore oil facilities is huge and working with SeaMetric will enable us to enhance our portfolio of asset support services to provide an integrated ‘end-of-life’ solution,” said Neil Bruce, COO of AMEC’s Natural Resources division. “In mature markets, with new independent operators and oil majors requiring new combinations of skills, we are well placed to deliver offshore decommissioning around the world. We have supported many of these offshore assets from their original concept through to design, commissioning and operations and maintenance, which puts us in a unique position to project manage and engineer the end of their life too.”

Marathon expands Indonesia leasehold, makes deepwater Angola, GoM discoveries

Recently, Marathon Oil Corp. has expanded its leasehold and made discoveries in others.

Indonesian expansion

First, a subsidiary of Marathon Oil Corp., Marathon Indonesia New Ventures Ltd., has been awarded a 49% interest and operatorship in the Bone Bay Block offshore Indonesia.

The Bone Bay Block is roughly 1.23 million acres and is located predominantly offshore southern Sulawesi Island. It is touted as a ‘high potential, under-explored area’ with water depths ranging between 165 to 6,500 feet.

Marathon expects to enter into a Production Sharing Contract with the Indonesian Government before the end of 2008. Current exploration plans call for the acquisition of 2D seismic starting in 2009, followed by drilling in 2011. Kaizan Oil and Gas LLC, a subsidiary of Black Gold Energy LLC, was awarded the remaining 51% interest in the Bone Bay Block.

Dione discovery

Secondly, another subsidiary, Marathon International Petroleum Angola Block 31 Ltd., has participated in the Dione discovery well in the southern area of Block 31 offshore Angola.

The Dione discovery well is located roughly 240 miles off the Angolan coast, and is about 5 miles southwest of the Juno-1 discovery well found in July 2005. The well was drilled in about 5,500 feet of water, to a total depth of more than 10,700 feet. Oil-bearing reservoirs were encountered in the Oligocene section. The well test results confirmed the capacity of the reservoir to flow in excess of 5,000 barrels per day under production conditions.

The concessionaire of Block 31 is Sonangol, Angola’s state-owned oil company. Marathon holds a 10% interest in Block 31. The operator is BP Exploration (Angola) Ltd. with 26.67%. The other interest owners are Esso Exploration and Production Angola (Block 31) Ltd. with 25%, Sonangol P&P with 20%, Statoil Angola AS with 13.33%, and TEPA (BLOCK 31) Ltd., a subsidiary of the Total Group with 5%.

Deepwater GoM discovery

Finally, the company has participated in a successful discovery well on the Freedom/Gunflint prospect, located on Mississippi Canyon Block 948, in the deepwater Gulf of Mexico.

The Freedom well is located nearly 160 miles southeast of New Orleans, La., and was drilled in about 6,100 feet of water, to a total depth of roughly 29,280 feet. The well encountered more than 550 feet of net hydrocarbon-bearing sands in the Middle and Lower Miocene reservoirs.

Marathon owns a 12.5% working interest in Mississippi Canyon Block 948. Noble Energy Inc. holds a 37.5% working interest in the well and will serve as operator for the block. BP Exploration & Production Inc. operated the exploration well with 25% working interest and Samson Offshore Co. owns the remaining 25% working interest.