The FY 2009 budget request for the Minerals Management Service is $307.1 million. This is an increase of $10.3 million above the FY 2008 enacted budget.
“We are committed to the safe and environmentally responsible development of our Nation’s energy resources,” said Randall Luthi, MMS director. “This budget request enables us to regulate the oil and gas industry with very high standards and pursue an alternative energy program on the Outer Continental Shelf (OCS). This request ensures our effectiveness as stewards of revenues generated from energy production on Federal and American Indian lands. MMS collected $11.4 billion in FY 2007.”
The Alternative Energy and Alternate Use Program requests an increase of $1 million to further development of the program. Furthermore, MMS has requested an additional $2 million to implement recommendations for the audit and compliance program.
In FY 2009, MMS will continue the 2007 to 2012 Outer Continental Shelf Oil and Gas Leasing Program, and an increase of $8.5 million is requested for environmental analyses and workforce and program support. The 2009 budget includes funding increases of $1.1 million for state of the art geoscientific interpretive tools for resource assessment, fair market bid evaluation, and conservation of resources analyses. In addition, the budget requests $1.7 million for the completion of a two-year initiative installing accounting software for an interactive payment reconciliation and billing system.
The 2009 MMS budget for direct appropriations is $160.4 million. MMS also requests use of $146.7 million in rental receipts and cost recoveries, bringing the total 2009 request to $307.1 million.
2007 a giant year for ExxonMobil
“ExxonMobil’s full year 2007 net income and earnings excluding special items were a record $40,610 million, reflecting strong results in all business segments,” said ExxonMobil chairman Rex Tillerson.
“ExxonMobil’s fourth quarter earnings excluding special items were a record $11,660 million, up 18% from the fourth quarter of 2006. Higher crude oil and natural gas realizations and gains on asset sales were partly offset by lower chemical margins.”
Earnings per share excluding special items increased 11% to $7.28, reflecting strong business results and the continued reduction in the number of shares outstanding. Net income was up 3% from 2006, which included a special item of $410 million for a tax-related benefit.
Cash flow from operations and asset sales was approximately $56.2 billion, including $4.2 billion from asset sales.
The corporation distributed a total of $35.6 billion to shareholders in 2007 through dividends and share purchases to reduce shares outstanding, an increase of $3.0 billion versus 2006. Dividends per share of $1.37 increased 7%.
Capital and exploration expenditures were $20.9 billion, an increase of 5% versus 2006. Excluding the Venezuela expropriation, divestments, OPEC quota effects and price and spend impacts on volumes, production on an oil-equivalent basis increased nearly 1%.
Upstream earnings were a record $26,497 million, an increase of $267 million from 2006 due to higher crude oil realizations and favorable sales mix effects, mostly offset by higher operating expenses, net unfavorable tax items, and lower natural gas realizations.
Liquids production of 2,616 kbd decreased 65 kbd from 2006. Excluding the Venezuela expropriation, divestments, OPEC quota effects and price and spend impacts on volumes, liquids production was flat. Mature field decline and PSC net interest reductions were offset by higher production from projects in Russia and West Africa.
Natural gas production of 9,384 mcfd increased 50 mcfd from 2006. Higher volumes from projects in Qatar and the North Sea were mostly offset by mature field decline. Earnings from US upstream operations in 2007 were $4,870 million, a decrease of $298 million. Earnings outside the US were $21,627 million, $565 million higher than 2006.
Riverstone Holdings, Carlyle Group lead $500M commitment to Dynamic Offshore Resources
Energy private equity firm Riverstone Holdings and global private equity firm The Carlyle Group have committed $450 million for investment in Dynamic Offshore Resources LLC, a new Houston-based oil and gas company that will focus on acquiring and developing ‘producing’ properties in the Gulf of Mexico. The founders and management team at Dynamic Offshore Resources have committed to fund up to an additional $50 million.
Dynamic Offshore Resources will use the committed capital for opportunities associated with Gulf of Mexico assets.
“With the major oil companies, large independents, and other public companies exiting the Gulf of Mexico shelf, market conditions are very favorable for a well-funded and experienced management team like the one we are building at Dynamic Offshore Resources,” said Matt McCarroll, chief executive and co-founder of the company.
McCarroll previously served as the president of Maritech Resources Inc., an exploitation and production company focused on the Gulf of Mexico, and a subsidiary of Tetra Technologies Inc.
McCarroll is joined at Dynamic Offshore Resources by co-founder Mike Moreno - who also serves as founder, chairman, and chief executive of Lafayette, La.-based oilfield services company Moreno Group LLC. The Moreno Group is the parent company of Dynamic Industries, Arc Equipment Rental, Dii, Southern Steel and Supply, and Dynamic Maritime Services.
The current management team at Dynamic Offshore Resources also includes John Y. Jo, who serves as the company’s senior vice president. Jo was previously the president and COO at Turnkey E&P Corp.
Brigham Exploration makes discoveries, grows acreage, provides operational update
Brigham has grown its acreage position in the Williston basin to nearly 219,000 net acres. Most of the recent growth has occurred in Mountrail County and extensional areas east of the Nesson Anticline where Brigham now controls roughly 67,500 net acres.
In Mountrail County, approximately 5,500 net acres are located in the Parshall Field area, and approximately 25,000 net acres are located generally between the Parshall Field and the Nesson Anticline. Approximately 37,000 net acres are located in undisclosed extensional areas to the east of the Nesson Anticline, but not necessarily in Mountrail County. To the west of the Nesson Anticline in McKenzie and Williams Counties, North Dakota, Brigham controls Bakken rights on approximately 51,500 net acres. In eastern Montana, where Brigham drilled its recent Red River discovery, Brigham controls all rights on roughly 100,000 net acres in Sheridan and Roosevelt Counties.
The company has successfully drilled and completed its first three operated Mountrail County horizontal Bakken wells. The first was the Bergstrom Family Trust 26 #1H.
Northern Oil and Gas Inc. also participated in the well with a 6.25% working interest, which increases to a 23% working interest after payout.
Approximately 25 miles to the northwest of that well, Brigham successfully drilled and completed the Hynek 2 #1H.
Finally, the company successfully drilled and completed the Bakke 23 #1H.
Brigham is currently drilling its fourth Mountrail County horizontal Bakken well, the Hallingstad 27 #1H, with results expected soon. Northern Oil and Gas is also participating in the well.
Bud Brigham, Brigham’s chairman, president, and CEO stated, “At this point, we believe the results indicate that all three wells should provide attractive economic returns, though it appears that the Bakke 23 #1H and the Hynek 2 #1H are likely to be the better producers.”
The company has drilled and completed its two most recent wells, the Hynek 2 #1H and the Bakke 23 #1H, for a total cost of roughly $4.5 million each, relative to the roughly $5.2 million completed well cost for the Bergstrom Family Trust 26 #1H.
Brigham successfully drilled and completed the Richardson 25 #1 as a Red River discovery, which commenced production flowing at an initial rate of approximately 220 barrels of oil equivalent per day. The Richardson 25 #1 was a vertical exploration test requiring conventional completion procedures and was drilled for a total cost of approximately $2.4 million. Brigham operated the Richardson 25 #1 with a 90% working interest, with Northern Oil and Gas participating with a 9.7% working interest, which increases to a 36.7% working interest after payout. Brigham plans to commence its next Red River test in April.
Finally, Brigham has entered into a joint venture to operate the drilling of six wells in Southern Louisiana with a 50% working interest. The first of these, located in Saint Bernard Parish, is expected to commence in April.
Bud Brigham stated, “These are very high quality, relatively shallow 3-D delineated prospects. We estimate our net risked dry hole cost for the six prospects at roughly $18 million, and the prospects provide an estimated gross unrisked reserve potential of approximately 127 bcfe.”
Pride International to add ultra-deepwater drillship secured by long-term contract, expands ultra-deepwater GoM presence
Houston-based Pride International Inc. is continuing the expansion of its deepwater fleet, following two, multi-year contracts.
One contract comes from a subsidiary of Petroleo Brasileiro SA (Petrobras) for the construction and operation of an advanced-capability, ultra-deepwater drillship to be delivered in the first quarter of 2011.
The multi-year drilling contract allows Petrobras to elect, by January 31, 2010, a firm contract term of at least five years and up to seven years in duration. The drilling contract provides for the payment of a fixed daily rate and the payment of a performance bonus of up to 17% of the fixed daily rate if a five year term is selected (or up to 15% if a six or seven year term is selected.)
Depending on the firm contract term chosen and excluding revenues for reimbursement of costs associated with the mobilization of the rig to an initial location, estimated contract revenues which could be generated range from $916 million to $1.24 billion and include the operating dayrate, the full amount of the performance bonus and other contractually guaranteed payments of $41 million to $49 million.
Louis A. Raspino, president and CEO of Pride stated, “This third addition to our deepwater fleet in less than seven months, along with the supporting contract, is beneficial in a number of ways as we continue to successfully transition the company to a pure offshore focus with an increasing emphasis on ultra-deepwater drilling.
Raspino added, “Deepwater exploration and development activity continues to be supported by impressive geologic success and strong energy demand outlook well into the next decade. Technological advancements continue to enable the industry to achieve drilling successes in challenging deepwater environments, resulting in promising new geologic plays, the emergence of new deepwater regions and expansion of the customer base.”
The expected construction cost of the rig, including commissioning and system integrated testing and excluding capitalized interest, is roughly $720 million. The company expects to fund the construction of the unit with available cash and borrowings.
The second award comes in the form of a five-year contract from a subsidiary of BP.
The contract is for Pride’s advanced capability, ultra-deepwater drillship that is scheduled for delivery during the first quarter of 2010. The drillship is scheduled to be the first of three ultra-deepwater units to be added to the Pride fleet beginning in 2010. Following the rig’s arrival, the company will have a presence in the world’s three established deepwater drilling regions – Brazil, West Africa (Angola), and the US Gulf of Mexico.
The five-year contract is expected to commence during the third quarter of 2010. Possible revenues over the five-year contract term, excluding revenues for the reimbursement of costs associated with the mobilization of the rig, are roughly $876 million.
The rig is being modified from the original design to improve on its off-line operational capabilities. Including the modifications to the rig’s technical features, commissioning and system-integrated testing, the company has revised the estimated cost to construct the rig to approximately $730 million, excluding capitalized interest, and expects to fund the construction of the unit with available cash and borrowings.
Raspino stated, “This contract award provides us an operating presence in the strategically significant deepwater Gulf of Mexico market sector, where new and effective technologies are expanding the offshore frontier and creating numerous long-term drilling opportunities. These opportunities add to those we see in Brazil and Angola, where the company already has well established and successful deepwater drilling operations.”
In closing, Raspino added, “The modified nature of this technically advanced drillship provides an expanded suite of field development capabilities for our customers that few rigs in the mobile offshore drilling fleet can offer.”
Chevron initiates production from Tengiz expansion projects
Chevron Corp.’s affiliate Tengizchevroil LLP has started up new facilities as part of the first phase of its expansion at the Tengiz Field in Kazakhstan.
This initial expansion of 90,000 b/d brings Tengizchevroil’s current capacity to a total of roughly 400,000 b/d. Included in the startup is the Sour Gas Injection (SGI) project and the front end of the Second Generation Plant (SGP).
SGI reinjects produced sour gas into the reservoir at very high pressures to boost production. SGP was brought up to about one-third of its full capacity and is currently separating the natural gas for injection while also stabilizing and sweetening the crude oil. Once fully operational, SGP is designed to also process sour gas into gas products and elemental sulfur.
The addition of full facilities is projected to further increase daily crude production capacity at Tengiz to 540,000 barrels. Start-up of full facilities is expected during the second half of 2008.
Once at full operating capacity, roughly one-third of the sour gas produced from the expansion is planned to be injected into the reservoir. The remaining volumes will be processed as commercial gas, propane, butane and sulfur.
“This multibillion-dollar SGI/SGP expansion of the world’s deepest producing supergiant oil field is another step forward in partnering with Kazakhstan to develop the full potential of the country’s vast energy resources,” said Jay Johnson, managing director of Chevron’s Eurasia business unit.
Chevron has a 50% interest in Tengizchevroil. Other partners are KazMunaiGas, 20%; ExxonMobil Kazakhstan Ventures Inc., 25%; and LUKArco, 5%.
