RUSSIAN VENTURE ENDS PARKER RIG CONTRACT

White Nights Joint Enterprise is terminating its contract in western Siberia with Parker Drilling Co., Tulsa.

The Russo-American partnership last week instructed Parker to suspend operations in West Varyegan and Tagrinsk oil fields and go to a reduced day rate, pending implementation of early termination provisions within 90 days.

White Nights said the joint venture will rely solely on Russian rigs and crews to continue drilling in the two fields in response to changing monetary exchange rates. It also updated operations there.

Parker had been operating two drilling rigs and one workover rig in western Siberia for White Nights.

Meantime, registration of Golden Mammoth, a second joint venture involving White Nights partners and an unspecified Norwegian company, could be delayed by a new Russian tariff on crude oil exports.

"Golden Mammoth cannot go ahead as long as that tax looms on the horizon," said Gil Labbe, president of Anglo-Suisse Inc., Houston, the U.S. partner in both ventures.

The export tariff is 26 European currency units (ECUs)/ton of oil. Depending on the ECU-U.S. dollar exchange rate, that would cost oil exporters $4.50-5.50/bbl. It was created by a decree signed recently by Russian President Boris Yeltsin.

MONETARY CHANGES

In recent months, ruble-U.S. dollar exchange rates-officially 1.6:1-have escalated to more than 150:1.

"Using Russian equipment and paying in rubles, we can drill a well in western Siberia for a fraction of the cost of using American rigs and crews," a White Nights official said. "We can drill better wells with Parker rigs, but not 10 times better.

"At least in the short term-the next 6-18 months-the economic incentive is great to use as much Russian equipment as possible, where it can do the job."

White Nights is owned 50% by Varyeganneftegaz, a Russian oil and gas enterprise, and 50% by Salomon Inc. unit-Phibro Energy Inc., Greenwich, Conn., and Anglo-Suisse (U.S.S.R.) Ltd., a subsidiary of Anglo-Suisse Inc., Houston.

Phibro said White Nights will continue using western contractors, equipment, and materials for cementing, drilling mud services, certain logging operations, well completions, and well stimulations. Only drilling rigs, crews, and drill pipe will be Russian.

"If we can drill new wells for one tenth or one fifth the cost by using Russian rigs married to western completion technology, the economic benefit overrides any productivity increases we get using all western equipment and crews," Labbe said.

Parker Pres. Robert L. Parker said his company's rigs will remain in Russia. Parker is the first private drilling firm to operate in the former Soviet republic.

"Several new outside ventures recently have been announced, and as a drilling contractor, Parker is in a favorable position since we already have rigs in the country to bid," he said.

WHITE NIGHTS UPDATE

White Nights currently has four Russian drilling rigs and 12 Russian workover/completion rigs operating on joint venture acreage. A fifth drilling rig is to begin working this week, and as many as four more drilling rigs could be added within a few weeks, White Nights said.

Since beginning operations in western Siberia on Apr. 1, 1991, White Nights has increased production in West Varyegan and Tagrinsk fields by 9,000 b/d to about 26,000 b/d. The joint venture's share of incremental production is about 3,500 b/d.

Of the 50 new wells White Nights has drilled to date in West Varyegan and Tagrinsk, 4 were drilled by western rigs, including the redevelopment's lone horizontal well. That well, completed this year, was drilled in West Varyegan to about 9,000 ft TVD with a horizontal section of about 1,000 ft. Most of the other wells have been deviated 30-60% from vertical, but some vertical wells have been drilled for logging purposes.

White Nights has recompleted another 10 wells, mostly in Tagrinsk, and placed more than 100 wells back on production following routine maintenance. Phibro estimates another 15 wells can be drilled and 25 reworked on White Nights acreage by mid-1992. That should increase production by at least another 5,000-6,000 b/d, officials said.