Search This Blog

Tuesday, September 14, 2010

Daily Energy Digest - 9/14/2010

  • ESV Few changes in fleet report. ENSCO won a three-month contract for accommodation work in the North Sea at $68,000/d (clean comp closer to $90,000/d, or in-line with expectations), while a jackup in the Middle East rolled off contract. By the end of 1Q11, ENSCO will have five more jackups repricing in the North Sea and another four repricing in the Middle East. Bottom line: ENSCO's high spec jackups should find new work, as that market remains tight. However, over two-thirds of its standard rigs reprice by the end of 2011, and bidding activity needs to rebound for all of these rigs to secure new work.

  • KEG August operating data - slightly bullish. Yesterday, Key reported operating data for the month of August indicating a 5.6% sequential increase in total trucking and rig hours. U.S. rig hours continued to perform well, increasing ~8% month/month. International hours remain depressed but could improve in the coming months as Key announced the award of a $25 million contract in Colombia for two services rigs expected to be running by October. This month, trucking hours touched their highest level in over a year, reporting a 5% sequential increase. All in, a favorable sales mix, positive pricing in certain domestic markets, and the increase in trucking hours. The company may see some margin improvement after the sale of its pressure pumping business expected during the quarter.

  • BBG receives drilling permits for continued drilling in West Tavaputs. The company was merely wading through the formality of a 30-day appeals process before being awarded the permits from the Bureau of Land Management. Bill Barrett plans to utilize two rigs to drill up to 20 wells on its 40,000+ net acres in this region (Uinta Basin of Utah) and will spend an incremental $25-30 million at West Tavaputs in 2010. The company plans to host a webcast in the coming weeks for more details on the company's development plans for West Tavaputs and its other active regions.

  • NRGY announces private placement of $600 million of eight-year 7% senior unsecured notes. The proceeds from the placement will be used to partially fund the partnership's recent Tres Palacios Gas Storage acquisition (~$725 million) and Seneca Lake acquisition (~$65 million). The remaining proceeds will be used to pay down borrowings on the partnership's revolving credit facility, which had a balance of ~$168 million as of 6/30/2010. Including the ~$400 million in net proceeds from Inergy's 9/8/2010 equity issuance, the partnership has raised ~$1 billion in capital this month.

  • NGLS announces drop down of ~77% interest in VESCO; will recommend 3Q10 distribution increase. VESCO, also known as Venice Energy Services Company, is a joint venture operated by Targa Resources Partner's indirect parent company, Targa Resources, Inc. VESCO consists of a cryogenic natural gas processing plant located in Plaquemines Parish, Louisiana, and a 160-mile offshore gathering system. The partnership expects to fund the transaction using its revolving credit facility. Of most importance, if the transaction closes by the end of 3Q10, management plans to recommend an increase of $0.01 to its 3Q10 quarterly distribution.

  • OPEC marks 50th anniversary. Fifty years ago today, five oil-producing nations met in Baghdad to sign the charter of the Organization of Petroleum Exporting Countries. The creation of OPEC effectively signaled the beginning of the end of Western company dominance of the upstream oil industry as the cartel gained market power by using its excess capacity to manipulate world oil prices. Today, OPEC has 12 member countries, which account for 40% of the world's oil supply and more than 75% of proved reserves. Currently, OPEC is still able to support a floor for oil prices (as seen in 4Q08/1Q09), but increasingly over the next several years, its goal will be to do the opposite- restrain future oil price increases to limit the incentives for significant oil substitution. As production growth slows, the OPEC of the next 50 years will certainly be a different- and generally weaker- organization than the one that marks its birthday today.
  • ATH.TO Athabasca Oil Sands Corp. said it entered into an agreement to purchase oil sands company Excelsior Energy Ltd. for $144 million (Can.). AOSC said it is acquiring “concentrated, high-quality oil sands leases” at Hangingstone and West Surmont, and consolidating AOSC's current acreage position in the Hangingstone area.
    AOSC said the acquisition of Excelsior is consistent with its strategy of “amassing a suite of large, critical sized assets which provide optimal long-term development potential for AOSC.”

    Key attributes of Excelsior include:

    • Contingent resources of about 183 million bbl {Estimate of contingent resources for Hangingstone from McDaniel & Associates as at Dec. 31, 2009; for West Surmont, from McDaniel & Associates report as at Dec. 31, 2008).

    • Net cash of about $25 million (Can.) (prior to exercise of any Excelsior stock options or Excelsior warrants).

    • About 26,607 net undeveloped acres of land on two contiguous blocks in the Hangingstone and West Surmont areas of the Athabasca oil sands region.

    • Operatorship, with high working interests of 75% at Hangingstone and 64.3% at West Surmont.

    • Patent for the combustion overhead gravity drainage (COGD) proprietary technology; project approval for a 1,000 b/d experimental pilot is expected in the latter half of 2010 with subsequent implementation and commissioning in early 2011.

    After closing the transaction, AOSC said it will have 113,007 net undeveloped acres of land in the Hangingstone area.

    “The combined Hangingstone acreage allows for both potential independent development by AOSC, as well as potential joint venture development opportunities,” the firm said.

No comments:

Post a Comment