MedcoEnergi buys oil and gas blocks in Tunisia

Medco Tunisia Petroleum, has entered into an agreement, effective 1 January 2014, to acquire 100% of the shares of Storm Ventures International from Storm Ventures International “Seller” for a base purchase price of $ 114.03 million, excluding an amount payable forworking capital (which is subject to a customary post-closing adjustment). The Seller is a subsidiary of Chinook Energy, which is listed on the Toronto Stock Exchange. SVI (together with its subsidiaries) is one of the leading active exploration and production companies in Tunisia, with a participating interest in eight working areas.

SVI’s interest in Tunisia comprises four exploration areas, two development areas and two production areas with concession periods of either 30 or 50 years. Out of these eight areas, five are located onshore and three are offshore. All of SVI’s blocks are located in prolific hydrocarbon areas. Five onshore blocks (Adam, Sud Remada,Bir Ben Tartar, Jenein and Borj El Khadra) are located in the Ghadames Basin, while the remaining three offshore blocks (Cosmos, Hammamet and Yasmin) are located in the Pelagian Basin off the northeast coast of Tunisia.
The completion of this acquisition is conditional upon, amongst other things, approval from the Government of Tunisia and the consent of certain existing partners in the blocks. Upon completion of the acquisition, MedcoEnergi anticipates adding 2P reserves and oil-and-gas production (net working interest before royalties, taxes and Government take) by 12.3 MMboe and 2,800 Boepd, respectively.

Production is envisaged to increase to approximately 16,000 Boepd from in fill well drilling of the existing producing block (Bir Ben Tartar) and the development of the Cosmos and Yasmin blocks (scheduled for completion in 2018) is expected to add a further 12.6 MMboe of 2P reserves.

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GDI is awarded long term contracts by QP for two new land rigs

Gulf Drilling International(GDI), reported that it has been awarded two new contracts by Qatar Petroleum(QP) for the provision of drilling rig services. The new contracts will cover services to be performed by two new land rigs (GDI-7 and GDI-8) that GDI is in the process of acquiring from a rig builder based in the United States. Each contract will have a term of five years and the combined value of both contracts is 297 billion.

The two new land rigs (GDI-7 and GDI-8) are being custom designed according to QP’s specifications. GDI-8 will be GDI’s largest land rig, and at 3000HP, it will have the capability of drilling deeper wells and executing extended reach wells to a much greater distance. The new land rigs will also come with a number of ancillary assets that are required to support these operations including water well rigs, mobile cranes, trucks and trailers. The total investment is being financed from a local bank on competitive terms.

Construction of the two new land rigs will soon commence and the rigs are expected to be received, mobilized from the United States and placed into service during the second half of 2015. GDI’s onshore base camp, workshop, storage yards, warehouses and accommodation facilities are also being expanded to accommodate these new operations.

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Explorers see promise in Egypt oil, gas when subsidies eased

Explorers in Egypt expect constraints on domestic energy prices to loosen, prompting new investment in oil and natural gas fields.

Companies including Citadel Capital SAE, Circle Oil Plc and Petroceltic International Plc expect President Abdel-Fattah El-Sisi to make good on promises to reduce subsidies of more than $20 billion a year and ease demands that producers sell fuel on the domestic market well below international prices, they said at a conference in London on June 27.

The changes would allow the government to cut the budget deficit and pay suppliers money owed for fuel, said Mohamed Shoeib, a managing director at Cairo-based Citadel. It’s a necessary first step if Egypt wants to lure back investors driven from the country by recent turmoil as it tries to both increase exports and meet surging domestic energy demand.

The government “should tackle the problem and not escape it,” Shoeib, whose company has about $10 billion invested, mostly in Egyptian energy projects, said in an interview. “It should happen very soon.”

Egypt is poised to become a net fuel importer as authorities divert gas from export projects to meet local demand, sometimes failing to pay the suppliers. The practice prevented the UK’s BG Group Plc from meeting contracted LNG shipments this year. The company has been in talks with the government about guarantees for future exports, with receivables for gas still owed by Egypt doubling in a year to March 31.

Oil Minister

Egypt plans to pay at least $1.5 billion to energy suppliers before the end of the year, or about a quarter of its debt as of April, Reuters reported June 26, citing Oil Minister Sherif Ismail.

Egyptian General Petroleum Corp., the state energy company, “is doing the best it can” to pay off the debt, said Chris Green, CEO at Circle Oil. “The key thing is reducing subsidy.”

Sea Dragon Energy Inc. plans to acquire additional assets in the country, said CEO Paul Welch. “The time is great now to get involved in Egypt.”

Oil producers receive international prices for their products in Egypt, while gas suppliers are paid only a fraction of what they could earn from exports when they sell on the domestic market, Stephane Foucaud, a London-based analyst at FirstEnergy Capital Corp., said in an interview at the conference.

“The gas price simply has to increase” and that will “unlock exploration” because some fields are not economic to drill at the current tariff, said David Thomas, COO at Petroceltic. “The country is full of opportunity. My question is, when the race will start?”

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C&J Energy forms fifth-largest fracturing fleet with $2.86 bn Nabors deal

Nabors Industries has signed a definitive agreement to combine its completion and production services businesses in the U.S. and Canada with C&J Energy Services, Inc.

The transaction will roughly triple the C&J stimulation fleet, which should then rank as the fifth-largest fleet in North America. The combined company will also operate the largest fluids management fleet and the second-largest workover/well-servicing fleet in North America. In addition, prospects for international expansion should be enhanced through a global alliance agreement with Nabors.

Following the completion of this transaction, Nabors will own approximately 53% percent of the combined company, which will be incorporated in Bermuda and listed on the NYSE as C&J Energy Services Ltd. In addition to the 62.54 million shares of the combined company, Nabors will also receive approximately $937 million cash, to be paid from proceeds of a public debt placement by the combined company.

The new C&J Energy Services Ltd. will be managed by the current C&J Energy Services management team, supplemented by Nabors' completion and production services workforce.

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Chesapeake completes spin-off of oilfield services business

Chesapeake Energy Corporation has completed the spin-off of its oilfield services business, previously conducted through Chesapeake Oilfield Operating, L.L.C., into a stand-alone, publicly traded company called Seventy Seven Energy Inc. (SSE)

SSE provides a range of wellsite services and equipment to U.S. land-based exploration and production customers operating in unconventional resource plays. Its services include drilling, hydraulic fracturing, oilfield rentals, rig relocation and water transport and disposal, and its operations are geographically diversified across many of the most active oil and natural gas plays in the onshore U.S.

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Encana sells Bighorn gas assets to Apollo as part of shift to oil production

Encana, Canada’s largest natural gas producer, is selling its Bighorn assets in Alberta to Apollo Global Management for about $1.8 billion as the company continues its shift into oil production.

The sale includes about 360,000 acres along with interests in pipelines, facilities and service arrangements. Total net proved reserves at the end of 2013 were approximately 1.1 Tcfe, about 75% of which is natural gas.

Encana has been selling gas fields and buying oil fields to boost profit by producing the more valuable fuel. It has sold or agreed to sell $4.1 billion of assets this year, according to data compiled by Bloomberg. Earlier this month, Encana paid $3.1 billion for Freeport-McMoRan assets in the Eagle Ford Basin in Texas, doubling its crude output.

“Bighorn is a high quality asset that has not been receiving significant investment in 2014,” Encana Chief Executive Office Doug Suttles said in the statement. “It should serve as an excellent foundational asset for Jupiter Resources.”

Apollo’s Jupiter Resources, based in Calgary, is a portfolio investment of funds managed by affiliates of the New York-based private-equity firm, which describes itself as “contrarian.”

Liquids-Rich Gas

“We are very excited about the opportunity to actively develop the Bighorn assets, one of North America’s premier liquids-rich natural gas projects,” Simon Bregazzi, CEO of Jupiter Resources, said in a separate statement.

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