Monthly Archives: January 2015

Indonesia Scraps Land Tax on Oil and Gas Exploration

JAKARTA, Jan 16 (Reuters) – Indonesia has scrapped a land tax that companies pay while exploring for oil and gas, a move that might encourage exploration at a time of concern that it could fall sharply due to tumbling oil prices.

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According to a ministerial decree posted on the Finance Ministry’s website, the tax office is no longer assessing a 0.5 percent “land and building tax” charged on the area in which companies are carrying out exploration activities, effective from Jan. 1.

Wahju Tumakaka, spokesman for the ministry’s tax office, said the interpretation used for taxing exploration areas was wrong, thus the ministry amended the regulation.

The tax “is supposed to be applied for those using Indonesian land. In terms of the oil and gas sector, it should only be applied during production stage,” Tumakaka told Reuters.

He said that in 2014, the land and building tax from oil and gas exploration and production work brought in about 18 trillion rupiah ($1.43 billion), or 1.2 percent of total government revenue. No breakdown of what percentage came from just oil exploration was available.

In December, the Indonesian Petroleum Association said that spending on oil and gas exploration and production in the country could fall by up to 20 percent this year.

Former OPEC Member

Indonesia, a former OPEC member, was self-sufficient in oil for decades, but is now a net importer.

Output in the Southeast Asian nation has declined since a 1995 peak, and is projected to fall to 700,000 barrels a day (bpd) in 2019 from an estimated 849,000 bpd this year.

To attract more investment, the energy ministry has been asking for tax incentives for exploration for several years.

An analyst who follows the oil industry said the tax change is “quite important” and could encourage companies to invest more in exploration.

Among oil companies, the tax was “their number one gripe, it’s the first thing they wanted to change,” he said, adding that it was positive that the government is listening to the industry and being “more investor friendly”.

Oil and gas companies operating in Indonesia include Chevron Corp, Exxon Mobil Corp, ConocoPhillips, and state-owned Pertamina. ($1 = 12,585 rupiah)

Statoil Hands Back 3 Greenland Exploration Licenses

OSLO, Jan 14 (Reuters) – Norway’s Statoil handed back three out of its four Greenland offshore oil and gas exploration licenses, it said on Wednesday, in yet another sign of cost cuts by energy firms following the recent plunge in oil prices.

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Statoil earlier said that it would slow its Arctic exploration efforts, one of its priority areas, to control capital spending. Statoil has Arctic licences from Greenland to Russia.

Britain’s Cairn Energy has been the biggest explorer in Greenland so far but its eight-well, $1.2 billion campaign in 2010 and 2011 yielded no commercial finds.

Statoil’s three licenses off the west coast of Greenland were handed back by the end of 2014, but the company kept one license off the island’s east coast where the deadline for drilling is longer.

“We have now completed the working programme and have no further obligations, and we don’t see any potential in taking on further obligations in these licenses,” spokesman Knut Rostad said.

French utility GDF Suez said it has handed both of its Greenland licenses back as it did not see any prospects of actually drilling any wells.

Danish newspaper Politiken reported that Denmark’s Dong Energy has also quit its licenses on Greenland’s west coast.

Philippines DOE Approves PNOC-EC’s Transfer of 10% Stake in SC 63 to Nido

Australia-based Nido Petroleum Limited (Nido or the Company) disclosed Thursday that approval has been received from the Philippines Department of Energy (DOE) for the transfer of 10 percent of PNOC-EC’s participating interest in Service Contract (SC) 63 offshore the Philippines to Nido.

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The transfer is part of the two stage farm-in process related to the drilling of the Baragatan-1A exploration well in SC 63 drilled in 2014.

Participating Interests in the Service Contract are as follows:

  • Dragon Oil (Philippine SC 63) Limited: 40 percent
  • PNOC-EC: 40 percent
  • Nido Petroleum Philippines Pty Ltd: 20 percent

Polarcus Asima Commences Seismic Acquisition in Phoenix Area Off WA

Carnarvon Petroleum Limited reported Tuesday that modern seismic data to be acquired in 2015, together with previously acquired data, will cover the majority of the four exploration permits making up the Phoenix area in the North West Shelf of Western Australia, namely covering WA-435-P, WA-436-P, WA-437-P and WA-438-P.

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On Jan. 12 the Polarcus Asima seismic vessel commenced acquisition of a large 3D multi-client three dimensional seismic program referred to as the Capreolus MC3D. The Joint Venture will license around 1,969 square miles (5,100 square kilometers) from the Capreolus 3D.

Carnarvon and partner Finder Exploration were the first to license 3D seismic data in the Phoenix area that now contains the Phoenix South-1 oil discovery. The first 3D seismic acquisition in this area (the Phoenix MC3D) covered 428 square miles (1,100 square kilometers) and was acquired late in 2010 / early 2011.

In late 2011 / early 2012 a second 3D seismic acquisition program (the Zeester MC3D) acquired an additional 1,488 square miles (3,854 square kilometers). The current Joint Venture partners have recently agreed to license this data following the success of the Phoenix South-1 well.

With the Capreolus MC3D the Joint Venture partners will have modern 3D seismic data covering some 3,861 square miles (10,000 square kilometers) of the approximate 8,494 square miles (22,000 square kilometers) covered by the four contiguous Phoenix area permits. This 3D seismic data is specifically intended to enable future exploration within the primary Triassic and Jurassic reservoirs within the Phoenix area.

Additionally, a new two dimensional seismic acquisition program (the Bilby MC2D) will acquire modern 2D seismic data over most of the remaining acreage holding.

Collectively the new data will provide important new insights regarding the regional geology and its prospectivity. The objective will be to use this data to identify new and refine currently identified prospects and leads for possible future drilling. Carnarvon will invest around $8.15 million (AUD 10 million) licensing the Zeester and Capreolus 3D seismic data and the Bilby 2D data. Carnarvon has previously licenced and paid for the Phoenix 3D data.

Horizon Oil Deems Results of Nama-1 Well in PNG’s PPL 259 Non-Commercial

Australia’s Horizon Oil Ltd. reported Friday that the Nama-1 exploration well in PPL 259, Western Province, Papua
New Guinea, which was spud Dec. 4, 2014 is currently at total depth of 11,591 feet (3,533 meters).

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The well encountered a total of 252 feet (77 meters) of the target Early Cretaceous Elevala and Toro sandstones and Late Jurassic Kimu sandstones, which are productive in nearby Stanley field. Subsequently pressure measurements and sampling were taken in the key prospective zones, followed by the acquisition of side wall cores.

The sands, which were considerably thicker than predicted, calculate as being gas-saturated, however reservoir properties are of poor quality and cannot be considered to be commercially productive at this location.

Sidewall cores were run to determine the cause of reservoir degradation, which is thought to be diagenetic alteration, and the implications for possible lateral improvement. Interpretation of the well data, including the side wall cores, will be carried out to determine whether this is a localized effect, and if so, what potential remains in the broader Nama prospect.

The well is currently being plugged and abandoned and it is anticipated that Parker Rig 226 will be released over the weekend. The Company intends to update shareholders on the results of the interpretation work when completed and the implications for future evaluation of the prospect.

Participants Interest

  • Ketu Petroleum Limited (a subsidiary of Horizon Oil Limited) – 35 percent
  • Eaglewood Energy (BVI) Ltd – 45 percent
  • Osaka Gas Niugini E&P Pty Ltd – 10 percent
  • Mega Fortune International Limited – 10 percent

KrisEnergy Completes Acquisition of Sumatra’s Block A Aceh PSC

KrisEnergy Ltd. (KrisEnergy or the Company), a Singapore-based independent upstream oil and gas company, referred Monday to the announcement dated July 1, 2014 in relation to the acquisition of Premier Oil Sumatra (North) B.V. (which holds 41.6666 percent working interest in the Block A Aceh production sharing contract (PSC)) from Premier Oil Overseas B.V. (Premier), and announces the completion of the acquisition. Approval for the change of control has been received from the Government of Indonesia and the provincial government of Aceh.

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Block A Aceh is located onshore Sumatra in the semi-autonomous region of Aceh and covers an area of 720 square miles (1,803 square kilometers). It contains several gas condensate discoveries including the Alur Rambong, Alur Siwah and Julu Rayeu fields, which were approved for development in 2007. These gas condensate discoveries are expected to go into development with first gas from Alur Rambong anticipated in 2017. The block also contains the Matang gas discovery, which requires further appraisal prior to being developed via tie-back to the initial facilities, and the high-carbon dioxide (CO2) Kuala Langsa gas discovery.

Richard Lorentz, executive director and director Business Development, said: “With all approvals now in place for our transaction, we are very excited to be able to progress commercialization of Block A Aceh with our joint-venture partners. We aim for a 50:50 mix of oil to gas production in our portfolio and Block A Aceh will maintain that balance following our two oil developments in the Gulf of Thailand due on stream in 2015 and the Lengo gas field offshore East Java thereafter. ”

PT Medco E&P Malaka is the operator of the Block A Aceh PSC with a 41.6667 percent working interest and Japex Block A Ltd. holds the remaining 16.6667 percent.

Taipan Resources Spuds Onshore Badada-1 Well in Kenya’s Block 2B

Taipan Resources Inc. (Taipan, the Company), through its Kenya-based subsidiary Lion Petroleum (Lion), revealed Wednesday that the GW-190 rig has spud the Badada-1 well in Block 2B onshore Kenya at 14:00:00 (2:00 pm) GMT Jan. 7.

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Taipan estimates gross mean unrisked recoverable resources of 251 million barrels of oil equivalent (MMboe) (Source: Sproule International Limited*, February 2014) for Badada. The well is planned to be drilled to a total depth of between 9,842 and 13,123 feet (3,000 and 4,000 meters) to test Tertiary age reservoirs analogous to those in the Lokichar basin where Tullow and Africa Oil have made discoveries with best estimate unrisked gross (2C) contingent resources totaling 616 million barrels (Africa Oil Corp. Corporate Presentation dated September 2014). The Operator expects drilling to take up to 70 days to complete.

During drilling, Taipan intends to provide the market with regular operational updates. The Company will also provide a comprehensive update once operations on the Badada-1 well have been fully completed and analyzed.

Maxwell Birley, CEO, commented: “The spudding of the Badada-1 well is an important milestone for both Taipan and Lion Petroleum. Since acquiring the Kenya-based assets of Lion, the Taipan team has identified the Badada prospect after acquiring two seismic surveys on Block 2B, building on legacy data from an earlier period of exploration, and then successfully financed the drilling through a combination of capital raises and farm downs. We, along with our partners, Tower Resources and Premier Oil, are extremely excited about the opportunity that Badada presents as a potential play opener which could generate considerable upside from a follow-on exploration program.”

*Sproule completed an updated independent assessment of the company’s prospective resources on block 2B with an effective date of Dec. 31, 2013. The independent assessment was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 — Standards of Disclosure for Oil and Gas Activities.

About Taipan Resources Inc.

Taipan Resources Inc. is an independent, Africa-focused oil exploration company with interests in Block 1 and Block 2B onshore Kenya through its wholly owned subsidiary Lion Petroleum Corp.

Taipan operates and holds a 30 percent working interest in Block 2B (1.35 million acres / 5,464 square kilometers) and a 20 percent working interest in Block 1 (5.497 million acres / 22,246 square kilometers) which is operated by East Africa Exploration (Kenya) Ltd, a subsidiary of Afren plc.

CNOOC, KUFPEC Ink PSCs for 3 Offshore Blocks in South China Sea

CNOOC Limited announced Wednesday that its parent company, China National Offshore Oil Corporation (CNOOC), has signed three production sharing contracts (PSCs) with KUFPEC (China) Inc. (KUFPEC) for Blocks 52/22, 52/26 and 63/13 in the South China Sea.

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The three blocks mentioned above are located in the Yinggehai Basin of the South China Sea. Block 52/22 covers a total area of 732 square miles (1,896 square kilometers), and has a water depth of 196-984 feet (60-300 meters); Block 52/26 covers a total area of 688 square miles (1,783 square kilometers), and has a water depth of 262-524 feet (80-160 meters); Block 63/13 covers a total area of 269 square miles (698 square kilometers), and has a water depth of 262-459 (80-140 meters).

According to the terms of the PSCs, CNOOC shall act as the operator of the three blocks mentioned above. Expenditures incurred during the exploration period will be borne by CNOOC and KUFPEC in a proportion of 20 percent and 80 percent of participating interest, respectively. Both parties will conduct 3D seismic data surveys and will drill exploration wells. Once entering the development phase, CNOOC  has the right to participate in up to 70 percent of the working interest in any commercial discoveries in the blocks. After signing the abovementioned PSCs, CNOOC will assign all of its rights and obligations under such contracts, except for those relating to CNOOC’s administrative functions, to CNOOC China Limited, a subsidiary of CNOOC Limited.

US Jury Finds Apache Did Not Breach Contract With W&T Offshore

Dec 15 (Reuters) – Apache Corp was not in breach of contract in a lawsuit brought by Houston-based oil and gas producer W&T Offshore Inc in 2011, a federal jury found on Monday, according to a court filing.

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The U.S. District Court for the Southern District of Texas has accepted the jury verdict and W&T can file any post-verdict motions by Jan. 5.

W&T filed a claim against Apache in 2011, accusing the energy company of breaking the terms of a processing contract and inaccurately recording how much processed oil W&T was owed.

Apache on Monday also filed a $31.5 million counter lawsuit, accusing W&T Offshore of breaching the parties’ joint operating agreement by refusing to pay its 49 percent share of plugging and abandonment costs for three offshore wells in the Gulf of Mexico.

“After repeated efforts to resolve the matter, Apache filed the Mississippi Canyon block #674 lawsuit because W&T refused to comply with its clear contractual obligations,” an Apache spokesman told Reuters.

W&T Offshore did not immediately respond to a request for comment outside regular U.S. business hours.

MEO Completes Negotiations for Onshore Exploration at Block 9 in Cuba

MEO Australia Limited announced Thursday that it has completed negotiations for 100 percent participating interest in a Production Sharing Contract (PSC) in the Republic of Cuba (Cuba). Detailed terms of the PSC have been agreed with the Commercial division of Cuba Petroleo Union (CUPET) and final PSC documents have been initialled by MEO and CUPET. Official execution and award is subject to final regulatory approval.

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MEO has been in discussions with CUPET since qualifying as an onshore and shallow water operator in early 2013. Block 9 was MEO’s preferred entry block due to the confirmed presence of hydrocarbons and the close proximity to existing production and infrastructure. The geology of the block is analogous to petroleum systems in which MEO’s technical personnel have significant experience, a key factor that helped qualify MEO to apply for acreage in Cuba.

Block 9 covers approximately 919 square miles (2,380 square kilometers) of predominantly low lying farmland on the north coast of Cuba approximately 81 miles (130 kilometers) east of Havana. It has an existing petroleum exploration dataset of modern 2D seismic and multiple wells. The block is close to the multi-billion barrel Varadero oil field and contains the Motembo field, the first major Cuban oil field which was discovered in 1881.

The exploration phase of the PSC term is split into 4 sub-periods totalling eight and a half years with withdrawal options at the end of each sub-period. The negotiated work program includes a commitment to an initial 18 month exploration sub-period during which existing exploration data in the block will be evaluated and selected seismic reprocessed before electing whether to proceed with a subsequent 24 month exploration sub-period which includes acquisition of new 2D seismic.

MEO has pursued this opportunity in collaboration with Petro Australis Limited, an unlisted Australian company. In the event that MEO is awarded the PSC and Petro Australis qualifies for participation in Cuba, it has an option to secure up to a 40 percent Participating Interest in Block 9 by reimbursing its share of costs MEO has incurred to date.

MEO’s CEO and MD Jurgen Hendrich, commented on the announcement:

“Without pre-empting the final regulatory approval process, we are very pleased to have reached this milestone after achieving pre-qualification in early 2013. We see significant potential in Cuba and in particular Block 9 and look forward to working closely with CUPET to our mutual benefit.”