Microsoft word new base 639 special 02 july 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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NewBase 02 July 2015 - Issue No. 639 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

SolarImpulse: Ocean Crossing To Hawaii : the Moment of Truth. http://www.solarimpulse.com/leg-8-from-Nagoya-to-Hawaii

Endeavoring to reach Hawaii from Japan to encourage the use of clean technologies (futureisclean), the solar powered aircraft of Bertrand Piccard and André Borschberg attempts the longest exploration leg of the Solar Impulse’s Round-The-World mission.

At the controls, André will venture into the unknown. This flight is demanding and challenging particularly given its duration: 120 hours on solar power only. It is a feat never accomplished before in the world of aviation




UAE Based Oil Firm Consolidates East African Presence with Acquisition of Essar Petroleum East Africa Ltd. Press Release 2015

Gulf Petrochem Group rename entity to Aspam Energy (Kenya) Ltd. , Gulf Petrochem Group today announces the official acquisition and name change of Essar Petroleum East Africa Ltd to

ASPAM Energy (Kenya) Ltd. The deal will enhance the group's integrated services and products for the downstream supply chain in the oil and gas sector in East Africa.

Gulf Petrochem Group secured the due approvals from the Energy Regulatory Commission (ERC), the Competition Commission and other regulatory bodies. ASPAM Energy (Kenya) will continue with the commitment to cater to customers in East Africa who were earlier serviced by Essar Petroleum East Africa Ltd in the fuel

retailing segment. Its current address is:

ASPAM Energy (Kenya) will now have license to market petroleum products through outlets earlier serviced by Essar Petroleum East Africa ltd. It also intends to develop storage and retail infrastructures as part of its long term goals in East Africa along with the expansion of retail networks through organic and inorganic routes of growth. ASPAM Energy (Kenya) is part of Gulf Petrochem Group , which has a trading arm active in trading Fuel Oil, Gas Oil, Bitumen, Base Oil, etc. and will now naturally focus on these products in East Africa. This will contribute in the growth of the East African economy.

"With the global market for bitumen expected to reach $95.77 bn by 2020 according to a new study by Grand View Research, Inc. our group has recognized the potential for business growth within the African continent. Through this acquisition, ASPAM Energy (Kenya) will allow us to efficiently cater to East African customers and capitalize on a market which we plan to make our East African Hub", said Gulf Petrochem Group Managing Director, Mr. Sudhir Goyel. He went on to add, "Prior to our acquisition of Essar (Kenya) Ltd, the company enjoyed roughly a 1.1% market share. With our experience, market knowledge, portfolio and global reach we hope to significantly increase that market share and consolidate the group's offering in East Africa."

About Gulf Petrochem Group

Gulf Petrochem Group is a leading player in the oil industry, specializing in Oil Trading and Bunkering, Oil Refining, Grease Manufacturing, Oil Storage Terminals, Bitumen Manufacturing, and Shipping and Logistics. Headquartered in United Arab Emirates, and having a presence in South Asia, the Far East Asia, Africa and Europe, Gulf Petrochem has emerged as one of the well-established manufacturers and traders of petroleum products in major parts of the world.




Saudi Aramco unveils self-capture CO2 emission car Saudi Gazette

The UN Climate Change Conference, COP18 Doha 2012, is all about finding solutions for a sustainable future and Saudi Aramco, one of the participants in Saudi delegation, is presenting one of the most innovative ideas: a car that captures its own CO2 emissions.

The project was initiated in 2003, when engineers from Saudi Aramco started working on theoretical hypotheses to reduce the carbon impact of cars. After years of research and development, Saudi Aramco’s R&D team defined a promising and feasible concept to capture CO2 emissions from conventional car engines. That car, which is still a prototype at this moment, captures its own CO2 emission and stocks it onboard. The system enabling this performance consists of 3 components: a carbon capture unit utilizing absorbent materials that can capture CO2 from the exhaust stream, a compression and storage system, and finally a unit recycling the heat produced by the vehicle to operate the whole carbon capture system onboard, without any additional or external energy supply. At this stage, the prototype captures 10 percent of its emissions, but the target is to reach 60 percent in the near future with a more compact configuration. The concept would not be complete without a solution to dispose of the CO2 stocked onboard, and the engineers have already determined some ways to dispose of the collected carbon dioxide. Drivers will upload the CO2 when they refuel their tank at petrol stations. Those stocks of carbon will then be used for EOR (enhanced oil recovery), sequestration and industrial uses or they will be converted on-site into alternative energy such as fuel or fuel additives. An expert from Aramco said “it is a challenging project and we are optimistic about implementing it and our aim is for the technology to be mass produced. This concept will have a bright future, if we come up with effective ways to use and convert the CO2 into useful purposes.

A car prototype that captures its own CO2




Saudi innovation on clean energy solutions drive gets high mark Technology start-ups provide one of the most important vehicles for developing and commercializing innovation to meet these challenges, while generating value for investors.

In “The Global Cleantech Innovation Index 2012” report based on evaluation of 38 countries on 15 indicators related to the creation and commercialization of cleantech start-ups, Saudi Arabia showed strong drive toward adoption of innovative clean energy solutions.

The index highlights the fundamentally global nature of cleantech innovation, with both eastern and western hemispheres giving rise to new companies and key players. North America and northern Europe do emerge as the primary contributors to the development of innovative cleantech companies, though the Asia Pacific region is following closely behind. In terms of general innovation drivers which address the general conditions that facilitate the development of innovative start-ups in a country, Saudi Arabia was ranked number 11. Like any other form of technological innovation, cleantech innovation requires supportive institutions, enabling infrastructures, and a culture of ingenuity as well as a ‘championing’ of entrepreneurial zeal.




Entrepreneurial culture plays an especially important role in innovation, as it is primarily through entrepreneurial ventures that technologies achieve impact beyond the laboratory doors, out in the market where it counts.

Even the most impressive ideas need drive and business skill to reach a wide market and realize their potential to achieve financial or environmental impact, hopefully both. This factor is a blend of the general innovation inputs as measured by the INSEAD Global Innovation Index and entrepreneurial culture as measured by the Global Entrepreneurship Monitor.

US topped this scale, with Silicon Valley representing a case in point for how the above factors interact to foster the creation of innovative companies. Driven by the rich resources and strong research culture of San Francisco, Stanford University, and UC Berkley, this tiny area is home to a vibrant community of entrepreneurs that has spawned such titans as Google and Apple, as well as a new generation of cleantech companies like Miasole and Solazyme. Emerging US start-ups are supported by a strong venture capital market; even accounting for the nation’s enormous GDP, the US has by far the most venture capital spending on cleantech amongst countries surveyed for this study, with over $5 billion invested in 2010 alone.

The private sector’s enthusiasm for cleantech is matched by mixed support from the US government. Policies in the nation’s states vary massively: California has a target to produce 33 percent of its energy renewably by 2020, while Pennsylvania’s target for the same period starts with 8 percent17. The federal government is similarly inconsistent: while the Department of Energy has supported cleantech start-ups with $38.6 billion in loans issued to date18, Republicans in Congress are seeking to undercut the Environmental Protection Agency and forthcoming regulation under the Clean Air Act.

Thus, while the US is currently a world leader in the creation of cleantech companies, without serious support for the industry and environmental policies to incentivize a domestic market, some of the potential profit and jobs from cleantech commercialization may be lost to foreign competitors.

Brazil is an interesting case as the Global Entrepreneurship Monitor scores it highest for entrepreneurial culture. The country has policies supportive of renewable energy and world-leading biofuels production, but lacks significant numbers of innovative cleantech companies. Brazil has been developing its biofuels industry since the 1970s, when Brazilian companies began creating a first generation of biofuels

innovations including agricultural techniques




Algeria's Q1 oil, gas output down 6 pct, investment up Reuters

Algeria's oil and natural gas output fell by 6 percent in the first quarter of 2015 from a year earlier despite an increase in investment, state radio reported on Wednesday citing the energy ministry.

Lower output by the OPEC member and gas exporter adds to problems for its finances caused by low crude oil prices. Energy accounts for about 95 percent of the north African country's exports. It produced 38.1 million tonnes of oil equivalent in the first quarter, with foreign energy firms accounting for 33 percent of the total, state radio said, without giving details. An energy

ministry source confirmed the figures were accurate. BP , Statoil , Anadarko Petroleum Corp. , Repsol and Total are the main foreign energy firms in Algeria. Algeria has struggled in recent years to attract foreign investment to its energy sector, where it needs help to bolster output at maturing fields.

Last year, Algeria awarded only four of 31 oil and gas blocks on offer to foreign consortiums. That followed a disappointing auction in 2011 when Algeria secured bids for just two of 10 fields. Some foreign operators see Algeria's terms as unattractive.

It also wants to build five refineries to double output by 2019, as it comes under pressure from growing domestic demand. Refined oil products output fell 8.2 percent to 7 million tonnes from 7.6 million in the first quarter, forcing the government to import 581,000 tonnes to meet domestic demand, state radio reported.

Petrochemical products output jumped by 82 percent to 924,000 tonnes due mainly to higher ammonia and urea production. Officials have said state-owned energy company Sonatrach will stick to its $90 billion five-year investment plan despite low oil prices. It raised investment by 19 percent to $3.6 billion in the first quarter, state radio said.




Uganda short-lists 17 companies in first oil licensing round Source: Uganda Directorate of Petroleum

Following the publication of Notice of Request for Qualification (RfQ) for Uganda's Licensing Round for Petroleum Exploration, Development and Production on 25th February 2015 in which six blo cks within the Albertine Grabenwere presented, the Ministry has received a significant number of Application for Qualification (AfQ) from companies across the Globe.

The Process of receiving the Request for Qualification ended on 30th June, 2015 at 17.00 hours East African Standard Time with the Ministry registering seventeen valid applicants out of the nineteen applicants that had registered and received the Request for Qualification.

The Albertine Graben is Uganda's most investigated, de-risked and prospective sedimentary basin with surface coverage in Uganda of approx. 23,000 sq kms. Following the conclusion of appraisal of most of the discoveries, the resources in the country are now estimated to be 6.5 billion barrels of oil in place and 500 standard billion cubic feet of gasin less than 20% of the Graben. Therefore, the six blocks on offer presents great opportunity to discover additional resources that will enhance the country's sustainability of oil and gas production and commercialization.

Dr F. A. Kabagambe-Kaliisa, Permanent Secretary, Ministry of Energy and Mineral Development noted the registration of Seventeen valid applications presents a significant milestone given the several challenges the entire oil and gas industry is going through. He further explained that Government will undertake the evaluation of the Application for Qualification between 1st July and 30th July 2015. The qualified applicants will be displayed on10th August 2015.

The Permanent Secretary, further explained that Government will issue Request for Proposal/ bidding and the modal Production Sharing Agreement documents to qualified applicants on 20th August,2015. The applicants will then be required to bid for blocks or a block of their interest after




the mandatory acquisition of data in the blocks or a block through the physical Data Room at the Directorate of Petroleum in Entebbe.

The companies that will submit the best evaluated bids will proceed to negotiate with government before signing Production Sharing Agreements with them. 'Government has planned to award new Petroleum Exploration, Development and Production licenses before the end of this year if all goes according to the planned licensing roadmap,' explained Dr. Kabagambe - Kaliisa.

On behalf of the Government of the Republic of Uganda, I wish to commend the following Oil and Gas Companies which have submitted the Expression of Interest:

1. Rift Energy Corp from United States of America (USA) 2. Mubadala Petroleum of United Arab Emirates (UAE) 3. SASOL Exploration and Production International of south Africa 4. Oil and Natural Gas Corporation Videsh Limited (ONGC) of India 5. Petoil Limited from Turkey 6. Atlas Petroleum International Limited from Nigeria 7. Oranto Petroleum International Limited from Nigeria 8. Niger delta Petroleum Resources from Nigeria 9. Africa Global Resources (Telconet Capital Ltd Partnership-Tatneft-Rostec) JV from Russia 10. Petrica Energy As from Norway 11. PTT Exploration and Production PCL from Thailand 12. Glint Energy LLC of United States of America (USA) 13. Rapid Africa Energy (Pty) Ltd of South Africa 14. Dragon Oil International Ltd of UAE 15. BRIGHTOIL Petroleum Uganda Ltd of Hong Kong/China 16. WALTERSMITH PETROMAN of Nigeria 17. ARMOUR ENERGY Ltd of Australia 18. Swala Energy Ltd of Australia 19. Tullow Uganda Operation Pty Ltd affiliated to Tullow Ireland

Government will move forward the selection process in a professional manner with the above Oil Companies added Dr. Kabagambe – Kaliisa.




Africa Oil announces Kenya operations update Source: Africa Oil Corp

Africa Oil Corp has provided the following update on operations in East Africa.

Progress is being made on the decision regarding the route of the export pipeline with the Technical Consultant having submitted its final feasibility report to the Governments of Uganda and Kenya. It is expected that the Governments will shortly agree on the preferred routing which will enable the next phase of work on the pipeline to progress.

Kenya operations have been focused on the South Lokichar Blocks 10BB and 13T where appraisal drilling and Extended Well Tests (EWT) are continuing. In May, the Amosing EWT commenced and five reservoir zones in the field were tested across two wells, being separately produced in one well while pressure responses were measured in the other well.

Production from all five zones was at a combined average constrained rate of 4,300 bopd under natural flow conditions and a cumulative volume of 30,000 barrels of oil was produced into storage.

The pressure data supports significant connected oil volumes and confirms lateral reservoir continuity between the wells which is positive for the future development of the Amosing field. Having completed the production testing, preparations are now underway for water injection tests into each of the five completed reservoir zones in Amosing-2A. These tests will validate the viability of water flood reservoir management and the oil recovery assumptions for the Field Development Plan.

Elsewhere in the South Lokichar basin, preparations for the Ngamia field EWT are underway. Multi zone completions were installed in the Ngamia-8, Ngamia-3 and Ngamia-6 wells. Initial rig-less flow testing during clean-up was at a combined maximum rate of 3,900 bopd and 1,740 bopd of 30 to 33 degree API oil for Ngamia-8 and Ngamia-3 with Ngamia-6 clean-up flow testing ongoing. These initial results are very encouraging.

The PR Marriott 46 rig spudded the Ngamia-9 appraisal well on 13 June 2015. Following this well, the rig will then move to drill the Twiga-3 and Amosing-5 appraisal wells, completing the 2015 appraisal drilling activities.

In the third quarter of 2015, a basin testing exploration well is planned at Cheptuket in Block 12A. The well will test a basin bounding structural closure in a similar structural setting to the successful discoveries along the western bounding rift basin fault in the South Lokichar basin.




Samsung Heavy Industries bags $4.7B order for 3 FLNG units OffShore World + NewBase

South Korea’s Samsung Heavy Industries has said that it has won an order to build three Floating LNG facilities. According to the shipyard, the order, by Shell, is worth around $4.7 billion, the amount

reflecting hull construction only, without the topsides included. The topsides award is expected in 2016. Offshore Energy Today has learned from industry sources the orders are related to the Woodside-operated Browse LNG development, offshore Western Australia. We have contacted Shell, as they were named by Samsung as the client, but a Shell spokesperson reverted us to Woodside. Woodside, based in Perth, Australia, did

not reply to an e-mail sent by Offshore Energy Today after business hours local time. We will update the article should we get a reply. The Browse FLNG Development concept is based on three FLNG facilities utilising Shell’s FLNG technology to commercialize the Brecknock, Calliance and Torosa fields, offshore Australia. Woodside is targeting a Final Investment Decision on the proposed development in 2H 2016.

Cameroon step closer to its first FLNG unit

Golar LNG Limited and Perenco have reached an agreement on the material commercial terms and conditions for

the Floating LNG project in Cameroon.

The deal follows the December 2014 announcement on the signing of a Heads of Agreement with Societe Nationale de Hydrocarbures (“SNH”) and Perenco Cameroon (“Perenco”) for the development of a floating liquefied natural gas export project in Cameroon.

In a statement issued today, Golar has said that the Tolling Agreement which defines the material commercial terms and conditions for the project is now subject to

finalisation with SNH and government approval.Similarly, the Midstream Gas Convention setting out the regulatory and fiscal regime governing the FLNG operations in Cameroon is being progressed in parallel with the Tolling Agreement and is also now subject to finalisation with the government.

It is anticipated that final approval by all parties (including the government in Cameroon) for the Tolling Agreement and the Midstream Gas Convention will take place late Q3, 2015.




Shell to build its largest Gulf of Mexico platform for Appomattox development

Royal Dutch Shell plc has today made the final investment decision (FID) to advance the Appomattox deep-water

development in the Gulf of Mexico.

This decision authorises the construction and installation of Shell’s eighth and largest floating platform in the Gulf of Mexico. The Appomattox development will initially produce from the Appomattox and Vicksburg fields, with average peak production estimated to reach approx. 175,000 barrels of oil equivalent (boe) per day.

The Appomattox development host will consist of a semi-submersible, four-column production host platform, a subsea system featuring six drill centres, 15 producing wells, and five water injection wells. The platform and the Appomattox and Vicksburg fields will

be owned by Shell (79%) and Nexen Petroleum Offshore U.S.A. Inc. (21%), a wholly-owned subsidiary of CNOOC Limited.

“We have again delivered a globally competitive investment scope for another significant deep-water project,” said Marvin Odum, Shell Upstream Americas Director. “Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 boe per day, and this development will be profitable for decades to come. With its competitive cost and design, Appomattox is next in our series of deep-water successes.”

During design work for Appomattox, Shell reduced the total project cost by 20% through supply chain savings, design improvements, and by reducing the number of wells required for the development, the company has said. This includes advancements from previous four-column hosts, such as the Olympus tension-leg platform (TLP), as well as ensuring a high degree of design maturity before construction.

With these and other cost reductions, the go-forward project breakeven price is estimated to be around $55 per barrel Brent equivalent, the company added.

The sanctioned project includes capital for the development of 650 million boe resources at Appomattox and Vicksburg, with start-up estimated around the end of this decade. The development of Shell’s recent, nearby discoveries at the Gettysburg and Rydberg prospects remains under review. These could become additional, high-value tiebacks to Appomattox, bringing the total estimated discovered resources in the area to more than 800 million boe, Shell has said.

Shell Pipeline Company LP also made a final investment decision on the Mattox Pipeline, a 24-inch corridor pipeline that will transport crude oil from the Appomattox host to an existing offshore structure in the South Pass area and then connect onshore through an existing pipeline. Last year in the Gulf of Mexico, Shell started production from the Mars B development, through the new Olympus TLP, and from the Cardamom subsea tie-back to the Auger platform. Shell is also currently developing the Stones project, which is expected to produce approximately 50,000 boed.




Oil Price Drop Special Coverage

Oil prices stabilize after sliding on U.S. stock build Reuters + NewBase

Oil prices steadied on Thursday after the main crude benchmarks tumbled 2.5-4 percent a day earlier as U.S. stockpiles rose for the first time in months on the back of high production. Following a 4.2 percent drop on Wednesday, front-month U.S. crude futures were trading at $56.94 per barrel at 0420 GMT, down 2 cents from their last settlement.

Heading into the second half of the year, U.S. crude has been testing support on the lower range of a $57-62 per barrel price channel, where it has been trading since early May. "We ... expect this support level to hold," Singapore-based Phillip Futures said, arguing that this week's bearish factors had already been priced into the market.

Brent crude futures were trading at $62.14 per barrel, up 13 cents after dropping 2.5 percent in the previous session. The contract remains on a downwards trend that has been in place since early May and which has seen prices fall more than 8 percent.

The tumble in U.S. crude came after government data showed inventories rose by 2.4 million barrels last week, marking the first weekly build since April. The stock build came on the back of strong U.S. production.

"Overall, production was supported by increased output from the Gulf of Mexico," Barclays said following the publication of the data. The higher U.S. output added to an ongoing glut in global production. Outside the United States, supply from the Organization of Petroleum Exporting Countries (OPEC) rose to a three-year high of 31.60 million barrels per day (bpd) in June, up from 31.30

million bpd in May.




POLL: Iran oil exports could jump by 60% in a year Reuters + NewBase

Iran will increase its oil exports by up to 60% within a year if it can agree a nuclear deal with world powers bringing an end to sanctions, a Reuters survey of analysts said yesterday. A poll of 25 oil analysts from leading banks and brokerages forecast Iran would be able to raise crude oil output by between 250,000 bpd and 500,000 bpd by the end of this year and boost sales abroad by up to

750,000 bpd by mid-2016. That would push the Islamic Republic’s total crude oil output to around 3.6mn bpd, its highest for four years, and would inflate Iranian exports by around 60% at a time when world markets are already likely to be oversupplied. But the Reuters survey said it would take time for Tehran to raise output as nuclear inspectors verified Iran’s compliance with the terms of any deal and sanctions were removed slowly. “It will take a few months before Iran can start to export at full blast,” said Swiss energy markets analyst Olivier Jakob. Negotiators from Tehran are locked in talks in Vienna with officials from the US and five other major powers to try to agree a deal to would allow development of peaceful nuclear technology in Iran.

The deadline for the talks has been extended until

July 7 to allow more time for a deal that both sides have said is close. The West wants guarantees that Iran is not secretly developing nuclear weapons, while Iran wants the removal of financial sanctions that have crippled its economy and reduced its oil exports by more than 1mn bpd. Iranian Oil Minister Bijan Zanganeh has said Iran could restore all its lost oil to markets quickly after sanctions. But years of under investment mean it may struggle to get its oil industry anywhere near full potential, analysts say. Edward Morse, global head of commodities research at Citi in New York says Iran’s own estimates “may be overly optimistic”. “Sanctions have clearly impaired Iran’s ability to maintain its mostly mature oilfields, let alone develop new projects,” Morse wrote in a note to clients this week. Iran pumped around 2.82mn bpd in June, according to a Reuters survey. Two analysts surveyed, Michael Wittner at Societe Generale in New York and Bjarne Schieldrop at SEB Markets in Oslo, said they expected no initial increase in Iranian output. At the other end of the scale, Mads Hemmingsen at Global Risk Management said Iranian production would surge quickly. Twelve of 25 polled forecast Iranian supply would increase by up to 250,000 bpd in the first six months, while eight others saw an increase of between 250,000 and 500,000 bpd this year. A year after any nuclear deal, most analysts see much bigger increases in Iranian supply with nine analysts forecasting a rise of up to 750,000 bpd and another seven seeing a rise of between 750,000 and 1mn bpd.




US Shale Drillers' Safety Net Is Vanishing Bloomberg

The insurance that producers bought before the collapse in oil -- much of which guaranteed minimum prices of $90 a

barrel or more -- is expiring. As they do, investors are left to wonder how these companies will make up the $3.7

billion the hedges earned them in the first quarter after crude sunk below $60 from a peak of $107 in mid-2014.

“A year ago, you could hedge at $85 to $90, and now it’s in the low $60s,” said Chris Lang, a senior vice president

with Asset Risk Management, a hedging adviser for more than 100 exploration and production companies. “Next year

it’s really going to come to a head.”

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The insurance protecting shale drillers against plummeting prices has become so crucial that for one company,

SandRidge Energy Inc., payments from the hedges accounted for a stunning 64 percent of first-quarter revenue.

The hedges staved off an acute shortage of cash for shale companies and helped keep lenders from cutting credit lines,

many of which are up for renewal in October. With drillers burdened by interest payments on $235 billion of debt,

$89 billion of it high-yield, a U.S. regulator has warned banks to beware of the “emerging risk” of lending to energy

companies.

Payments from hedges accounted for at least 15 percent of first-quarter revenue at 30 of the 62 oil and gas companies

in the Bloomberg Intelligence North America Exploration and Production Index. Revenue, already down 37 percent

in the last year, will fall further as drillers cash out contracts that paid $90 a barrel even when oil fell below $44.

Increased Efficiency

Hedges purchased from banks or other traders allow drillers to lock in a sale price. Some guarantee a specific value. Others ensure a minimum payment regardless of how much the market moves, but require the oil company to pay some of it back if the price exceeds a certain threshold.




SandRidge, the Oklahoma City-based producer, had about 90 percent of its oil and natural gas liquids output hedged

in early 2015, according to a regulatory filing. Next year, the hedges cover less than a third. SandRidge stock traded

yesterday at 85 cents, down 88 percent in the last year. More than $3 billion of its bonds are trading at 62 cents on the

dollar or less.

Jeff Wilson, a spokesman for the company, said declining well costs and increased efficiency are helping SandRidge

achieve returns comparable to what the company made at higher prices. SandRidge issued $1.25 billion in bonds last

month, which gives the company the liquidity it needs, Wilson said.

Buy Time

For SandRidge and other drillers, the hedges, required by some lenders, gave them enough time to cut spending. Costs in shale fields have fallen by 20 to 30 percent and productivity has increased as producers moved rigs to the most prolific regions. Producers were able to raise about $44 billion in equity and debt in the first quarter, according to UBS AG.

“That postponed the day of reckoning,” said Carl Tricoli, co-founder of private-equity firm Denham Capital

Management.

At Goodrich Petroleum Corp., hedges accounted for 35 percent of revenue in the first three months of 2015. Most of

its insurance runs out at the end of the year, company records show.

Daniel Jenkins, director of corporate planning and investor relations for Goodrich in Houston, didn’t return calls

seeking comment.

Oasis Petroleum Inc., one of the most active drillers in North Dakota’s Bakken shale, received almost $91 a barrel for

19,000 barrels a day. That accounts for more than 40 percent of its daily production and is the biggest piece of its

hedging program. At the end of June, the guaranteed price drops to $77, company records show. By January, the

company will have just 2,000 barrels a day hedged at $65 a barrel.




Supportive Lenders

Richard Robuck, vice president of finance for Oasis, said the company’s hedges worked perfectly. The cash infusion gave Oasis the time it needed to cut back from 16 drilling rigs to four, which will allow the company to spend less than it brings in, even at lower prices. Oasis also has a “very supportive lender group,” plenty of room on its credit line and a plan to add new hedges for next year, he said.

“There’s a chance prices fall, and there’s a chance they go up,” Robuck said. “It’s the oil business. That’s why we

hedge.”

Forecasters including Citigroup Inc. and Bank of America Corp. see U.S. crude falling further in the final six months

of the year. UBS predicts prices will slide as low as $50 a barrel.

Regulator Scrutiny

With oil prices down 45 percent in the past year, the industry is facing scrutiny from lenders and their regulator. Banks typically evaluate credit lines to oil and gas companies twice a year. The next time is October, and by then many of the drillers’ hedging contracts will have run out. The U.S. Office of the Comptroller of the Currency has expressed concern that the banks it supervises be more careful about lending to energy firms.

“Some companies are not nearly as well-hedged for 2016 as they were for this year,” said Omar Samji, a partner in

law firm Jones Day’s energy practice. “They’re going to have a real cash-flow crunch.”




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

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