New base 823 special 05 april 2016

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,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 1

NewBase 05 April 2016 - Issue No. 823 Edited & Produced by: Khaled Al Awadi

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

UAE sets examples for as Saudi Arabia can take a page out of Dubai’s renewables book

The National - LeAnne Graves + NewBase

Saudi Arabia will need to follow Dubai’s lead and hike electricity prices by more than 50 per cent to support the expected growth of its renewable energy sector after the government’s new diversification drive, experts said.

The country is looking to drum up US$100 billion a year in new revenue by 2020 through slashing subsidies and increasing levies, according to Deputy Crown Prince Mohammed bin Salman in an interview with Bloomberg.

“It’s a large package of programmes that aims to restructure some revenue-generating sectors," the prince said, highlighting solar as a key industry for the kingdom’s future.

Decreasing electricity subsidies and pushing up power bills to match those in Dubai will trigger a demand for renewables, particularly rooftop solar in the residential and commercial sectors, according to Apricum, a consultancy specialising in renewable energy.




Mortiz Borgmann, a partner at Apricum, pointed to Dubai’s ability to foster local demand in solar energy, beginning with the utility-scale Mohammed bin Rashid Al Maktoum solar park. “Dubai shows that a local rooftop solar market can be driven by high electricity prices," he said.

Saudi Arabia began initiating economic reforms by way of decreasing power subsidies at the end of last year. This resulted in a 15.4 per cent increase in power bills for the commercial and residential sector to 8 US cents per kilowatt-hour from 6.9 cents per kWh last year. Dubai’s residential and commercial rates are at 12.1 cents per kWh.

This shake-up in strategy, moving the kingdom away from heavy reliance on petrodollars, comes as the price of oil nears a two-year lull to around $40 per barrel from highs of US$110.

Saudi Arabia, where demand for electricity has more than doubled since 2000, is one of the few countries worldwide that uses crude oil for power generation, according to the US energy information administration.

The kingdom consumed nearly a third of its oil for domestic production in 2014. By incorporating other forms of energy such as wind and solar power, the country would free up more crude oil for export to international markets.

Prince Mohammed also has plans to build a solar energy plant. “We’re targeting many projects. Most important is building the first solar energy plant in Saudi Arabia," he said.




Saudi Arabia originally planned to more than double its generating capacity to 120 gigawatts from 58GW using solar and nuclear power by 2032, but the country has hardly made any headway in its diversification efforts. The kingdom last year announced that it would delay this plan by eight years to 2040, as it needed to further assess various technologies.

“Numerous examples worldwide show that deploying renewables triggers local economic activity," said Mr Borgmann. “By creating a sustainable domestic demand for solar and wind, Saudi Arabia could create jobs in both manufacturing and around construction of power plants, helping their goal of diversifying the economy."

However, the heavy renewable energy hitter Acwa Power in Riyadh said that the case for renewables has become more compelling, with a greater opportunity for the private sector.

“We expect to see much more focus on cost and on the private sector taking increasing responsibility to invest in infrastructure assets, take ownership and operate to deliver service," said Paddy Padmanathan, the chief executive of Acwa.

And this points to another page from Dubai’s book. The emirate’s power utility, Dubai Electricity and Water Authority, announced at the start of this year that it would tender renewable energy projects worth more than Dh27bn based on an independent power producer model, as a way to “leverage public-private partnerships and build new capacity in renewable energy".

This puts the tab on private companies rather than the government fronting the

capital, a move replicated throughout the region as government budgets tighten because of low oil prices. And players such as Acwa with home court advantage are ready to respond.

“We expect a significant amount of renewable energy procurement to also start soon and we will participate with the same vigour as we have done in other markets," Mr Padmanathan said.




UAE: No impact of low oil prices on economy, UAE Oil Minister Emirates News Agency (WAM) 2016.

The current slump in the world oil prices poses a real challenge to oil exporting countries but did not have any impact on the UAE's economy, thanks to the economic diversification policy adopted by the country, Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy, affirmed today.

''Low oil prices should create investment opportunities in non-oil sectors for the purpose of diversifying the economy,'' the minister said as he chaired the delegation to the second UAE-Russia Taskforce Meeting held in St. Petersburg to explore the prospects of joint co-operation and investment. Abu Dhabi hosted the first meeting in November 2015.

Russian Deputy Minister for Economic Development, Alexander Tsybulskiy, led the Russian side to the meeting which also

discussed a variety of economic and investment issues of mutual interest. The two sides stressed the importance of pursuing work to broaden the scope of regional joint co-operation and investment opportunities.

The UAE side gave an overview of the state of the UAE's economy, its strengths and enabling factors, legislative framework, infrastructure and services and investment incentives that the state offers to foreign investors. The Russian side reviewed a number of investment opportunities in the areas of economy, energy, industry, free zones, tourism, agriculture and higher education.

''We had constructive discussions with the Russian side which will enable us to go ahead on a number of bilateral issues of mutual concern regarding regional co-operation, mutual investment opportunities and economic co-operation,'' the UAE minister said.

The Russian minister said the taskforce meetings were ''constructive and meaningful,'' adding that continued regular meetings underscored the importance of joint, close work to address opportunities and challenges in the region and the world at large.

Gazprom will supply crude oil to OMV

During a working lunch, the two sides recognised the need for identifying a series of potential projects in free, economic zones for implementation in the next phase.

Later, Al Mazrouei, in his capacity as Managing Director of the International Petroleum Investment Company (IPIC), met with Russian Energy Minister Alexander Novak and Gazprom CEO Alexey Miller. He also held a briefing with Austrian Finance Minister Hans Joerg Schelling and OMV Chief Executive Officer Rainer Seele to announce the conclusion of a series of economic and




investment agreements. These agreements included a memorandum of understanding for swap of upstream assets between Austria's OMV, 24.8 percent owned b y IPIC, Gazprom, which is owned 50 percent by the Russian government.

As per another agreement, Gazprom will supply crude oil to OMV. The two oil majors also signed an agreement for scientific and technical cooperation for gas production. They also agreed to sponsor cultural events in St. Petersburg and Vienna.

The UAE minister said these agreements would further solidify relations between the UAE, Russia and Austria in the field of energy, pave the way for greater joint co-operation in the future and raise profile of the three partners in the world energy sector.

''In my capacity as the IPIC Managing Director, I'm pleased to witness the signing of these vital agreements for our investment in

OMV. The agreements cover trade, cultural, scientific and technological aspects,'' the UAE minister said following the signing ceremony.

OMV's engagement in the Achimov oil and LNG project underscores the IPIC's commitment to develop and participate in major energy projects which will have far-reaching impact on the European energy markets.

The UAE Minister of Energy noted that the recent visits that His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the

UAE Armed Forces, undertook to Moscow had given a big boost to bilateral ties and co-operation, particularly in the economic field.

''The UAE-Russia relations are important and efforts should continue to advance them further by implementing signed agreements or concluding new ones,'' he affirmed.

The UAE delegation paid a field visit to the free economic zone in St. Petersburg where they were briefed about its working mechanisms and facilities.

World location of the OMV company, for exploration and production activities




Saudi Arabia pushes for its economic miracle - All eyes on Aramco The National - Anthony McAuley + Bloomberg + NewBase

Saudi Arabia’s powerful Deputy Crown Prince Mohammed bin Salman, has again talked of plans to take the kingdom’s state oil company public, but left many questions unanswered about how such a sale might actually pan out.

In an interview with the editor-in-chief and reporters of Bloomberg, the 30-year-old prince was asked to expand on the idea of floating Saudi Aramco, which he first aired in an interview with The Economist in January.

He said he plans to push for the share sale for next year and will open it up to foreign investors. But asked whether plans are to float the entire company, his answer was vague.

“The mother company will be offered to the public as well as a number of its subsidiaries," Prince Mohammed said, according to a transcript released by Bloomberg.

“We will also announce Aramco’s new strategy and will transform it from an oil and gas company to an energy/industrial company," he said.

Pressed on the size of such an offering – presumably to determine what he meant to incorporate – the prince began talking of plans to build a huge solar plant, expand petrochemicals and create “a huge construction company", but he did not specify what a public offering, or offerings, might comprise.




There are few who believe that Aramco will be sold off as a single entity incorporating its main source of wealth: the country’s oil reserves.

“The prince has indicated that Aramco is willing to change its overall economic approach and he has been testing the waters for a partial divestment, but one thing for sure is that it will never, ever entail upstream, not directly anyway," said Cyril Widdershoven, an independent consultant who until December had been a long-time consultant for Aramco via the Dutch government’s applied science arm, TNO Energy.

Aramco’s most valuable asset is the 16 per cent of the world’s oil reserves it owns, an unchanging 268 billion barrels, which is “the most strategic state secret in the world", says Mr Widdershoven.

An IPO based on those reserves would require making public an audit of Aramco’s recoverable reserves, the public estimate of which has remained unchanged for decades.

The extreme reluctance of Saudi officials to reveal reserves information was made clear by Aramco’s chairman, Khalid Al Falih, in January, when he sought to clarify the prince’s initial comments.

“What will be offered is the economic value of Saudi Aramco and not its oil reserves," Mr Al Falih said then.

In India this week, Mr Al Falih underlined what is likely to be Aramco’s strategy as it transforms to the “energy/industrial company" that the prince envisions.

Mr Al Falih told Narendra Modi, the Indian prime minister, that India is Aramco’s “No 1 investment target", for refinery/petrochemical investments and offshore oil exploration and development.

Aramco has been expanding its downstream operations domestically and abroad and is aiming to spend US$100 billion to double worldwide capacity to 10 million bpd.




Domestic refinery capacity is increasingly integrated with petrochemicals, including the giant $20bn Sadara joint venture with Dow Chemical that came onstream last year.

Warren Wilder, Aramco’s head of chemicals, explained in January the strategic importance of Sadara.

“By integrating chemicals production with our refineries – both home and abroad – we are leveraging our existing and future refining assets to provide additional revenue from a business that is growing faster than the oil business and would diversify our sources of revenue," he said.

The Sadara plant uses naphtha – an oil by-product – rather than natural gas as a feedstock, which allows it to produce a wider range of products. More than half of Sadara’s 26 units make products never previously produced in the region, which, Mr Wilder pointed out, “support the development of several local industries".

The report Saudi Arabia Beyond Oil, published by McKinsey & Co in December, is widely thought to be the initial blueprint for the National Transition Programme. It focused on petrochemicals as a key area for expansion.

The sector already accounts for two-thirds of the kingdom’s non-oil exports and McKinsey says that it can add $30bn to GDP and add thousands of high-skill jobs with investment.

Last month, Aramco split with long-time North America refining partner Royal Dutch Shell, but executives told employees that the company plans to expand in the US, in refining and in chemicals.

Aramco has refining joint ventures in China’s Fujian province, in Japan and in South Korea and plans to expand throughout the region, including India, both upstream and downstream.

“We target emerging markets like China, India, South Africa, Indonesia. We believe these are the main markets that we are targeting. We’re also targeting the US market," Prince Mohammed told Bloomberg.

Aramco could put together an energy conglomerate that would look like a bigger version of ExxonMobil, but with a key difference: it would have long-term crude supply deals from the world’s lowest-cost producer but it would not have title to those reserves.

No. 2 No. 5




India’s Dabhol terminal ups LNG deliveries LNG World news + NewBase

India’s Dabhol LNG import terminal has more than doubled the number of LNG cargoes it received during the fiscal year that ended in March, as compared to the same period a year ago.

The 5 mtpa Dabhol LNG terminal received 22 cargoes (1840 mmscm) during the fiscal year from April 2015 to March 2016, GAIL India, the country’s biggest natural gas supplier said on Monday.

The LNG plant received ten cargoes in the fiscal year that ended in March last year. It has been operating at about 60 percent of its capacity as it lacks infrastructure, such as breakwater and is not able to receive LNG tankers during monsoon rains.

The Dabhol LNG terminal, located some 340 km south of Mumbai is owned by Ratnagiri Gas and Power (RGPPL). RGPPL is a joint venture of Gail and National Thermal Power Corporation (NTPC), who are the major shareholders, with remaining equity held by financial institutions and Maharashtra State Electricity Board (MSEB).

Sabine Pass’ second LNG cargo heading for India

Sabine Pass LNG’s second commissioning cargo that left the facility on March 15 aboard the

162,000 cbm Clean Ocean LNG carrier is reportedly set to unload in India at the Dabhol LNG

terminal. This will be the first ever shipment of US shale gas to Asia.

The cargo has been bought on a spot basis and will be delivered by mid-April, Vandana Chanana, spokesperson at India’s GAIL, the buyer of the cargo, told Bloomberg. GAIL did not respond to an email sent by LNG World News seeking further clarification on the matter, by the time this article is published.

First cargo from Cheniere’s Sabine Pass export facility in Louisiana was delivered to Brazil’s Petrobras, which is the likely destination for the majority of the commissioning cargoes from Sabine Pass LNG.

The number of potential destinations was limited according to Genscape, a company that has infrared cameras pointed at the export plant, as the LNG currently produced at the facility has a high ethane content, with Petrobras having the infrastructure to handle such cargoes.

Another potential destination was Kuwait, however, GAIL seems to have the capability to handle such cargoes at the Dabhol LNG terminal some 340 km south of Mumbai. Once the commercial operations begin at the Sabine Pass LNG export plant, the first of its kind to export US shale gas to overseas markets, it will be shipping 3.5 mtpa of liquefied natural gas to India under a 20-year deal with GAIL.




Tanzania: Solo Oil signs SPA for Kiliwani North, Tanzania Source: Solo Oil

Solo Oil has announced that further to the agreements previously announced with Aminex to acquire a further interest in the Kiliwani North Development Licence ('KNDL') Solo has now executed a Sale and Purchase Agreement ('SPA') for the acquisition of a 3.825% interest in Kiliwani North Development Licence ('KNDL') to Solo Oil for a total cash consideration of US$2.16 million.

Under the terms of the SPA Solo's interest will increase through three payment tranches to Aminex, linked to project milestone, for the total agreed cash consideration:

• Initial investment of US$566,802 for an additional 1% interest on signature of the SPA, increasing Solo's total interest from 6.175% to 7.175%

• A second investment of US$708,502 for a further 1.25% interest within 15 days of the first US dollar payment being received for gas from Kiliwani North-1 ('KN-1'). Solo's total interest will increase to 8.425%

• A third investment for the balance of US$892,712 for an additional and final 1.575% interest within 15 days of the commercial operations date being declared, taking Solo's total and final interest to 10%.

If any payment is missed then that payment option, and only that option, will be automatically cancelled. Payment of the second and third investments will require further funding from cash flow or otherwise to be arranged by Solo.

Following full payment of the consideration, Solo's interest will increase from its current 6.175% to a 10% interest in KNDL. As announced on 11 February 2016, the transaction represents the part exercise of its pre-existing option to acquire a further 6.175% interest. The

remaining entitlement under the option agreement has now expired.

The KN-1 well, which is now ready to begin production, has been ascribed gross contingent resources (2C) of gross 28 billion cubic feet by LR Senergy and the Company expects to book reserves from this well by the year-end. Gas from KN-1 will be sold to the Tanzania Petroleum Development Corporation ('TPDC') under a gas sales agreement ('GSA') at the wellhead for an agreed price of US$3.00 mmBTU (approx. US$3.07 per mscf), payable in US dollars. The gas




price is not linked to any commodity price so is unaffected by current commodity market conditions.

Gas will be processed at the new Songo Songo Island gas plant and will ultimately be transported by pipeline to Dar es Salaam, where it will be sold into the local Tanzanian market.

Neil Ritson, Solo's Chairman, commented:

'Solo is delighted to increase its exposure to the KNDL project with commencement of production imminent. The project offers a revenue stream that will increase through the commissioning process and into commercial production under the GSA which has take-or-pay provisions and is paid in US Dollars guaranteed by a consortium of banks. By linking the acquisition of our additional interest to project milestones we have been able to further de-risk the investment.'

Current participants in the Kiliwani North Development Licence, following TPDC back in, are: Ndovu Resources Ltd (Aminex) 55.575% (operator), RAK Gas LLC 23.75%, Solo Oil plc 6.175%, Bounty Oil & Gas NL 9.5% and TPDC 5%. On completion of the payments envisaged by the SPA Aminex will hold 51.75% and Solo will hold 10%.

KILIWANI NORTH

With the flow of gas from Kiliwani North Solo has achieved it's first commercial production in

Africa. Kiliwani North Development Licence (KNDL) is located in Tanzania, East Africa, and contains the

Kiliwani North 1 (KN-1) well which is expected to produce at an approximate rate of 30 million cubic feet

per day (equivalent to more than 5,000 barrels of oil per day) from the first quarter 2016.

Gas from the KN-1 well will be supplied to the newly built Songo Songo gas processing plant which was

completed in 2015 and is being commissioned now. It will be commingled with gas from Songo Songo gas

field and is connected by the newly constructed 36-inch pipeline from Mtwara in the south of Tanzania to

Dar es Salaam in the north, providing an immediate route to monetise the Kiliwani North gas production.

TIMELINE

May 2015

Competent Person's Report (CPR), provided by independent consultant LR Senergy, defined 44

billion cubic feet of gas at the KNDL (28 billion cubic feet best estimate contingent resources to

Kiliwani North-1, which was contingent on completion of the GSA. Reserves at Kiliwani North

will be booked later this year)

January 2016

GSA executed. Gas will be sold at US$3.00 per million BTU (approximately US$3.07 per mcf), and

will increase in line with an agreed United States Consumer Price Index, the price is not directly

linked to the prevailing oil price. Gas revenues will be invoiced and payable in United States

dollars and are guaranteed by a consortium of banks.

February 2016 Solo agrees to increase it holding to 10% with payment to Aminex of US$2.16 million.

April 2016

Production expected to commence at Kiliwani North-1 well following a revision of the Songo

Songo commissioning schedule. During the commissioning program the initial production rates

will be managed to allow for testing of the new gas processing facilities and related pipelines.




NewBase 05 April 2016 Khaled Al Awadi

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

Looming gasoline glut pulls down crude oil prices Reuters + NewBase

Crude oil prices fell in early Asian trading on Tuesday on signs of weakening gasoline demand, long a pillar of support for struggling fuel markets, in both North America and Asia.

Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $35.39 per barrel at 0015 GMT, down 30 cents from their last settlement. International Brent futures were down 23 cents at $37.46 a barrel.

The declines extended falls from the previous two sessions as investors doubted that producers will be able to rein in global overproduction that has seen crude prices tumble by as much as 70 percent since mid-2014.

Tuesday's declines came after U.S. gasoline demand fell for the first time in 14 months while oversupply and slowing economic growth in Asia forced some traders to store unwanted gasoline aboard tankers as onshore storage facilities in Singapore and Malaysia are filled to the rims.

Strong gasoline demand has been one of the strongest pillars of demand in the fuel complex, largely credited for preventing crude prices from tumbling even further than they did.

With an emerging gasoline glut potentially adding to a global overhang in crude production that sees over 1 million barrels produced in excess of demand every day, analysts say that prices could fall lower again soon.

"Global oil balances will witness sizeable implied inventory builds in H1'16, suggesting that the price of oil can easily revisit the lows seen earlier this year," French bank BNP Paribas said in a note to clients.

Oil price special

coverage




Interview: TPH Chief Tudor Says Oil Price Already Hit Floor by Deon Daugherty|Rigzone

An ongoing downturn in oil prices has reshaped many businesses. At Tudor Pickering Holt & Co. (TPH), it’s meant less transactions work and more engagement to help companies shore up their balance sheets and plan for the future. And although the downturn has been painful for many in the field, Tudor maintains that the energy industry is still a good space for new college graduates.

Founder and CEO Bobby Tudor runs the premier oil and gas investment banks in Houston. With office throughout the U.S. and Canada, TPH has more than $1.5 billion in assets under management specifically in the energy space.

Days into a price rebound that showed oil selling at slightly more than $40 per barrel, Tudor talked with Rigzone about the business’ cycles and how the energy industry will likely emerge from the downturn.

Rigzone: What’s your take on the production freeze discussions between the Organization of the Petroleum Exporting Countries (OPEC) and Russia? Is there a real intent to hold production at January levels, or is it just lip service?

Tudor: I think it’s mostly lip service. Primarily because production there (with the exception of) Iran, is mostly frozen now. It’s not going up. I think it’s really meant to signal to the broader market that they’re not going to do anything different from what they’re doing right now. The balancing factor continues to be what happens in North America.

The market is not going to get balanced based on what happens at OPEC at this point because they basically are flat, they’re just not decreasing. To balance the market, there actually has to be a decrease, and the decrease is going to have to come from the United States.

Rigzone: If prices do go up, wouldn’t the effect on prices be minimized when U.S. producers turned the spigot back on? Tudor: There are a lot of drilled but uncompleted wells, (but) the spigot cannot be turned on immediately. I do think, though, given what’s happened to cost, producers can hedge their 2017 production at $45. For example, they would do that and do it aggressively and would produce more at those levels. It’s all driven ultimately by what price can you hedge, and I think at $45, there would be a lot of hedging and more production. That being said, the ultimate question is what price is required for the United States to keep production flat. We don’t think the United States could keep production flat in the $40s. We think it’s going to have to be $50 or more for it to keep production flat. Rigzone: Let’s talk a little about the businesses themselves. The spring borrowing base redetermination, in which banks re-evaluate corporate debt, is upon us. What do you expect to happen to that source of financing? Tudor: We’re expecting average redeterminations to be down 25 to 30 percent, and if that’s an average number, then that means there are some that are down 50 percent. But there will be




some that are basically flat. That’s a very different thing from what we saw in the fall, when redeterminations were down 8 to 10 percent on average. We are expecting pretty dramatically higher levels of downward redeterminations. Rigzone: So this is the moment the finance executives have been dreading as the downturn has dragged on for more than a year? Tudor: I think time is not your friend when you continue to have soft commodity prices. The banks have been, frankly, bending over backwards to work with people. But at some point, if you still have an oil price in the $30s and the banks have regulators breathing down their necks and reserves for so many of these companies are fundamentally uneconomic in the $30s … the banks have no choice but to take down the bases, and that’s what they’re doing. Rigzone: What do you suppose this means for reserve-based lending going forward? Tudor: I don’t think reserve-based lending goes away. Typically, it’s been the very best place to be in the whole capital structure if you’re a lender to the energy industry. But they have to be sensitive to price, and there’s just not that much in North America that is economic in the $30s. Costs are too high, and for you to book those reserves, you need higher commodity prices and that’s just not where we are at the moment. I don’t think reserve-based lending goes away at all. It’s just the amount that they can lend in a price environment like this has gone down. There’s nothing magic to that. Rigzone: What will be the enduring impact of this downturn? Tudor: I think people will definitely be a lot more cautious on the backend of this for a meaningful period of time – meaning I think CEOs and boards are going to be less inclined to lever back up. I think they’re going to be a little less inclined to outspend their cash flow. I think banks are going to be inclined to be less aggressive. I think it will be a while before the high yield market opens back up with these covenant-light deals we saw a lot of in 2013, 2014 and early 2015. So on the whole, the industry is going to come out of this more cautious. That being said, capital markets have very short memory spans, and when people – people being investors – start making money again by participating in equity deals and high yield deals in the energy business, the markets will open back up. It always happens that way, and there’s no reason to believe it won’t happen that way again. I do think that boards of directors for energy companies are going to be less comfortable in outspending their cash flow dramatically, assuming capital markets are going to be there for them. We had a period of time when the markets just weren’t there; there’s also basically been no (acquisitions and divestitures) market to help you fund things. When you have a near death experience, it tends to impact you. We think there will be more caution on the back end of this, and frankly, that’s good for the oil price, just because it means we’re not going to see this immediate hard-snap back to dramatic year-over-year growth in North America. Rigzone: Do you expect oil prices to dip any further? Tudor: We think we probably have seen the bottom. But inventories are still very heavy. I think a lot depends on what happens with inventories in the next month or two – do we see continued drawdowns and returns to more normalized levels? We think you will, but we could be wrong. It’s a little hard to predict.




Rigzone: At what point will transactions activity pick up in the market? Tudor: We’ve been saying that to have a functioning asset market in the United States, we need propped oil prices at $40 and above. And prices five years out, in and around $50, and we’re just not there yet. The problem has been to date if you were selling assets at the current strip with the [prop month] being in and around $30, and a five year number in and around $40, it actually really didn’t help you all that much. And so, you just didn’t have buyers who were willing to look at that strip price and say well, even though the five year strip says $40, I’m willing to use a longer term price of $50. Buyers were just not in that mood. So we’ve just needed an uplift in that forward curve to have a functioning A&D market and we’re not there quite yet, but directionally, we’re going in the right way and it feels a bit better. Rigzone: How has downturn impacted what you do at TPH? Tudor: It has slowed the overall (mergers and acquisitions) market pretty dramatically. If you look at overall M&A volumes in the last year, and in particular in the last three to six months, they’ve been down very dramatically from … the five or seven year average, so we’ve spent more time on restructurings, and more time helping companies think through balance sheet issues and planning for the future. It has slowed transaction activity a lot in the upstream and in oilfield services. The healthiest market generally has been in the midstream space, where those assets have generally continued to trade at high valuations. There hasn’t been a ton of them on the market, but the ones that have been on the market have generally traded pretty well. Rigzone: How would you advise a recent graduate interested in working in the oil and gas industry? Tudor: I think it’s a great place to be. You just have to recognize that it’s a cyclical industry and there are periods when supply and demand get out of balance and when that happens, the industry tends to shrink. But you know what? It happens to manufacturing, it happens to autos, it happens to technology – it’s not the only business that has cycles. It’s just that this particular cycle seems really harsh and painful, and it is. I’ve had a lot of people who have been running energy companies for 30 years saying this is as painful as they can remember, including back to the mid-80s. But the world will continue to need energy, and the United States will continue to be a very important supplier of that. Our degree of confidence in the industry is very high and that’s what I would tell a college senior.




NewBase Special Coverage

News Agencies News Release 05 April 2016

Chance of workable OPEC freeze at Doha is ‘minimal’: CIO CNBC - Alexandra Gibbs

Any hope of a coordinated output freeze between leading oil producers and an end to the recent sharp swings in the commodity's price are likely to be dashed, one expert has told CNBC.

"I think the prospect of a tangible production freeze (in April) is minimal. I think the fact that they're actually talking about one is a thing that the markets will jump on," Simon Fentham-Fletcher, CIO at Freedom Asset Management, told CNBC Monday.

"Russia will not and has never held to any production freezes ever and I can't see it doing so now. The Saudis are in the same situation, they've been trying to grab market share and we have Iran coming back online, they were very unsure about the levels of the Iranian oil production," Fentham-Fletcher added.

Leading OPEC and non-OPEC producers are expected to meet in Doha on April 17 to discuss a solution to oil's current supply glut. However recent comments made by leading OPEC members have suppressed many analysts' hopes of a potential cut or freeze this month.

Oil fluctuated on Monday, with prices coming under renewed pressure around 2 pm U.K. time,

with Brent and US crude trading at $38.46 and $36.70 respectively. Prices have been volatile after oil minister Bijan Zanganeh, said Iran would continue increasing production and exportsuntil it reached a favorable market position, similar to one seen before its sanctions period, according to reports.

Remarks made by Saudi Arabia last week also weighed on investor sentiment, after it said it wouldn't join any efforts to fix current conditions, unless Iran was also on board, Reuters reported.

Private banking group Julius Baer said on Monday that while talk about Doha grabs market attention, the prospect of orchestrated supply cuts remained "dim."

"Most petro-nations are starving for cash and the incentives are set to produce more rather than less, not least as Iran returns to the market claiming its historic share of the export pie," Norbert Ruecker, head of commodity research at Julius Baer, said in a note.




For some, while Russia and Saudi Arabia remain influential, Iran's return to the international oil scene has become the key catalyst.

"(Iran) doesn't want to agree to any kind of limit (following its sanctions relief) and without that, it's hard to see others in the group feeling like a production freeze is really going to work," Richard Mallinson, geopolitical analyst at Energy Aspects, told CNBC Friday.

"If they can get some kind of commitment out of Iran, or even if Iran is just not being overly unhelpful, maybe they do go ahead to try and give some positive messages to the market," Mallinson added.

Fentham-Fletcher, meanwhile, added that while sanctions were "definitely hurting" the Russian economy; the oil price remained the main influence, as many hope sanctions would ease off later this year.

"The saving grace for Russia is that in ruble terms the oil price decline isn't so extreme but we've seen oil rebound substantially since the lows of mid-February. However, oil in the mid-$30s is doing Russia no favors whatsoever. And indeed it's doing nobody any favors whatsoever."

"FX reserves in the Middle East will run dry as quickly as the desert sand if it keeps on like this, so I expect in the medium term, I'd expect cost to rise back to the marginal cost, which is more in the $45 to $50 a barrel range."

While Russia has shown interest in an agreement with other producers, recent Energy Ministry data revealed the country's oil production hit its highest in almost 30 years in March, with production rising 0.3 percent to some 10.91 million barrels a day. Despite this data, Russia's energy minister said that it wouldn't get in the way of an agreement on a production freeze, according to Reuters.

While a potential cut or freeze in output still remains unclear for April, Fentham-Fletcher saw the discussion between leading producers as a sign that a freeze would "eventually" happen.

"But the fact that there's absolute talk of one, means that eventually one will come and a production freeze will eventually happen. At the moment just the talk of it is good for the oil price."

—Reuters contributed to this report.




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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.

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