Encana to sell U.S. LNG assets to Stabilis Energy

Stabilis Energy has signed a definitive agreement to purchase substantially all of the U.S. based assets of Encana Natural Gas Inc. (ENGI).

Denver-based ENGI is a leading distributor of LNG fuel to domestic high horsepower engine operators in the oilfield, mining, rail, marine, over the road transportation, and industrial sectors. ENGI is a subsidiary of Encana Corporation. The transaction is scheduled to close on April 30, 2014.

"We are proud to announce the addition of Encana Natural Gas Inc.' s people, assets, and customer relationships to Stabilis Energy," said Casey Crenshaw, President and CEO of Stabilis Energy.

In addition to adding ENGI' s staff, Stabilis has agreed to purchase its fleet of cryogenic rolling stock assets including storage and regasification trailers, mobile fueling units, and other related equipment. Stabilis will fulfill all of ENGI' s existing customer obligations including its existing contracts, subject to customer consent.

Stabilis plans to open its first LNG production facility in George West, Texas, in January 2015 to service oilfield customers in the Eagle Ford shale. The facility is being built as part of a previously announced venture with Flint Hills Resources LLC to build up to five LNG production facilities that target oilfield customers.

The George West facility is under construction now and will be able to produce approximately 100,000 LNG gallons per day when complete. Other targeted LNG liquefaction plant locations include West Texas, North Dakota, and other major oilfield regions. Stabilis also will continue to source fuel from ENGI' s large existing third-party supply network.

"Encana is pleased that Stabilis Energy will carry on the outstanding LNG business that our Natural Gas team has worked hard to build over the past several years," said David Hill, executive V.P. of Encana Corporation. "Encana believes that natural gas has a bright future as a domestic fuel source for high horsepower engines and that LNG will be an important part of this value chain." Encana will remain a customer of Stabilis Energy for LNG.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Iran oil shipments highest since sanctions began, IEA says

Iran’s crude shipments in February were the highest since the imposition of sanctions and more than a limit agreed with Western powers in an interim nuclear deal, according to the International Energy Agency.

The country shipped 1.65 MMbpd to importing countries in February, the highest level since June 2012, the IEA said. March shipments, estimated to have fallen to 1.05 MMbpd, “will likely be revised upwards closer to February levels upon receipt of more complete data,” the IEA said.

“Imports of Iranian oil are running well above 2013 levels for the third consecutive month” and could remain high in April, the Paris-based adviser to 28 nations said in its monthly oil market report. Under the interim nuclear deal agreed in November, “Iran’s exports are supposed to be held at an average 1 MMbpd for the six months to end-July,” it said.

Iranian oil production plunged by 1 MMbpd, or 28%, from 2011 to 2013 after the U.S. and European Union banned imports of oil from the country and imposed financial sanctions. An interim accord easing restrictions on insurance for Iran’s oil shipments and freeing up cash held outside the country went into effect in January, in return for a suspension of some parts of the country’s nuclear program.

Crude shipments from Iran will probably average above 1.2 MMbpd over the six month period of sanctions relief, Richard Mallinson, geopolitical analyst at Energy Aspects, said by phone today from London.

Keeping production at the level of the last couple of months “will have a real knock-on effect in the diplomacy,” Mallinson said. “I don’t think it’s too late yet for Iran to moderate that short-term behavior, in order to rebuild some confidence in the talks and as they progress towards a final deal.”

Officials from Iran, the U.S., UK, France, Germany, China, Russia and the EU met in Vienna this week. “A lot of intensive work will be needed to overcome the differences,” between the two sides before a final July deadline for a nuclear deal, EU foreign policy chief Catherine Ashton said as talks ended April 9. Diplomats will meet again on May 13 for talks.

The IEA revised upward February import volumes of Iranian crude by 240,000 bpd after it gathered more complete data. China, India, and South Korea all imported more Iranian oil than originally estimated in last month’s report, the IEA said. The agency counts cargoes once they are received in importing countries.

Buyers permitted to import Iranian crude under U.S. sanctions are Turkey, China, Japan, India, South Korea and Taiwan. In March importers of Iranian oil expanded to include Albania and Syria, the IEA said. February data for Chinese, Indian and Korean imports were revised upwards by 168,000, 93,000 and 83,000 bpd respectively. Japanese data was revised down by 103,000 bpd.

Iranian crude stored on tankers fell from 32 MMbbl at the end of February to 22 MMbbl at the end of March, the agency said citing data from E.A. Gibson Shipbrokers.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

ConocoPhillips raises Eagle Ford resource estimate

ConocoPhillips has reaffirmed its objective to deliver double-digit returns annually to shareholders at its Analyst Meeting held at the New York Stock Exchange. Members of the company’s executive leadership team outlined ConocoPhillips’ goal to consistently deliver 3 to 5% compound annual growth in production and margins.
 
ConocoPhillips also highlighted its substantial U.S. unconventional position and announced an increase of its estimated resource base in the prolific Eagle Ford play. Based on its prime acreage position and technical knowledge, the company has increased its estimates from 1.8 billion to 2.5 billion bbl of oil in place. Production is also expected to increase from current volumes to more than 250,000 boed by 2017.
 
“ConocoPhillips’ wells in the Eagle Ford have the highest oil rates per well and are leading the industry in value. This is attributable not only to the fact that we are in the best part of the play, but also to our relentless focus on  technical innovation and drilling and completion cost efficiencies,” said Chairman and CEO Ryan Lance. “We are applying these benefits and efficiencies across our unconventional portfolio in the Bakken, Permian, Niobrara, Canada, and outside of North America. We believe our unconventional resource base is unmatched, particularly for a company our size."
 
“Beginning this year, we will be growing production and margins across our diverse asset base, and allocating 95% of our annual capital expenditures to growth projects and programs with margins that are higher than our average margin today. We believe we have the asset base, technical capability, world-class workforce and financial strength to deliver on our unique value proposition,” Lance added.
 
Since 2009, ConocoPhillips has added 6.7 billion boe of resources through a diverse and balanced exploration and appraisal portfolio of high-value opportunities. Among the high-quality prospects are four large U.S. Gulf of Mexico discoveries – Tiber, Gila, Shenandoah and Coronado. Further activity is targeting offshore prospects in Australia, Angola and Senegal; conventional exploration in Norway and Indonesia; and unconventional exploration in North America, Poland and Colombia.
 
In its first two years as an E&P company, ConocoPhillips generated proceeds of $12.4 billion from non-core asset sales, advanced new growth projects, achieved visible margin growth, accessed new organic growth opportunities, participated in successful deepwater Gulf of Mexico discoveries and maintained a strong dividend.
 
Over the next several years, ConocoPhillips plans to execute a disciplined capital program of approximately $16 billion per year and achieve the company’s organic reserve replacement target of more than 100%. The company expects to generate 3 to 5% compound annual production growth and margin growth from major development programs and projects already under way in the U.S. Lower 48, Canadian oil sands, UK and Norwegian North Sea, Malaysia and Australia.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Cub Energy commences drilling of Olgovskoye-11 well

Cub Energy reports that the Olgovskoye-11 (O-11) development well has commenced drilling. The O-11 well is operated by KUB-Gas, a partially-owned subsidiary in which Cub has a 30% effective ownership interest through its 30% shareholding of Kubgas Holdings.
 
The O-11 well will be drilled as a step out to the O-9 well for the R30c zone in the Bashkirian and an appraisal of the O-15 well in the S6 zone of the Serpukhovian. The well is located approximately one km southeast of the company’s Olgovskoye-15 (O-15), which was drilled last year and began producing from the S6 in July 2013.
 
The well will be drilled with the KUB-Gas owned K-200 drilling rig and the company expects that both zones targeted in the O-11 will require fracture stimulation.The O-11 well is expected to take approximately 70 days to reach TD.
 
The company’s Olgovskoye field comprises approximately 43% of gross KUB-Gas production and is Cub’s second-highest producing field. Given the success last year in the Serpukhovian with the O-15, and the M-16 well on the Makeevskoye field, the company’s new exploration and development efforts have been expanded to include the deeper Serpukhovian targets.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Iran to maintain oil sales at 1 MMbpd into July

Iran anticipates maintaining crude exports at about 1 MMbpd until at least July when a deal with global powers over its nuclear program will be renewed or expire, the nation’s deputy oil minister said.

Iran is producing about 2.7 MMbpd, Ali Majedi said today in Dubai. Output may rise to as much as 3.7 MMbpd within six months of sanctions being lifted, he said, adding the move would also open the nation’s energy industry to investment.

The nation plans to outline a new oil development contract at a conference in London by November, offering overseas partners incentives. “We will introduce the new contract, plus some of the oil and gas fields for development,” Majedi said at the Middle East Petroleum and Gas Conference.

Iran, the fourth-largest oil producer in the Organization of Petroleum Exporting Countries, is discussing limits to its nuclear program in exchange for the removal of sanctions on its financial and energy industries. The U.S. and allies say Iran is seeking to develop atomic-weapons technology, a claim Iran denies. An interim deal between the parties expires on July 20.

The revised oil contract terms will allow for flexible payments to international companies based on crude prices and development risk, the minister said.

The country is also seeking international buyers for its gas next year when the expansion of offshore fields will boost production levels to more than domestic demand, Majedi said.

“Iran plans to increase gas exports once domestic demand is saturated,” he said. “Pipeline export is preferred to liquefied natural gas shipments” for sales to markets including Europe, Majedi said.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.

Magnolia LNG, SKEC Group sign technical services agreement

Liquefied Natural Gas Limited has reported that Magnolia LNG, LCC (MLNG), its wholly-owned subsidiary, has executed a technical services agreement (TS Agreement) with SK E&C USA, Inc., a wholly-owned subsidiary of SK Engineering and Construction Co. Ltd., of Korea (SKEC Group).

The TS Agreement relates to the ongoing engineering, procurement and construction (EPC) activities for MLNG’s planned 8 mtpa Magnolia LNG Project, in Lake Charles, Louisiana.

SKEC Group has already completed a satisfactory detailed review of Liquefied Natural Gas Limited’s OSMR process technology, which will be employed in the Magnolia LNG Project, and provided the company with an initial estimated EPC cost of $1.57 bn, which was consistent with the company’s budget estimate, including appropriate contingencies.

Liquefied Natural Gas Limited’s Managing Director, Maurice Brand, said that the EPC activities remained on schedule with the SKEC Group and will be managed going forward by the recently appointed COO, John Baguley, who will commence on May 1, 2014.

“We also remain on schedule to lodge our application for Filing with the Federal Energy Regulatory Commissions on the 30 April 2014,” Brand said.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Tolfem Investments Limited, online.