Apache completes acquisition of nine Marathon Oil Permian Basin properties

Crum
Apache Corp. has completed the acquisition of nine Permian Basin oil and gas fields with current net production of 3,500 barrels of oil equivalent per day from Marathon Oil Corp.

Apache paid $181.1 million for the properties.

Apache acquired Marathon’s company-operated assets located in Lea County, NM, and Reagan, Howard, and Sterling counties in Texas, as well as Marathon’s interests in the Chenot/Putnam area in Pecos County, Texas. The properties have a current net production of 10 million cubic feet (MMcf) of natural gas, 1,332 barrels of oil and 524 barrels of natural gas liquids per day.

“Apache has a long track record of increasing production from mature fields in the Permian Basin,” said John Crum, Apache’s co-COO and president - North America. “Of the acquired properties, approximately 75% of the proved reserves and 61% of the current production directly offset the Apache-operated Northeast Drinkard Unit in Lea County, NM.”

When Apache started downsizing well-spacing at the Northeast Drinkard Unit from 16 wells per square-mile section to 32 wells per section, field production grew from 700 barrels per day to 2,000 barrels per day. The newly acquired properties have 16 wells per section.

Prior to the acquisition, Apache’s net production in the Permian Basin was 34,500 barrels of oil and 86 MMcf of gas per day.

ATP sees potential in North Sea Bodbury prospect; gears up for Telemark Hub development

ATP Oil & Gas Corp. expects to place its third well drilled from its Wenlock platform, the W3z ‘Bodbury’, by the end of the month. The exploratory well at ATP Oil & Gas Corp.’s Wenlock field Block 49/12 North in the UK North Sea was completed and tested in the Leman sandstone at a depth of 15,437 feet MD and flow tested at a stabilized 59 MMscf/d at a flowing wellhead pressure of 2,800 psig.

The company’s wholly-owned subsidiary, ATP Oil & Gas (UK) Ltd., is the operator and owns a 20% working interest. The remaining 80% equity is held by EDF Production UK Ltd.

In the Gulf of Mexico, ATP Corp. is looking to ramp up activity in its Telemark Hub. Bluewater Industries Inc. recently awarded Weatherford International Ltd. a contract for a subsea production control system for the discovery on behalf of ATP Oil & Gas Corp.

The project will be managed by Weatherford and has been designated as a fast-track project with all equipment to be supplied to the client in roughly 24 weeks.

Telemark, 100% owned by ATP, lies on the Atwater Valley Block 63 in 4,450 ft of water and will be tied back to ATP’s Titan MinDOC deep-draft floating drilling and production platform in the Mirage and Morgus fields on Mississippi Canyon blocks 941 and 942, respectively.

In June, the company made a public offering of 8.75 million shares of common stock at $8.25 per share to raise money for Telemark Hub well development. JP Morgan Securities Inc. acted as sole book-running manager for the offering.                                     – Mikaila Adams

Goodrich Petroleum completes 2nd horizontal Haynesville shale well

Goodrich Petroleum Corp. has completed its second operated horizontal Haynesville Shale in East Texas, the Lutheran Church 5HR, which tested at an initial production rate of 9.0 MMcf per day on a 26/64 inch choke with 4,375 psi. The well, which was completed with roughly 3,100 feet of lateral length and ten stages, is located in the company’s Beckville/Minden area of Panola County, Texas. Goodrich is operator and owns a 100% working interest in the well.

Northern Oil and Gas acquires Bakken acreage, production with borrowing base increase from CIT

Wayzata, Minnesota-based Northern Oil and Gas Inc. has acquired certain North Dakota Bakken assets from Windsor Bakken LLC as part of a syndicate led by privately-owned Slawson Exploration Co. Inc. Northern Oil purchased a 5% interest in the undeveloped acreage, including roughly 60,000 net acres as well as 14% of the existing 59 gross Bakken and Three Forks well bores in North Dakota – including nearly 1,200 barrels of oil production per day.

All told, Northern Oil & Gas purchased roughly 300,000 barrels of proven producing reserves as well as nearly 3,000 net undeveloped acres for a total cost of $7,300,000.

Slawson Exploration will be responsible for all operations concerning the properties and is expected to drill up to 45 gross Bakken wells on the newly-acquired acreage through 2010. Northern Oil currently expects drilling to be focused on approximately 23,000 core Bakken acres located in Mountrail County, encompassing a significant portion of Northern’s existing core Bakken acreage.

Earlier in the year, Northern Oil completed the closing of a revolving credit facility with CIT Capital that provides up to $25 million of working capital for exploration and production operations. Originally, CIT made $11 million available Northern Oil, however, in conjunction with the Bakken asset acquisition, CIT increased the amount to $16 million. The additional borrowing was used to fund the acquisition from Windsor Bakken LLC.

Michael Reger, CEO, commented, “This new acreage is highly complementary to our existing acreage position, especially in Mountrail County, North Dakota and we expect a significant number of the wells to be drilled on the undeveloped portion to include acreage Northern currently controls. We believe the addition of such acreage, together with the increased borrowing base under our CIT facility, will enable Northern Oil to continue to aggressively execute its development plans within a highly productive area of the Bakken.”

– Mikaila Adams

Pilgrims Group warns energy industry of increased criminal activity in Nigeria

Poor GDP growth and rising inflation combined are having an adverse affect on Nigeria’s income stream, prompting concern that Nigeria may see high levels of piracy and a renewed drive of kidnap-for-ransom schemes as criminal groups seek to procure alternate means of income, reveals a report by Pilgrims Group, a risk consultancy that operates in the region. The warnings are targeting specifically to the energy industry.

The Nigerian economy is heavily dependent on oil and gas exports, which provide 95% of export revenues, 85% of government revenue and in 2008, approximately 20% of the country’s GDP. The global financial crisis has notably affected Nigeria, which is struggling to maintain an income stream amid low production quotas imposed by the OPEC and production caps as a result of militant attacks.

Oil theft will continue in the region as militant groups need to raise funds for weapons in the face of an effective offensive against them by the Nigerian security forces.

Secured residential compound in Bonny Island.

Pilgrims also warns that the potential of kidnapping-for-ransom schemes spreading outside of the Niger Delta remains, with seven foreign nationals targeted in Lagos, Ondo, Ebonyi, and Kaduna states since the beginning of 2009. Likewise, piracy along the coast of Nigeria remains high and could see an increase in the short term.

Michael Howlett, divisional director of the International Maritime Bureau claims that although roughly 40 attacks were reported in Nigerian waters in 2008, the actual figure was likely to be closer to between 150 and 200.

The Pilgrims report has been compiled various sources including the Pilgrims Africa team, intelligence contacts, academia and government departments, as well as those engaged in-country on specific projects.

The comprehensive report is continually updated and reissued as a way for companies contemplating business activity in Nigeria to gather information before putting processes in place.

Williams, Rex Energy team up to drill,develop natural gas wells in Marcellus Shale

Williams has teamed up with Rex Energy Corp. to develop natural gas wells in the Marcellus Shale. Williams is acquiring a 50% interest in nearly 44,000 net acres in Pennsylvania’s Westmoreland, Clearfield, and Centre counties for $33 million in a “drill to earn” structure.

Williams will drill to earn its 50% by incurring 90% of costs and expenses associated with drilling and completion of wells in the area until it has invested $33 million on behalf of Rex Energy and $41 million in its own costs and expenses. Williams has until the end of 2011 to fulfill its funding obligations.

The company will fund the investments with cash on hand. Amounts to be spent in 2009 are within existing capital expenditure guidance.

Once Williams earns its 50%, the companies will share all costs of joint venture operations in accordance with their participating interests, which are expected to be 50/50. Rex Energy is currently operating the assets and will continue to do so through the end of 2009, when Williams will assume operations.

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