Rig Count down countinues

US rig count drops by 73(oil: 19 rigs/-7.3%, gas 54 rigs/-5.56%), Canada is down 95.

Seadrill Update

Monday: John Fredriksen has increased his exposure to Seadrill by 500 0000 shares through TRS-contracts

Today: Seadrill subscribes to Scorpion private placement
Seadrill subscribed ~37% of the new shares offered.

Big moves in South Saskatchewan

Talisman to sell Bakken assets

"Calgary independent Talisman Energy Canada and its affiliate, Fortuna have agreed to sell their assets in Bakken play in southwest Saskatchewan and Daniels County, Montana for about C$720 million (US$565.6 million) to Crescent Point Resources and TOG Partnership, an affiliate of Tristar Oil & Gas..."

In addition Crescent Point Energy Trust is converting into a corporation.

"“Conversion to a corporation is an exciting and necessary step in the continued growth of Crescent Point,” says Mr. Saxberg. “At the current growth and development stage of the southeast Saskatchewan Bakken light oil resource play, there are too many opportunities available to Crescent Point to be
constrained by the federal government’s Safe Harbour growth limitations. Our business model will remain unchanged."

The Talisman asset acquisition metrics for CPG

2009 Cash Flow Multiple:
- 5.8 times based on production of 4,000 boe/d (US$50.00/bbl WTI, Cdn$5.00/mcf AECO and
$0.80 US$/CDN$ exchange rate)

Production:
- $69,875 per producing boe based on 4,000 boe/d
- Operating costs of less than $11.50 per boe.

Reserves:
- $13.25 per proved plus probable boe
- $19.14 per proved boe


The acquisition looks ok and the conversion is an expected move, though it does take place much earlier than I expected. CPG is funding the purchase through issuance of new equity, monetization of hedges and through bank lines. Adding debt in todays finance market is a bold move, but in a better environment the number on the price tag of these assets would have been much greater. CPG's ability to raise 200 million worth of common equity with modest costs to its current unitholders clearly reflects company's high quality asset base and healthy financial position. The acquired 312 net sections of undeveloped land in Saskatchewan and 125 net sections of Bakken land in Montana should enable Crescent Point to sustain and even grow its reserves through the drill bit in the coming years.
Talisman's decision to focus on unconventional gas seems outright stupid as allmost every single oil & natural gas company in North America is more or less involved in unconventional gas.

XOM hits paydirt in Brazil

ExxonMobil Notifies Brazil ANP of 2nd Find at BM-S-22

"The Brazilian unit of global oil titan ExxonMobil Corp. notified Brazil's National Petroleum Agency that it had made a second oil discovery at the BM-S-22 offshore block.

In a routine filing with the ANP, Exxon said that it had once again discovered traces of oil in a well drilled in the Santos Basin's BM-S-22 block. In January, Exxon said it had discovered oil in the same 1ESSO3SPS well.
ExxonMobil's local press office confirmed that discovery, which was dated Feb. 17 but posted on the ANP's Web site late Tuesday, was new but declined to give any further details. It's unclear if the find was made after deeper drilling of the well."

"The BM-S-22 block was the last to be drilled in a promising region that could hold deposits of up to 33 billion barrels of oil equivalent, or BOE, government officials have said. The block is part of a cluster of four blocks that contain a gigantic geographical structure, which industry experts and analysts believe could contain several discoveries the size of Petrobras' Tupi find."

RIG jackup contract terminated

Transocean cold stacks rig after Petrobel termination

"ALEXANDRIA, EGYPT: Petrobel, an Egyptian oil company jointly owned by the Egyptian General Petroleum Corp. and Eni, has terminated its contract for Transocean jackup GSF Key Singapore. Transocean is challenging the validity of this termination.."

It is difficult to draw any conclusion out this since the information provided is very limited. This is the third Transocean contract that has been terminated pre-maturely, the two others were terminated due to financial woes of the customers.

Vantage Drilling Double

Vantage Drilling Company's (AMEX:VTG) two ultra deep water drillships have been awarded contracts by ONGC and Petrobras. Platinum Explorer has been awarded a five-year contract starting in the fourth quarter of 20120 worth $1.1 billion(dr ~$585k) by ONGC.
The Titanium Explorer has been contracted by Petrobras for an eight period. The contract commences in the third quarter of 2011 and will generate revenues worth 1.6 billion dollars(dayrate ~$547k).

The ultra deepwater demand and dayrates still show no weakness.

Saudi Arabia to Cut Drilling Rigs Amid Lower Oil Demand

RIGZONE:

"Saudi Arabia, the world's largest oil exporter, is expected to cut the number of oil rigs by as much as 20% until year-end amid lower crude output, people familiar with the situation said.

Last year, Saudi Arabian Oil Co., or Saudi Aramco, the state-run oil company, had about 130 offshore and onshore rigs in operation at peak times, a number that is set to fall by up to a fifth throughout 2009, the people said.

"They haven't announced any specifics but they are saying there will be a reduction in the number of rigs by 20%," one Gulf-based oil industry official told Zawya Dow Jones..."

Aramco employs land and shallow water rigs and as the day rates of these rigs are already under pressure the Saudi cuts will push the rates straight to the bottom.

Oil field with 100 mln-ton reserves found in Inner Mongolia

China Knowledge:

"A large oil field has been found in Siziwang Banner in northern China's Inner Mongolia autonomous region, which is known as the landing place of the Shenzhou-7 space module in 2008.

The oil field has a proven reserve of 100 million tons, and has a workable reserve of 35 million to 40 million tons based on preliminary estimate.

The Siziwang Banner government will input RMB 20 million (US$2.9 million) in the first half of 2009 to establish five exploratory shafts for further exploration, and plans to invest RMB 200 million in the next three years to dig 100 wells with an annual oil output of 150, 000 tons.

This is the second oil field found in Inner Mongolia which already has a proven reserve of 700 million tons. It is expected the oil reserve will amount to over 4 billion tons in this region."

The field isn't very large as the recoverable reserves are estimated to be around 300 million barrels, but the location is interesting.