New base 796 special 28 february 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 28 February 2016 - Issue No. 796 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Dewa launches smart power plant to World-class utility
Khaleej Times
Dubai Electricity and Water Authority (Dewa) has launched the smart power plant to develop its
smart operations and achieve its vision to become a sustainable, innovative world-class utility.
Saeed Mohammed Al Tayer, managing director and chief executive director, Dewa, said: ”The
launch of the Smart Power Plant is part of our efforts to speed up the transformation of Dubai into
a smart city, in line with the Smart Dubai initiative launched by His Highness Sheikh Mohammed
bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to
make Dubai the smartest city in the world.
“The Smart Power Plant will enhance the quality of life in Dubai and provide its community with
efficient and reliable electricity and water services.
“Dewa 's three smart initiatives, Shams Dubai, Smart Applications through Smart Meters and
Grids and Green Charger, contribute to achieving smart transformation within the Emirate by
building smart grids to achieve its vision.
“It is the first network in the world to provide customers with generation,
transmission and distribution systems.”
The plant is a centralised information system that automatically gathers data
from control systems in real time and is capable of functions such as watering
plants using the One-Way Data Device, developed by Dewa's internal staff.
The operational system is clear and comprehensive, allowing quick analysis and
fast decision making to improve performance and prevent potential mishaps.
Users can easily receive results at any time, and from any location, by the use of
personal computers, or other smart devices, Al Tayer added.

Oman set to achieve 1m bpd output for 3rd month
Oman Observer Conrad Prabhu
Underscoring efforts to sustain output despite the collapse in global oil prices, Oman is on track to
achieving a record 1 million barrels per day (bpd) crude production for the third consecutive
month, according to a top official of the Ministry of Oil & Gas.
Salim bin Nasser al Aufi (pictured), Under-Secretary, said output for February is likely to surpass
the 1 million bpd mark — an achievement that
promises to buoy an industry otherwise
weighed down by steep cuts in spending
outlays. Speaking at the 1st OPAL Oil & Gas
Forum last week, Al Aufi said: “If you look at
the numbers, our production figures are at
their best. In fact, for the last two months, and
for the third month probably, we will be
producing about a million barrels per day, and
that’s a record production figure.”
This outstanding result, he said, was evidence
of a more prudent response to the oil price
slump mounted by the authorities in concert
with operators, as opposed to what has been
characterised as a “kneejerk” reaction to the previous oil price collapse of 1986. Unlike the last
crisis that saw a significant slowdown in areas like seismic acquisition, exploration, project
development, and so on — areas that are critical to the future well-being of the industry — this
time around, the operators continue to invest in activities that help “safeguard the future”, the
under-secretary said.
“In terms of the main activities that are safeguarding the future of our business, I don’t think we
have reduced a lot,” Al Aufi said. “Exploration activity is being pursued by all of the operators. But
in drilling, probably, instead of drilling, say, 10 wells, they’re drilling eight. Unlike in the past, when
this was the first activity to be cut, this time around we’re still keeping it going. Additionally, a lot of
the projects that are safeguarding the future are still happening. They could be probably
contributing to a higher unit cost of production, but we are investing in the future,” he stated.
Nevertheless, he warned that the status quo cannot be sustained if oil prices continue to remain at
current abysmal levels. Unlike the 1986 crisis, which while severe was relatively brief in
comparison, a protracted downturn this time around could potentially result in more projects being
put on ice until they can be revived when market conditions improve, he pointed out. Asked by the
forum’s moderator Musallam al Mandhry, CEO of Oman Society for Petroleum Services (OPAL),
for his assessment of the downturn on the domestic oil and gas industry, Al Aufi stressed that the
oil production business in the Sultanate continues to be profitable at current global prices.
“We are still a low (cost) producing country; our production cost does not exceed $9.50 per barrel,
which is last year’s figure. This year it should be slightly lower as operating costs have gone down
a bit. However, unit expenditure costs, according to the Ministry of Finance, are approaching
current oil prices, which do not leave a lot of spare dollars for the government’s use. While
declining to comment on whether oil prices have hit a bottom, the under-secretary noted that, of
late, prices have been fluctuating within a narrow range of $25 – $30 — a trend that would not be
sustainable for some of the major oil producing regions of the world.

Egypt: Eni announces successful exploration wells in Egypt
Source: Eni
Eni has successfully drilled a new well in the Nooros East exploration prospect, in the Abu
Madi West license, and has also completed the drilling of the Zohr 2X well, first appraisal well
of Zohr discovery, in the Shorouk block.
Eni successfully drilled the 'Nidoco North 1X' well, in the exploration prospect of 'Nooros East',
located in the Abu Madi West license, in the Nile Delta, Egypt. The new find start up is expected
by the end of March 2016 and will allow the Nooros area, which started production in September
2015, just two months after the initial Nooros discovery, to reach a production of approximately
45,000 barrels of oil equivalent per day (boed). Eni, through its subsidiary IEOC, holds a 75%
stake in the concession of Abu Madi West, while BP holds a 25% stake.
By the middle of 2016, with the addition of new development wells, the production capacity will
increase to over 60,000 boed. The gas and condensates produced are sent to the Abu Madi’
treatment plant, about 25 kms from the discovery, and then routed to the Egyptian network.
'Nidoco North 1X' well, similarly to Nooros’ last discoveries, was drilled from onshore as a
deviated well to the Nooros East field in the offshore shallow waters. The well encountered over
43 meters of net gas and condensates bearing sandstone layers of Messinian age with excellent
petrophysical properties.

In parallel with the field development, Eni will continue its exploration activities in the license area,
where significant additional potential has been identified which will be tested through the drilling of
further two exploration wells.
This new discovery, with immediate return of production capacity, is the result of Eni’s near field
exploration strategy targeting high value activities able to grant the rapid development of
discoveries through existing infrastructures.
Eni also completed the drilling of the Zohr 2X well, first appraisal well of Zohr discovery. The
well, drilled in the Shorouk blockwhere Eni, through IEOC, holds a 100% share, is located 1.5
kilometers southeast from Zohr 1X and down-dip of it, on the flank of the Zohr’s structure, in a
water depth of 4800 feet.
Zohr 2X well was drilled up to 13684 feet (4171metres) and encountered 1614 feet (455 metres)
of continuous hydrocarbon column in a carbonate sequence with excellent reservoir
characteristics (305 metres net pay). The comprehensive formation evaluation program confirmed
the same gas-water contact and connection with the discovery well showing Zohr as a single and
continuous mega tank of natural gas, fully comprised in the Egyptian Exclusive Economic Zone
(EEZ) and within the Shorouk Block. Eni is arranging all the activities for the execution of the well
production test.
The appraisal plan envisages the drilling of 3 further wells to fully delineate the field which holds a
potential of up to 30 trillion cubic feet of lean gas in place (5.5 billion of barrels of oil equivalent in
place).

Egypt: BP & DEA award Subsea 7 contract offshore Egypt
Source: Subsea 7
Subsea 7 has announced the award of a major contract by BP and partner DEA(Deutsche Erdoel
AG), for the development of the Giza, Fayoum and Raven subsea fields offshore Alexandria,
Egypt. This is the second phase of the West Nile Delta project, where the field development will
be at depths of up to approx. 800 metres.
The contract scope includes engineering, procurement, installation and pre-commissioning of the
subsea infrastructure from twelve wells, with 80 kms of umbilicals and 220 kms of pipelines. It also
includes the installation of the export lines from the subsea location to the Idku terminal.
Engineering and project management work will commence immediately and will be undertaken at
Subsea 7's Global Projects Centre in London. Offshore installation is scheduled to commence in
two stages. The first stage, commencing in 2017, will comprise the landfall and shallow water
pipelay, and the second stage, commencing in 2018, will involve the installation of deepwater
pipelines and execution of the SURF scope. Subsea 7 vessels Seven Borealis and Seven Antares
will be used for the pipelay, with the heavy construction vessel, Normand Oceanic, being used for
the other construction activities.
Øeyvind Mikaelsen, Executive V. President Southern Hemisphere and Global Projects said:
'This major contract awarded by BP recognises our performance during the first phase of the West
Nile Delta project and allows us to deliver synergies across multiple work packages.
Our early engagement on this project has enabled BP and Subsea 7 together with DEA to develop
an optimised solution for the development of the Giza, Fayoum and Raven fields and
demonstrates the effective collaboration between us. We look forward to consolidating our
presence in Egypt and building on our long and successful relationship with BP.'

Morocco: Sound Energy announces mobilisation of rig to drill
Tendrara well onshore … Source: Sound Energy
Sound Energy, the Mediterranean focused upstream gas company, has announced the
mobilisation of the National 110 UE (1500 HP) traditional rig for the upcoming first well at the
Company's Tendrara licence area, onshore Morocco. The rig has been mobilised from
Mauritania and is expected to arrive on site in early March 2016.
The Company has also announced that it has now received final approval from the Moroccan
National Environmental Committee for the first and second Tendrara wells. There are no other
approvals required before drilling can commence. Civil works on site at Tendrara, including the
upgrading of local infrastructure and the preparation of the camp and the two well pad areas,
continue ahead of the rig's arrival.
The Tendrara Licence
The onshore Tendrara Licence includes two stranded gas discoveries with low risk appraisal potential and
significant (multiple Tcf) blue sky exploration upside. Preliminary internal estimates of existing discovery
volumes are broadly comparable to estimated volumes (post a successful drill) at the Company's Badile
licence in Italy.
The Tendrara Licence area covers eight blocks across a total of 14,500 square kilometres in the North East
of Morocco. The underlying Trias Argilo-Gréseux Inférieur (TAGI) reservoir is a continuation of the
Algerian Triassic Province capped by salt and underlain by Paleozoic source rocks. Seven wells have
been drilled on the Tendrara Licence to date, of which five discovered hydrocarbons and two were tested
successfully. The licence already has 4,400 kilometres of 2D seismic and 500 square kilometres of 3D
seismic. Gas produced from the Tendrara Licence is expected to either feed the gas hungry Moroccan
domestic market or be connected to the Gazoduc Maghreb Europe (GME) gas export pipeline. The
Tendrara Licence is currently owned 75% by OGIF and 25% by The National Office of Hydrocarbons .

Indonesia: Black Platinum Energy to drill East Natuna Blocks
Source: Black Platinum Energy
Black Platinum Energy (BPE), a private equity funded oil and gas exploration company,
announced Thursday that it has plans to forge ahead with exploration and appraisal/development
activities to prove up its shallow gas plays in East Natuna, offshore Indonesia. The Company
plans to drill one exploration well, Paus Hitam-1 in its Sokang Production Sharing Contract
(PSC) and one or two appraisal wells in its North Sokang PSC within the next 12-18 months.
Planned Sokang PSC Exploration Activities
One exploration well is planned in early 2017 targeting an unrisked mean exploration
prospect, Paus Hitam-1 of P50 878 billion cubic feet (Bcf) in the Lower Pliocene sands at a total
depth (TD) of 2,881 feet (878 meters). The Sokang PSC was the site of a three well exploration
campaign (Paus S-1, Paus NE-1 & 2) in the early 1970’s which was targeting resources in the
Miocene. All three wells penetrated gas columns with no carbon dioxide (CO2) detected in the
Upper & Lower Pliocene and were deemed shallow gas hazards at that time.
Judiana Ardiwinata, CEO of the Company stated that 'recent success in the Upper & Lower
Pliocene (in interval above 2,625 feet or 800 meters) in the adjacent North Sokang PSC (East
Dara gas discovery) provides a low CO2 play analogy for a Paus Hitam-1 well'.
Judiana further stated that 'a successful result in a Paus Hitam-1 well along with the adjacent
East Dara gas discovery would further boost the commercial potential of shallow gas in the East

Natuna region and likely unlock a huge amount of potential gas resources in the greater Natuna
Sea which were previously deemed shallow gas hazards and not commercially viable'.
Judiana indicated that 'the Company is actively looking for farm-in Parties to drill the Paus
Hitam-1 exploration prospect but given the recent decline in drilling costs that it would drill the
exploration well on its own, if necessary.'
Planned North Sokang Appraisal/Development Activities
One or two appraisal wells are planned in mid-2017 on the East Dara gas structure to further
test/prove up the Upper & Lower Pliocene gas resources and move this gas discovery into a
development phase.
The Company plans to drill a Dara 5 appraisal well on the West Flank of the East Dara structure
targeting the Upper Pliocene sands with a possible second appraisal well,Dara-6 on the high of
the East Dara structure targeting the Lower Pliocene sands.
In November 2012, the Company completed two exploration wells on the East Dara structure in
its North Sokang PSC. Both wells -- Dara 3 & 4 targeted the Upper Pliocene sands which were
plugged and abandoned as gas discoveries.
The Dara 3 well was drilled to a depth of 3,182 feet (970 meters) and intersected net gas pay of
59 feet (18 meters). Dara 3 was successfully flow tested at a rate of 9 milion standard cubic feet
per day (MMscf/d) with 1.9 percent CO2 and no water. The nearbyDara 4 well was drilled to a
depth of 2,526 feet (770 meters) and intersected net gas pay of 19.7 feet (6 meters). In 2015,
the East Dara gas discovery was independently assessed by a third party to contain 734 Bcf of
gas.
Judiana stated 'the objective of drilling one or two more appraisal wells in East Dara is to prove
the commercial viability of the Pliocene shallow gas play'. Judiana noted that 'the East Dara gas
discovery was analogous to Chevron’s shallow AB gas fields in the Netherlands'. Judiana
explained further that 'Chevron had successfully developed the offshore Netherlands AB gas
fields despite the shallow depth and low relief of the structures, the unconsolidated nature of the
reservoir sands, together with difficulties modelling reservoir architecture and predicting water
breakthrough. The AB gas fields were developed employing highly-deviated wells completed with
expandable sand screens after gaining an understanding of sequence stratigraphic and glacial
controls on sand quality and deposition'.

Judiana further added that 'the Company had already studied a number of commercialization
options for the East Dara gas field which included a tie-in to the West Natuna pipeline system, a
new-build pipeline to Natuna Island and a floating liquefied natural gas (FLNG) vessel, and the
Company has determined a FLNG solution provided the best commercial and operational
results'.
Judiana explained 'the Company had completed a Preliminary Plan of Development by a 3rd
party for the East Dara gas field confirming robust economics utilizing:
• Up to 14 development wells phased over field life
• Four unmanned Well Head Platforms (WHP)
• Infield umbilicals and flowlines
• Leased FLNG facility to support 11 years of production/throughput at 110 MMscf/d plateau
with 18 year production life
• Export via LNG tanker to the Indonesian domestic gas market
Judiana mentioned that 'further pre-FEED/FEED work was needed to finalize this Preliminary
Plan of Development'.
Judiana indicated that 'the targeted gas market for East Dara gas was the Indonesian domestic
market given the growing demand for gas, the planned new build regas FLNG infrastructure and
the favorable gas prices'. He also mentioned that some discussions have already been initiated
with local gas Buyers/Offtakers.
Judiana stated that 'the Company was actively looking for Parties to progress the East Dara
gas development and hoped a transaction would be concluded soon so Pre-FEED/FEED and
other appraisal/development activities could be started'.

Turkey starts repairs on Iraqi Kurdish oil pipeline
Reuters + Gulf News + NewBase
Turkey has begun work to repair a pipeline taking crude oil from northern Iraq to the
Mediterranean through its restive southeast and aims to restore flows soon, the Turkish energy
ministry said on Saturday.
The pipeline, which has been repeatedly sabotaged in recent months, normally carries some
600,000 barrels per day (bpd) of crude from Iraq’s autonomous Kurdistan region and the disputed
Kirkuk oilfields to the port of Ceyhan for export.
Rising security threats in Turkey’s southeast mean Iraqi Kurdish exports to world markets through
the pipeline could remain halted for another two weeks, Turkish shipping and industry sources
said on Friday.
The energy ministry said the pipeline was most recently suspended on Feb. 17 due to temporary
security measures.
Kurdistan Workers Party (PKK) militants, who have waged a three-decade insurgency in Turkey’s
southeast, carried out a bomb attack on the pipeline in the Idil district of Sirnak province on Feb.
25.
The ministry said there was no fire as a result of the bomb as the crude flow had already been
stopped, but 40-inch and 46-inch diameter pipes were damaged.
“The Ministry of Energy has launched work to repair the damage to the oil pipeline and the
security forces have taken necessary steps to ensure the pipeline’s safety. We expect to restart
the oil delivery soon,” it said in a statement.

The outage, one of the longest in the past two years, is a major blow to Iraq’s semi-autonomous
region which depends on revenue from oil exports via the pipeline as it fights with Islamic State
and is struggling to avert economic collapse amid slumping energy prices.
It also highlights how intertwined Iraqi Kurdistan’s economic woes are with the deteriorating
security in Turkey’s predominantly Kurdish southeast, engulfed in the worst violence since the
1990s after a two year-long ceasefire between the state and Kurdish militants collapsed last July.
Turkish security forces had detonated explosives set at several points along the pipeline, the
ministry said. Security sources told Reuters the devices were set in the Yeni Mahalle district of Idil
on the border with Iraq and Syria, one of the flashpoints in the latest violence.
The security sources said around 4,000 gendarmes and special force police officers had been
involved in operations to clear barricades and ditches set up by militants in Yeni Mahalle.
Drones were being used to locate the militants, who were then being targeted by military shelling
and snipers, they said.
The PKK, considered a terrorist group by Turkey, the United States and the European Union,
launched a separatist armed rebellion against the Turkish state in 1984 in a conflict that has killed
more than 40,000 people, mostly Kurds.
The PKK says it is fighting for autonomy for Turkey’s large ethnic Kurdish minority. It has sealed
off entire districts of some towns and cities in the southeast and declared autonomy, prompting
the security forces to step up their operations.

Turkey: Gazprom cutting gas supplies to Turkey
https://www.rt.com/business/333732-russia-gazprom-turkey-gas/
The already strained relations between Moscow and Ankara have taken a turn for the worse.
Gazprom has cut gas supplies by nearly a quarter after failing to reach an agreement with Turkish
importers on discounts for Russian natural gas.
Delivery is down 23 percent, compared to the same period last year, Interfax reports, quoting data
from Bulgarian gas operator Bulgartransgaz that processes about 50 percent of Russian gas
going to Turkey.
According to the news agency sources, the reduction is linked to a price dispute between
Gazprom and Turkey's private gas importers. Last year, Gazprom gave the importers a 10.25
percent discount, but is now doing away with it as energy prices have dropped significantly.
Business daily Kommersant’s sources say Gazprom stopped giving the discount at the beginning
of the year. For January deliveries, Turkish companies had to pay at a higher price, but on the
payment date of February 21 they only paid the discounted price. As a result, Gazprom has cut
the volume delivered by the size of the underpayment.
Enerco Enerji, Bosphorus Gaz, Avrasya Gaz, Shell, Bati Hatti and Kibar Enerji are the importers
affected. Overall, they import 10 billion cubic meters of Russian gas per year. Kommersant’s
sources in the companies say the cancellation of the discount hurts their business, as they have
signed contracts with clients based on the discount gas price.
From the 1st to the 24th of February Gazprom under-delivered 117 million cubic meters worth $30
million, the newspaper’s calculations say. Kommersant added that Turkey could fine the Russian
gas monopoly $2.5 million for not fulfilling its obligations.
The source in Gazprom claimed the reduction in supply will not affect supply of the Turkish
market, "especially because Botas does not reach its contractual volumes." State-owned Botas
imports about 17 billion cubic meters of Russian gas per year. In 2015, it didn’t get a discount from
Gazprom due to the failure of the Turkish Stream negotiations and is now suing Gazprom.

Suadan: Oil minister discuss with chinese officials building
Sudan’s first natural gas pipeline.. http://www.sudantribune.com/spip.php?article58116
Sudanese oil minister Mohamed Zayed Awad Wednesday held discussions with Chinese officials
to build the first gas pipeline in Sudan and ways to develop gas industry in the east African
country
Speaking to Ashorooq TV channel from Beijing- China, Awad said he discussed with officials from
the state-owned China National Petroleum Corporation (CNPC) ways to develop oil crude and
natural gas extraction systems in Sudan in order to increase national production.
The minister said he also
discussed the signing of a
partnership deal with a big
Chinese natural gas company
that he didn’t name for the
construction of natural gas
processing facilities and deposits
in Sudan.
Natural gas associated with oil
extraction is usually burnt off at
oil fields due to the lack of
market near the production sites.
The Chinese investors didn’t
construct natural gas pipeline
because it was not economically
feasible.
The visiting minister said the
discussions with Chinese officials
aimed to increase production of
natural gas, its transportation
and distribution from a well site
to an end consumer.
Sudan seeks to take advantage
of the fall of oil prices to develop
natural gas industry, Awad said.
He further expected that the current juncture will encourage Chinese natural gas firms to
participate in the Sudanese natural gas project. China which is the largest foreign investor in
Sudan, agreed last year to embark on new oil explorations and to expand its oil operations in
Sudan.
In line with an agreement reached in September 2015, China will explore for oil and gas in the
Red Sea, Sinnar, and West Kordofan. During a visit to New Delhi last January, Awad offered
three gas and oil blocks to India’s ONGC Vides.
The east African nation lost three quarters of its oil revenue when South Sudan seceded in 2011
and currently produces about 115,000 barrels per day (bpd).

Canadian oil production expected to increase despite lower prices
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, and Statistics Canada
Despite lower crude oil prices, EIA expects Canadian oil production to continue increasing
through 2017. Canadian oil sands projects that were already under construction when
prices began to fall in 2014 and that are expected to begin production in the next two years
are the main driver of production growth.
According to EIA's February Short-Term Energy Outlook, production of petroleum and other
liquids in Canada, which totaled 4.5 million barrels per day (b/d) in 2015, is expected to average
4.6 million b/d in 2016 and 4.8 million b/d in 2017. This increase is driven by growth in oil sands
production of about 300,000 b/d by the end of 2017, which is partially offset by a decline in
conventional oil production.
Oil sands production continues to grow even as global crude oil prices have declined significantly.
Prices of heavy (dense) Canadian crude oil are linked to the Western Canadian Select (WCS)
benchmark, an index of different conventional and synthetic crude oils.
WCS has traded about $15 to $20 per barrel (US $/b) lower than U.S. benchmark West Texas
Intermediate (WTI) crude oil since early 2014, because WCS has to be transported over a longer
distance to refineries and—because of its density and quality—it is more difficult to process into
petroleum products. The average price for WCS in January 2016 was $18.42/b, about $15/b
below WTI.
WCS prices at these levels suggest that many oil sands projects may be operating at a loss.
However, such projects are designed to operate over a period of 30 to 40 years and can withstand
volatility in crude oil prices.
Additionally, the cost to shut down an existing oil sands project is estimated to be in the range of
$500 million to $1 billion, which may exceed the operating losses a producer might experience in

the short term. Although some new projects are expected to come online in 2016, many more
have been postponed until oil prices increase.
EIA's forecast for oil prices over the next two years (see figure below) is expected to allow new
projects to earn a return over their running cost. Some producers may opt to decrease production
volumes by delaying maintenance or allowing natural production declines. However, these
scenarios are not included in this forecast.

NewBase 28 February 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
US oil, closes at $32.78 a barrel & Brent at $35.12 a barrel
Reuters + NewBase
U.S. crude closed lower in choppy trade, but still recorded weekly gains, as supply disruptions in
Iraq and Nigeria provided supported.
Pipeline outages in Iraq and Nigeria have removed more than 800,000 barrels of crude oil per day
from the market for at least the next two weeks. The disruptions should offset recent increases to
supply from Iran, analysts said.
Also on Friday, oilfield services firm Baker Hughes reported the total number of rigs drilling for
crude in the United States fell by 13 to a total of 400 in the previous week. At this time last year,
there were 986 rigs in U.S. fields.
U.S. stock prices hit their highest in nearly two months after an upward revision to the country's
economic growth for the fourth quarter. A raft of other U.S. economic data also boosted Wall
Street, which has traded in tandem with oil for weeks.
"Equities have been in a rally mode and with the technical picture for oil becoming bullish in the
short term, we have a risk-on trade in crude," said Chris Jarvis at Caprock Risk Management, an
energy markets consultancy in Frederick, Maryland.
Brent crude futures were trading at $35.12 a barrel, down 17 cents from their last close, but rose
to $37 earlier in the session, the highest since Jan. 5. For the week, Brent was up about 7
percent.
U.S. West Texas Intermediate (WTI) crude futures for April delivery closed 29 cents lower, at
$32.78 a barrel, but still managed to gain about 3 percent for the week.
Oil price special
coverage

Baker Hughes: US Oil Drillers Cut Rigs For 10th Week In A Row
Reuters + NewBase
U.S. energy firms this week cut oil rigs for an 10th week in a row to the lowest levels since
December 2009, data showed on Friday, as some producers focus more on completing their
drilled but uncompleted wells instead of drilling new ones.
Looking forward, analysts forecast the rig count will bottom in a few months before recovering
later this year when they expect crude prices to rise. Drillers removed 13 oil rigs in the week
ended Feb. 26, bringing the total rig count down to 400, oil services company Baker Hughes Inc
said in its closely followed report.
That compares with 986 oil rigs operating in same week a year ago. In 2015, drillers cut on
average 18 rigs per week for a total of 963 oil rigs for the year, the biggest annual decline since at
least 1988.
Before this week, drillers had also cut on average 18 rigs per week so far this year.
U.S. crude futures were trading over $33 a barrel, putting them on track for their largest weekly
gain in seven years, after supply disruptions in Iraq and Nigeria and higher equity prices fueled by
U.S. growth data.
After falling to the lowest level since 2003 earlier this month at $26.05 a barrel, U.S. futures were
expected to continue climbing for the rest of the year, fetching around $38 for the balance of 2016
and $42 for 2017.

Whiting Petroleum Corp, a U.S. exploration and production company, said on its fourth quarter
earnings call this week that it would consider completing some of its drilled but uncompleted wells,
known in the industry as DUCs, if crude prices recover back to the $40-$45 level.
Other U.S. exploration and production companies, like Cabot Oil & Gas Corp, have also said they
too will focus more on completing existing DUCs this year as they cut back on spending to drill
new wells.
Analysts at Simmons & Co International, an investment banking services firm, said they expect
the total U.S. oil and natural gas rig count to bottom around 400 during the second quarter before
recovering later this year.
For all of 2016, Simmons expects the total U.S. land rig count to average 468, which is about half
of last year's 978 average. Analysts at Cowen and Co, a financial services firm, forecast the total
onshore rig count could fall even further, bottoming between 375 and 400 later this year.
The total oil and gas rig count this week fell to 502, with 400 oil and 102 gas rigs, the lowest level
since 1999, according to the Baker Hughes data.

NewBase Special Coverage
News Agencies News Release 28 February 2016
Buffett: Wind and Solar Power Competition Challenges Utilities
Bloomberg Jim Polson
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said subsidized wind and
solar power in the U.S. may erode the economics of electric utilities that care little for efficiency.
“The joke in the industry was that a utility was the only business that would automatically earn
more money by redecorating the boss’s office,” Buffett wrote Saturday in his annual letter to
shareholders. “Some utilities ran things accordingly. That’s all changing.”
Utilities across the country have been grappling with how to integrate wind farms and solar plants
into their systems and business models. Cheap power from large-scale renewables has undercut
the profitability of conventional electricity generation from coal and nuclear sources. In addition,
rooftop solar panels have sapped sales for power distribution companies.
Berkshire is both a utility owner and a producer of electricity from renewable energy. After it
pledged in July to almost double its $16 billion investment in renewables, its Nevada utility, NV
Energy, persuaded state regulators to raise fees and cut credits for newhome-solar customers.
Nevada casino operators have tried to break away, saying they can buy cheaper power in the
open market, including some from renewable sources.
High-Cost Utilities

“Tax credits, or other government-mandated help for renewables, may eventually erode the
economics of the incumbent utility, particularly if it is a high-cost operator,” Buffett wrote Saturday.
Berkshire Hathaway Energy’s track record of efficiency “leaves us particularly competitive in
today’s market (and more important, in tomorrow’s as well).”
The company’s Iowa, Oregon and Utah utilities produce more power with fewer employees and a
lower accident rate than before it bought them, Buffett said. The Iowa utility operated without a
rate increase for 16 years, while average rates in the industry rose 44 percent, he said.
Berkshire’s pledge to spend another $15 billion on renewable-power development “will make great
sense, both for the environment and for Berkshire’s economics,” he said. “It seems highly likely to
me that climate change poses a major problem for the planet.”
In the same letter, Buffett urged rejection of a shareholder proposal that would require Berkshire
to report on the danger of climate change to insurance companies, its biggest business.
“As a homeowner in a low-lying area, you may wish to consider moving,” he said. “But when you
are thinking only as a shareholder of a major insurer, climate change should not be on your list of
worries.”
At $30 oil price, shale rebound may take much, much longer
Debt of US shale companies is trading at 30 to 40 cents on the dollar.
CNBC - Patti Domm |
Shale producers may not snap back quite as fast as hoped if oil prices stay in the $30-per-barrel
range for much longer.
Energy drillers say the U.S. is finally beginning to see real declines in production, and the longer
prices stay low, the longer it will take to reverse the effects across the industry of cutbacks in
production, capital spending and staffing.
"Now you're starting to see the
decline, and I believe you're
going to continue to see the
decline as you move through
2016," said Devon Energy CEO
David Hager to an audience at
the annual IHS CERAWeek
energy conference this week.
"Right now to summarize it: $30
and $2 does not work — $30 oil
and $2 gas," he said. "Most of
us are in place to make sure we
can survive, and make sure we
are in place when it turns."
U.S. production reached a peak of 9.6 million barrels a day in April 2015, six months after OPEC
moved to a market-based strategy that sent prices skidding. U.S. oil output was lifted by the

industry's recently completed projects, and production was also supported by hedging, ready
financing and technology gains. But financing is no longer easy, and some producers face real
hardship, including fire sales or bankruptcy.
"They're going through another round of cuts, and it's now about protecting your balance sheet,"
said Daniel Yergin, IHS vice chairman, in an interview. But he said the industry should come
through this downturn better positioned because of its emphasis on technology and innovation.
There was some hope in the industry that a proposed production freeze between Russia and
Saudi Arabia could lead to talks of output cuts, but the industry learned at the IHS CERAWeek
conference that cuts are not on the agenda.
Saudi Arabian oil minister Ali al-Naimi made it clear this week that a production cut is not now
possible since big producers would not agree to it. He told CERAWeek attendees Tuesday that
while there is no war against shale, high costs producers must find ways to lower costs or
liquidate, a comment that pushed oil prices lower.
On Thursday, WTI crude rallied in the afternoon to close up 3 percent on news of a major oil
producers meeting set for March.
WTI crude
200-day moving average: $44.78
(Source: Stockcharts.com)
"There's a great chance longer term we could overshoot this thing," Hager said. "The strategy now
is to survive, keep your strength up, because I do believe there's a brighter day around the
corner," he added. Companies are cutting dividends, issuing stock and taking other steps to shore
up balance sheets, the Devon Energy CEO noted.
IHS data shows that U.S. exploration and production companies issued about $5 billion in stock
year-to-date compared to about $20 billion for all of last year.
Pioneer Natural Resources CEO Scott Sheffield said, "This is the worst I've seen it from a
balance-sheet standpoint. Everybody's debt is trading at 30 cents on the dollar, 40 cents on the
dollar."
Hager said innovation has become much more important, and for instance, his company is using a
higher sand concentration in fracking to increase output. "Thirty dollars (per barrel ) is not working
at this point. I think you're going to see a lot of plays that work in $45 to 50 range. At $60, most
work. We certainly don't need $90," Hager said.
Sheffield said $50-per-barrel oil would not be enough for growth in the industry, because there
would not be enough cash flow.
Service providers are lowering costs. Sheffield said costs are always highest when oil prices are
highest, but some suppliers were charging three times what it cost to frack a well when prices
were high and production was growing. Now those costs have come down. On Thursday, oil-
services giant Halliburton announced it was cutting another 5,000 jobs, after having already
reduced its workforce by roughly one-quarter since 2014.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
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
khdmohd@hawkenergy.net
khdmohd@hotmail.com
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
NewBase 28 February 2016 K. Al Awadi

New base 796 special 28 february 2016

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base 796 special 28 february 2016

Similar to New base 796 special 28 february 2016 (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base 796 special 28 february 2016