Microsoft word new base 639 special 02 july 2015

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
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NewBase 02 July 2015 - Issue No. 639 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
SolarImpulse: Ocean Crossing To Hawaii : the Moment of Truth.
http://www.solarimpulse.com/leg-8-from-Nagoya-to-Hawaii
Endeavoring to reach Hawaii from Japan to encourage the use of clean technologies
(futureisclean), the solar powered aircraft of Bertrand Piccard and André Borschberg attempts the
longest exploration leg of the Solar Impulse’s Round-The-World mission.
At the controls, André will venture into the unknown. This flight is demanding and challenging
particularly given its duration: 120 hours on solar power only. It is a feat never accomplished
before in the world of aviation

UAE Based Oil Firm Consolidates East African Presence with
Acquisition of Essar Petroleum East Africa Ltd. Press Release 2015
Gulf Petrochem Group rename entity to Aspam Energy (Kenya) Ltd. , Gulf Petrochem Group
today announces the official acquisition and name change of Essar Petroleum East Africa Ltd to
ASPAM Energy (Kenya) Ltd. The deal will enhance the group's integrated services
and products for the downstream supply chain in the oil and gas sector in East Africa.
Gulf Petrochem Group secured the due approvals from the Energy Regulatory
Commission (ERC), the Competition Commission and other regulatory bodies.
ASPAM Energy (Kenya) will continue with the commitment to cater to customers in
East Africa who were earlier serviced by Essar Petroleum East Africa Ltd in the fuel
retailing segment. Its current address is:
ASPAM Energy (Kenya) will now have license to market petroleum products through outlets
earlier serviced by Essar Petroleum East Africa ltd. It also intends to develop storage and retail
infrastructures as part of its long term goals in East Africa along with the expansion of retail
networks through organic and inorganic routes of growth.
ASPAM Energy (Kenya) is part of Gulf Petrochem Group , which has a trading arm active in
trading Fuel Oil, Gas Oil, Bitumen, Base Oil, etc. and will now naturally focus on these products in
East Africa. This will contribute in the growth of the East African economy.
"With the global market for bitumen expected to reach $95.77 bn by 2020 according to a new
study by Grand View Research, Inc. our group has recognized the potential for business growth
within the African continent. Through this acquisition, ASPAM Energy (Kenya) will allow us to
efficiently cater to East African customers and capitalize on a market which we plan to make our
East African Hub", said Gulf Petrochem Group Managing Director, Mr. Sudhir Goyel.
He went on to add, "Prior to our acquisition of Essar (Kenya) Ltd, the company enjoyed roughly a
1.1% market share. With our experience, market knowledge, portfolio and global reach we hope to
significantly increase that market share and consolidate the group's offering in East Africa."
About Gulf Petrochem Group
Gulf Petrochem Group is a leading player in the oil industry, specializing in Oil Trading and
Bunkering, Oil Refining, Grease Manufacturing, Oil Storage Terminals, Bitumen Manufacturing,
and Shipping and Logistics. Headquartered in United Arab Emirates, and having a presence in
South Asia, the Far East Asia, Africa and Europe, Gulf Petrochem has emerged as one of the
well-established manufacturers and traders of petroleum products in major parts of the world.

Saudi Aramco unveils self-capture CO2 emission car
Saudi Gazette
The UN Climate Change Conference, COP18 Doha 2012, is all about finding solutions for a
sustainable future and Saudi Aramco, one of the participants in Saudi delegation, is presenting
one of the most innovative ideas: a car that captures its own CO2 emissions.
The project was initiated in 2003, when engineers from Saudi Aramco started working on
theoretical hypotheses to reduce the carbon impact of cars. After years of research and
development, Saudi Aramco’s R&D team defined a promising and feasible concept to capture
CO2 emissions from conventional car engines. That car, which is still a prototype at this moment,
captures its own CO2 emission and stocks it onboard.
The system enabling this performance consists of 3 components: a carbon capture unit utilizing
absorbent materials that can capture CO2 from the exhaust stream, a compression and storage
system, and finally a unit recycling the heat produced by the vehicle to operate the whole carbon
capture system onboard, without any additional or external energy supply.
At this stage, the prototype captures 10 percent of its emissions, but the target is to reach 60
percent in the near future with a more compact configuration. The concept would not be complete
without a solution to dispose of the CO2 stocked onboard, and the engineers have already
determined some ways to dispose of the collected carbon dioxide.
Drivers will upload the CO2 when they refuel their tank at petrol stations. Those stocks of carbon
will then be used for EOR (enhanced oil recovery), sequestration and industrial uses or they will
be converted on-site into alternative energy such as fuel or fuel additives. An expert from Aramco
said “it is a challenging project and we are optimistic about implementing it and our aim is for the
technology to be mass produced. This concept will have a bright future, if we come up with
effective ways to use and convert the CO2 into useful purposes.
A car prototype that captures its own CO2

Saudi innovation on clean energy solutions drive gets high mark
Technology start-ups provide one of the most important vehicles for developing and
commercializing innovation to meet these challenges, while generating value for investors.
In “The Global Cleantech Innovation Index 2012” report based on evaluation of 38 countries on 15
indicators related to the creation and commercialization of cleantech start-ups, Saudi Arabia
showed strong drive toward adoption of innovative clean energy solutions.
The index highlights the fundamentally global nature of cleantech innovation, with both eastern
and western hemispheres giving rise to new companies and key players. North America and
northern Europe do emerge as the primary contributors to the development of innovative
cleantech companies, though the Asia Pacific region is following closely behind.
In terms of general innovation drivers which address the general conditions that facilitate the
development of innovative start-ups in a country, Saudi Arabia was ranked number 11. Like any
other form of technological innovation, cleantech innovation requires supportive institutions,
enabling infrastructures, and a culture of ingenuity as well as a ‘championing’ of entrepreneurial
zeal.

Entrepreneurial culture plays an especially important role in innovation, as it is primarily through
entrepreneurial ventures that technologies achieve impact beyond the laboratory doors, out in the
market where it counts.
Even the most impressive ideas need drive and business skill to reach a wide market and realize
their potential to achieve financial or environmental impact, hopefully both. This factor is a blend of
the general innovation inputs as measured by the INSEAD Global Innovation Index and
entrepreneurial culture as measured by the Global Entrepreneurship Monitor.
US topped this scale, with Silicon Valley representing a case in point for how the above factors
interact to foster the creation of innovative companies. Driven by the rich resources and strong
research culture of San Francisco, Stanford University, and UC Berkley, this tiny area is home to a
vibrant community of entrepreneurs that has spawned such titans as Google and Apple, as well as
a new generation of cleantech companies like Miasole and Solazyme. Emerging US start-ups are
supported by a strong venture capital market; even accounting for the nation’s enormous GDP,
the US has by far the most venture capital spending on cleantech amongst countries surveyed for
this study, with over $5 billion invested in 2010 alone.
The private sector’s enthusiasm for cleantech is matched by mixed support from the US
government. Policies in the nation’s states vary massively: California has a target to produce 33
percent of its energy renewably by 2020, while Pennsylvania’s target for the same period starts
with 8 percent17. The federal government is similarly inconsistent: while the Department of
Energy has supported cleantech start-ups with $38.6 billion in loans issued to date18,
Republicans in Congress are seeking to undercut the Environmental Protection Agency and
forthcoming regulation under the Clean Air Act.
Thus, while the US is currently a world leader in the creation of cleantech companies, without
serious support for the industry and environmental policies to incentivize a domestic market, some
of the potential profit and jobs from cleantech commercialization may be lost to foreign
competitors.
Brazil is an interesting case
as the Global
Entrepreneurship Monitor
scores it highest for
entrepreneurial culture. The
country has policies
supportive of renewable
energy and world-leading
biofuels production, but lacks
significant numbers of
innovative cleantech
companies.
Brazil has been developing
its biofuels industry since the
1970s, when Brazilian
companies began creating a
first generation of biofuels
innovations including agricultural techniques

Algeria's Q1 oil, gas output down 6 pct, investment up
Reuters
Algeria's oil and natural gas output fell by 6 percent in the first quarter of 2015 from a year
earlier despite an increase in investment, state radio reported on Wednesday citing the
energy ministry.
Lower output by the OPEC member and gas exporter adds to
problems for its finances caused by low crude oil prices.
Energy accounts for about 95 percent of the north African
country's exports.
It produced 38.1 million tonnes of oil equivalent in the first
quarter, with foreign energy firms accounting for 33 percent of
the total, state radio said, without giving details. An energy
ministry source confirmed the figures were accurate. BP , Statoil , Anadarko Petroleum Corp. ,
Repsol and Total are the main foreign energy firms in Algeria. Algeria has struggled in recent
years to attract foreign investment to its energy sector, where it needs help to bolster output at
maturing fields.
Last year, Algeria awarded only four of 31 oil and gas blocks on offer to foreign consortiums. That
followed a disappointing auction in 2011 when Algeria secured bids for just two of 10 fields. Some
foreign operators see Algeria's terms as unattractive.
It also wants to build five refineries to double output by 2019, as it comes under pressure from
growing domestic demand. Refined oil products output fell 8.2 percent to 7 million tonnes from 7.6
million in the first quarter, forcing the government to import 581,000 tonnes to meet domestic
demand, state radio reported.
Petrochemical products output jumped by 82 percent to 924,000 tonnes due mainly to higher
ammonia and urea production. Officials have said state-owned energy company Sonatrach will
stick to its $90 billion five-year investment plan despite low oil prices. It raised investment by 19
percent to $3.6 billion in the first quarter, state radio said.

Uganda short-lists 17 companies in first oil licensing round
Source: Uganda Directorate of Petroleum
Following the publication of Notice of Request for Qualification (RfQ) for Uganda's Licensing
Round for Petroleum Exploration, Development and Production on 25th February 2015 in
which six blo cks within the Albertine Grabenwere presented, the Ministry has received a
significant number of Application for Qualification (AfQ) from companies across the Globe.
The Process of receiving the
Request for Qualification
ended on 30th June, 2015 at
17.00 hours East African
Standard Time with the
Ministry registering seventeen
valid applicants out of the
nineteen applicants that had
registered and received the
Request for Qualification.
The Albertine Graben is
Uganda's most investigated,
de-risked and prospective
sedimentary basin with surface
coverage in Uganda of approx.
23,000 sq kms. Following the
conclusion of appraisal of most
of the discoveries, the
resources in the country are
now estimated to be 6.5 billion
barrels of oil in place and 500
standard billion cubic feet of
gasin less than 20% of the
Graben. Therefore, the six
blocks on offer presents great
opportunity to discover
additional resources that will
enhance the country's
sustainability of oil and gas
production and
commercialization.
Dr F. A. Kabagambe-Kaliisa,
Permanent Secretary, Ministry of Energy and Mineral Development noted the registration of
Seventeen valid applications presents a significant milestone given the several challenges the
entire oil and gas industry is going through. He further explained that Government will undertake
the evaluation of the Application for Qualification between 1st July and 30th July 2015. The
qualified applicants will be displayed on10th August 2015.
The Permanent Secretary, further explained that Government will issue Request for Proposal/
bidding and the modal Production Sharing Agreement documents to qualified applicants on 20th
August,2015. The applicants will then be required to bid for blocks or a block of their interest after

the mandatory acquisition of data in the blocks or a block through the physical Data Room at the
Directorate of Petroleum in Entebbe.
The companies that will submit the best evaluated bids will proceed to negotiate with government
before signing Production Sharing Agreements with them. 'Government has planned to award new
Petroleum Exploration, Development and Production licenses before the end of this year if all
goes according to the planned licensing roadmap,' explained Dr. Kabagambe - Kaliisa.
On behalf of the Government of the Republic of Uganda, I wish to commend the following Oil and
Gas Companies which have submitted the Expression of Interest:
1. Rift Energy Corp from United States of America (USA)
2. Mubadala Petroleum of United Arab Emirates (UAE)
3. SASOL Exploration and Production International of south Africa
4. Oil and Natural Gas Corporation Videsh Limited (ONGC) of India
5. Petoil Limited from Turkey
6. Atlas Petroleum International Limited from Nigeria
7. Oranto Petroleum International Limited from Nigeria
8. Niger delta Petroleum Resources from Nigeria
9. Africa Global Resources (Telconet Capital Ltd Partnership-Tatneft-Rostec) JV from Russia
10. Petrica Energy As from Norway
11. PTT Exploration and Production PCL from Thailand
12. Glint Energy LLC of United States of America (USA)
13. Rapid Africa Energy (Pty) Ltd of South Africa
14. Dragon Oil International Ltd of UAE
15. BRIGHTOIL Petroleum Uganda Ltd of Hong Kong/China
16. WALTERSMITH PETROMAN of Nigeria
17. ARMOUR ENERGY Ltd of Australia
18. Swala Energy Ltd of Australia
19. Tullow Uganda Operation Pty Ltd affiliated to Tullow Ireland
Government will move forward the selection process in a professional manner with the above Oil
Companies added Dr. Kabagambe – Kaliisa.

Africa Oil announces Kenya operations update
Source: Africa Oil Corp
Africa Oil Corp has provided the following update on operations in East Africa.
Progress is being made on the decision regarding the route of the export pipeline with the
Technical Consultant having submitted its final feasibility report to the Governments of Uganda
and Kenya. It is expected that the Governments will shortly agree on the preferred routing which
will enable the next phase of work on the pipeline to progress.
Kenya operations have been focused on the South Lokichar Blocks 10BB and 13T where
appraisal drilling and Extended Well Tests (EWT) are continuing. In May, the Amosing EWT
commenced and five reservoir zones in the field were tested across two wells, being separately
produced in one well while pressure responses were measured in the other well.
Production from all five zones was at a combined average constrained rate of 4,300 bopd under
natural flow conditions and a cumulative volume of 30,000 barrels of oil was produced into
storage.
The pressure data supports significant connected oil volumes and confirms lateral reservoir
continuity between the wells which is positive for the future development of the Amosing field.
Having completed the production testing, preparations are now underway for water injection tests
into each of the five completed reservoir zones in Amosing-2A. These tests will validate the
viability of water flood reservoir management and the oil recovery assumptions for the Field
Development Plan.
Elsewhere in the South
Lokichar basin, preparations
for the Ngamia field EWT
are underway. Multi zone
completions were installed in
the Ngamia-8, Ngamia-3 and
Ngamia-6 wells. Initial rig-
less flow testing during clean-
up was at a combined
maximum rate of 3,900 bopd
and 1,740 bopd of 30 to 33
degree API oil for Ngamia-8
and Ngamia-3 with Ngamia-
6 clean-up flow testing
ongoing. These initial results
are very encouraging.
The PR Marriott 46 rig
spudded the Ngamia-9 appraisal well on 13 June 2015. Following this well, the rig will then move
to drill the Twiga-3 and Amosing-5 appraisal wells, completing the 2015 appraisal drilling
activities.
In the third quarter of 2015, a basin testing exploration well is planned at Cheptuket in Block
12A. The well will test a basin bounding structural closure in a similar structural setting to the
successful discoveries along the western bounding rift basin fault in the South Lokichar basin.

Samsung Heavy Industries bags $4.7B order for 3 FLNG units
OffShore World + NewBase
South Korea’s Samsung Heavy Industries has said that it has won an order to build three Floating LNG
facilities. According to the shipyard, the order, by Shell, is worth around $4.7 billion, the amount
reflecting hull construction only, without
the topsides included. The topsides
award is expected in 2016.
Offshore Energy Today has learned from
industry sources the orders are related
to the Woodside-operated Browse LNG
development, offshore Western
Australia.
We have contacted Shell, as they were
named by Samsung as the client, but a
Shell spokesperson reverted us to
Woodside.
Woodside, based in Perth, Australia, did
not reply to an e-mail sent by Offshore Energy Today after business hours local time. We will
update the article should we get a reply. The Browse FLNG Development concept is based on
three FLNG facilities utilising Shell’s FLNG technology to commercialize the Brecknock, Calliance
and Torosa fields, offshore Australia. Woodside is targeting a Final Investment Decision on the
proposed development in 2H 2016.
Cameroon step closer to its first FLNG unit
Golar LNG Limited and Perenco have reached an agreement on the material commercial terms and conditions for
the Floating LNG project in Cameroon.
The deal follows the December 2014
announcement on the signing of a
Heads of Agreement with Societe
Nationale de Hydrocarbures (“SNH”)
and Perenco Cameroon (“Perenco”)
for the development of a floating
liquefied natural gas export project in
Cameroon.
In a statement issued today, Golar
has said that the Tolling Agreement
which defines the material
commercial terms and conditions for
the project is now subject to
finalisation with SNH and government approval.Similarly, the Midstream Gas Convention setting out the
regulatory and fiscal regime governing the FLNG operations in Cameroon is being progressed in parallel with
the Tolling Agreement and is also now subject to finalisation with the government.
It is anticipated that final approval by all parties (including the government in Cameroon) for the Tolling
Agreement and the Midstream Gas Convention will take place late Q3, 2015.

Shell to build its largest Gulf of Mexico platform for Appomattox development
Royal Dutch Shell plc has today made the final investment decision (FID) to advance the Appomattox deep-water
development in the Gulf of Mexico.
This decision authorises the construction and
installation of Shell’s eighth and largest
floating platform in the Gulf of Mexico. The
Appomattox development will initially produce
from the Appomattox and Vicksburg fields, with
average peak production estimated to reach
approx. 175,000 barrels of oil equivalent (boe)
per day.
The Appomattox development host will
consist of a semi-submersible, four-column
production host platform, a subsea system
featuring six drill centres, 15 producing wells,
and five water injection wells. The platform
and the Appomattox and Vicksburg fields will
be owned by Shell (79%) and Nexen Petroleum Offshore U.S.A. Inc. (21%), a wholly-owned
subsidiary of CNOOC Limited.
“We have again delivered a globally competitive investment scope for another significant deep-
water project,” said Marvin Odum, Shell Upstream Americas Director. “Appomattox opens up
more production growth for us in the Gulf of Mexico, where our production last year averaged
about 225,000 boe per day, and this development will be profitable for decades to come. With its
competitive cost and design, Appomattox is next in our series of deep-water successes.”
During design work for Appomattox, Shell reduced the total project cost by 20% through supply
chain savings, design improvements, and by reducing the number of wells required for the
development, the company has said. This includes advancements from previous four-column
hosts, such as the Olympus tension-leg platform (TLP), as well as ensuring a high degree of
design maturity before construction.
With these and other cost reductions, the go-forward project breakeven price is estimated to be
around $55 per barrel Brent equivalent, the company added.
The sanctioned project includes capital for the development of 650 million boe resources at
Appomattox and Vicksburg, with start-up estimated around the end of this decade. The
development of Shell’s recent, nearby discoveries at the Gettysburg and Rydberg prospects
remains under review. These could become additional, high-value tiebacks to Appomattox,
bringing the total estimated discovered resources in the area to more than 800 million boe, Shell
has said.
Shell Pipeline Company LP also made a final investment decision on the Mattox Pipeline, a 24-
inch corridor pipeline that will transport crude oil from the Appomattox host to an existing offshore
structure in the South Pass area and then connect onshore through an existing pipeline. Last year
in the Gulf of Mexico, Shell started production from the Mars B development, through the new
Olympus TLP, and from the Cardamom subsea tie-back to the Auger platform. Shell is also
currently developing the Stones project, which is expected to produce approximately 50,000 boed.

Oil Price Drop Special Coverage
Oil prices stabilize after sliding on U.S. stock build
Reuters + NewBase
Oil prices steadied on Thursday after the main crude benchmarks tumbled 2.5-4 percent a day
earlier as U.S. stockpiles rose for the first time in months on the back of high production. Following
a 4.2 percent drop on Wednesday, front-month U.S. crude futures were trading at $56.94 per
barrel at 0420 GMT, down 2 cents from their last settlement.
Heading into the second half of the year, U.S. crude has been testing support on the lower range
of a $57-62 per barrel price channel, where it has been trading since early May. "We ... expect this
support level to hold," Singapore-based Phillip Futures said, arguing that this week's bearish
factors had already been priced into the market.
Brent crude futures were trading at $62.14 per barrel, up 13 cents after dropping 2.5 percent in the
previous session. The contract remains on a downwards trend that has been in place since early
May and which has seen prices fall more than 8 percent.
The tumble in U.S. crude came after government data showed inventories rose by 2.4 million
barrels last week, marking the first weekly build since April. The stock build came on the back of
strong U.S. production.
"Overall, production was supported by
increased output from the Gulf of Mexico,"
Barclays said following the publication of the
data. The higher U.S. output added to an
ongoing glut in global production. Outside the
United States, supply from the Organization
of Petroleum Exporting Countries (OPEC)
rose to a three-year high of 31.60 million
barrels per day (bpd) in June, up from 31.30
million bpd in May.

POLL: Iran oil exports could jump by 60% in a year
Reuters + NewBase
Iran will increase its oil exports by up to 60% within a year if it can agree a nuclear deal with world
powers bringing an end to sanctions, a Reuters survey of analysts said yesterday. A poll of 25 oil
analysts from leading banks and brokerages forecast Iran would be able to raise crude oil output
by between 250,000 bpd and 500,000 bpd by the end of this year and boost sales abroad by up to
750,000 bpd by mid-2016.
That would push the Islamic Republic’s total
crude oil output to around 3.6mn bpd, its highest
for four years, and would inflate Iranian exports
by around 60% at a time when world markets are
already likely to be oversupplied.
But the Reuters survey said it would take time for
Tehran to raise output as nuclear inspectors
verified Iran’s compliance with the terms of any
deal and sanctions were removed slowly.
“It will take a few months before Iran can start to
export at full blast,” said Swiss energy markets
analyst Olivier Jakob.
Negotiators from Tehran are locked in talks in
Vienna with officials from the US and five other
major powers to try to agree a deal to would allow
development of peaceful nuclear technology in Iran.
The deadline for the talks has been extended until
July 7 to allow more time for a deal that both sides have said is close. The West wants
guarantees that Iran is not secretly developing nuclear weapons, while Iran wants the removal of
financial sanctions that have crippled its economy and reduced its oil exports by more than 1mn
bpd.
Iranian Oil Minister Bijan Zanganeh has said Iran could restore all its lost oil to markets quickly
after sanctions. But years of under investment mean it may struggle to get its oil industry
anywhere near full potential, analysts say.
Edward Morse, global head of commodities research at Citi in New York says Iran’s own
estimates “may be overly optimistic”. “Sanctions have clearly impaired Iran’s ability to maintain its
mostly mature oilfields, let alone develop new projects,” Morse wrote in a note to clients this week.
Iran pumped around 2.82mn bpd in June, according to a Reuters survey.
Two analysts surveyed, Michael Wittner at Societe Generale in New York and Bjarne Schieldrop
at SEB Markets in Oslo, said they expected no initial increase in Iranian output. At the other end
of the scale, Mads Hemmingsen at Global Risk Management said Iranian production would surge
quickly. Twelve of 25 polled forecast Iranian supply would increase by up to 250,000 bpd in the
first six months, while eight others saw an increase of between 250,000 and 500,000 bpd this
year. A year after any nuclear deal, most analysts see much bigger increases in Iranian supply
with nine analysts forecasting a rise of up to 750,000 bpd and another seven seeing a rise of
between 750,000 and 1mn bpd.

US Shale Drillers' Safety Net Is Vanishing
Bloomberg
The insurance that producers bought before the collapse in oil -- much of which guaranteed minimum prices of $90 a
barrel or more -- is expiring. As they do, investors are left to wonder how these companies will make up the $3.7
billion the hedges earned them in the first quarter after crude sunk below $60 from a peak of $107 in mid-2014.
“A year ago, you could hedge at $85 to $90, and now it’s in the low $60s,” said Chris Lang, a senior vice president
with Asset Risk Management, a hedging adviser for more than 100 exploration and production companies. “Next year
it’s really going to come to a head.”
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The insurance protecting shale drillers against plummeting prices has become so crucial that for one company,
SandRidge Energy Inc., payments from the hedges accounted for a stunning 64 percent of first-quarter revenue.
The hedges staved off an acute shortage of cash for shale companies and helped keep lenders from cutting credit lines,
many of which are up for renewal in October. With drillers burdened by interest payments on $235 billion of debt,
$89 billion of it high-yield, a U.S. regulator has warned banks to beware of the “emerging risk” of lending to energy
companies.
Payments from hedges accounted for at least 15 percent of first-quarter revenue at 30 of the 62 oil and gas companies
in the Bloomberg Intelligence North America Exploration and Production Index. Revenue, already down 37 percent
in the last year, will fall further as drillers cash out contracts that paid $90 a barrel even when oil fell below $44.
Increased Efficiency
Hedges purchased from banks or other traders allow drillers to lock in a sale price. Some guarantee a specific value.
Others ensure a minimum payment regardless of how much the market moves, but require the oil company to pay
some of it back if the price exceeds a certain threshold.

SandRidge, the Oklahoma City-based producer, had about 90 percent of its oil and natural gas liquids output hedged
in early 2015, according to a regulatory filing. Next year, the hedges cover less than a third. SandRidge stock traded
yesterday at 85 cents, down 88 percent in the last year. More than $3 billion of its bonds are trading at 62 cents on the
dollar or less.
Jeff Wilson, a spokesman for the company, said declining well costs and increased efficiency are helping SandRidge
achieve returns comparable to what the company made at higher prices. SandRidge issued $1.25 billion in bonds last
month, which gives the company the liquidity it needs, Wilson said.
Buy Time
For SandRidge and other drillers, the hedges, required by some lenders, gave them enough time to cut spending. Costs
in shale fields have fallen by 20 to 30 percent and productivity has increased as producers moved rigs to the most
prolific regions. Producers were able to raise about $44 billion in equity and debt in the first quarter, according to
UBS AG.
“That postponed the day of reckoning,” said Carl Tricoli, co-founder of private-equity firm Denham Capital
Management.
At Goodrich Petroleum Corp., hedges accounted for 35 percent of revenue in the first three months of 2015. Most of
its insurance runs out at the end of the year, company records show.
Daniel Jenkins, director of corporate planning and investor relations for Goodrich in Houston, didn’t return calls
seeking comment.
Oasis Petroleum Inc., one of the most active drillers in North Dakota’s Bakken shale, received almost $91 a barrel for
19,000 barrels a day. That accounts for more than 40 percent of its daily production and is the biggest piece of its
hedging program. At the end of June, the guaranteed price drops to $77, company records show. By January, the
company will have just 2,000 barrels a day hedged at $65 a barrel.

Supportive Lenders
Richard Robuck, vice president of finance for Oasis, said the company’s hedges worked perfectly. The cash infusion
gave Oasis the time it needed to cut back from 16 drilling rigs to four, which will allow the company to spend less
than it brings in, even at lower prices. Oasis also has a “very supportive lender group,” plenty of room on its credit
line and a plan to add new hedges for next year, he said.
“There’s a chance prices fall, and there’s a chance they go up,” Robuck said. “It’s the oil business. That’s why we
hedge.”
Forecasters including Citigroup Inc. and Bank of America Corp. see U.S. crude falling further in the final six months
of the year. UBS predicts prices will slide as low as $50 a barrel.
Regulator Scrutiny
With oil prices down 45 percent in the past year, the industry is facing scrutiny from lenders and their regulator.
Banks typically evaluate credit lines to oil and gas companies twice a year. The next time is October, and by then
many of the drillers’ hedging contracts will have run out. The U.S. Office of the Comptroller of the Currency has
expressed concern that the banks it supervises be more careful about lending to energy firms.
“Some companies are not nearly as well-hedged for 2016 as they were for this year,” said Omar Samji, a partner in
law firm Jones Day’s energy practice. “They’re going to have a real cash-flow crunch.”

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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 02 July 2015 K. Al Awadi

Microsoft word new base 639 special 02 july 2015

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