The Mediterranean is rapidly becoming the world's most oversupplied oil market, as exports from OPEC heavyweights Iraq and Iran, rising star Kazakhstan and the return of Libyan crude force traders to get creative in marketing their barrels.

Supply of virtually every key grade of crude in the region has increased in the last year, in spite of the benchmark oil price struggling to hold above $45 a barrel and showing a year-on-year loss of over 10 percent.

Low freight rates and fierce competition for buyers have unleashed unusual trade flows of Mediterranean crude and prompted some producers to get creative with blending to expand their client base.

Looking at combined exports of major grades from OPEC members Iran, Algeria and Libya, together with those from non-OPEC producers Russia and Kazakhstan, shipments of crude towards the Mediterranean have grown by some 2 million barrels per day (bpd) over the past year, according to Reuters calculations.

"The Med is becoming one of the world's most oversupplied markets and volumes will have to move out of the region," one veteran Med crude trader said.

Exports of CPC Blend, a light, sweet crude, rose to 1.0 million bpd in October, compared with an average of 600,000 bpd in recent years, largely driven by the first shipments from Kazakhstan's Kashagan field.

As Kashagan is ramping up output, CPC will be shipping around 1.4 million bpd in the next few years.

It is not the first time that the Mediterranean market has become oversupplied. Excess barrels have occasionally travelled outside the region to Asia and North America.

Industry sources, however, say cargoes are now travelling much further.

Reuters data shows a vessel with Algerian Saharan crude sailing as far as Australia and Cuba, while trader Glencore booked a cargo of Libyan crude for the 20,000-km (12,500-mile) trip to Hawaii and Sweden bought Kurdish oil for the first time.

CPC is up against the return of Iranian and Libyan barrels, which had been frozen out of the market by international sanctions in the case of the former, and civil unrest and violence in the case of the latter.

Iran returned as a global exporter in January this year, increasing its exports of oil and ultra-light condensate to near five-year highs of 2.56 million bpd in October, from 1.07 million bpd in the same month of 2015.

Iraq ramped up exports to 3.89 million bpd in October from around 2.7 million bpd a year earlier, although most of its shipments abroad tend to head to Asia.

URALS IS THE NEW BLACK

Libyan output has virtually doubled to just shy of 600,000 bpd in the last two months and most of that total is exported.

Russia, OPEC's largest rival, has increased overall crude output to post-Soviet highs above 11 million bpd and a growing chunk of this has flooded into the Med all the way from the Baltic thanks to cheap freight rates.

Reuters data shows shipments of Russian crude from the Black Sea port of Novorossisk to the Mediterranean have remained largely steady in the year to date, compared with last year, while those from the Baltic have risen by 12 percent.

With its diversified pipeline infrastructure, Russia can send crude to the Mediterranean, the Baltic, China and the Pacific. Landlocked Kazakhstan has only one major option for rising supplies - the CPC pipeline to the Mediterranean - unless it expands an existing pipeline to China.

Traders say they anticipate that more refiners will try to blend CPC with other grades - such as Iraq's heavier Basrah crude - for Asian customers as one potential way of draining the glut.

But that strategy is not easy to implement given the amount of mercaptan - a harmless, pungent gas - in CPC.

"You have certain refineries in Italy ... which forbid refining CPC due to the proximity of the beaches and its awful smell," one veteran trader said.

Also boosting Med exporters is a narrowing of the premium of Brent oil over Dubai crude DUB-EFS-1M, which acts as a benchmark for Asian-based buyers, to its smallest in a year at around $2.05 a barrel. That move gives Brent-linked crudes such as Urals or Saharan an edge in Asia.

http://www.reuters.com/article/oil-mediterranean-glut-idUSL8N1DF6SF

---

Attached Files

Norway may not match last year's record natural gas exports of 115 Bcm in 2016, the country's energy minister said Thursday, but Oslo is confident of its projections of average annual exports of 100 Bcm over the next 20 years.

In a wide-ranging interview with S&P Global Platts in London, Tord Lien said Norwegian gas exports would remain high in the future through careful exploitation of the vast resources on the Norwegian Continental Shelf.

"I'm not sure if this year we'll be able to beat last year, but it'll be in that range," Lien said, when asked if supplies would be higher than 2015's record 115 Bcm.

"You can't have records every year," he said.

Given the system's downtime each year for planned maintenance, there would always be a variable impact on overall annual flows, he added.

But, Lien said, given the current technical capacity of the Norwegian gas system of some 130 Bcm/year, "when you are exporting 115 Bcm, that means everything is running smoothly."

Some analysts have questioned Norway's ability to maintain its gas exports at such high levels, especially given the slowdown in investment in new exploration since the oil price crash of 2014-2015.

In addition, no new major gas discoveries have been made for many years on the NCS.

Lien, though, said he was not concerned.

"We have a very good understanding on the next 20 years where we expect to export on average 100 Bcm/year," he said. "That is less than today, but it's still

high. It's going to still be more than 20% of the EU's gas consumption."


EU SIGNAL


Key to future developments on the NCS is the knowledge that there will be a market in Europe for Norwegian gas, Lien said.

Oslo, he said, was buoyed by the strategy announcement in February by the European Commission that Europe would rely heavily on gas for the coming two decades and beyond in its energy supply mix.

"That was a strong signal from the Commission, and I will like it even more when it really materializes," Lien said, pointing to the UK's move to phase out coal in power generation over the next decade as an example of concrete action.

"That is really the kind of signal we need, and if Germany were to proceed with their idea of doing the same, that would be of great importance for future investment decisions, which -- let's face it -- are necessary to be able to export 100 Bcm/year," he said.

Lien said the 100 Bcm forecast was based on both already discovered resources and those that are yet to be found, including in the relatively remote Norwegian high north and Barents Sea.

Asked whether he was confident of a major gas find in these new frontier areas, Lien was cautious.

"If you had asked me that question two years ago, I would've said yes," he said.

"Some of the companies tend to think there is oil there, not gas, so it looks less likely now than two years ago. But we have to do the drilling," he said, adding that both state-controlled Statoil and Lundin Petroleum planned exploration wells in the spring of 2017.

Lien was also confident on Norway's ability to build new pipeline infrastructure in the remote Arctic waters if a big gas find was made, linking in with existing infrastructure, provided it was economically sound and sustainable.

"We have already built a gas pipeline into the Arctic with the Aasta Hansteen field [the Polarled line]," he said, adding that an alternative would always be a new LNG plant or an expansion of the existing Snohvit LNG facility.


TROLL PHASE 3, 'VALUE OVER VOLUME'


Lien also said that the third development phase of the giant Statoil-operated Troll field would inevitably go ahead as Norway looked to maintain its gas export levels.

The development would see gas recovered from the Troll Vest structure, which mostly contains oil.

"It will happen in time, but there is no urgency to do it this year or next year," Lien said. "But it is one of the huge investments that will come on the NCS in the years ahead, obviously. You have to have a plan -- otherwise you lose income either from oil or from gas. So it has to be planned carefully.

"But that has been the story of the Troll field development," he said. "There has been a huge political debate on this issue, and what we have done so far has worked out very nicely for the Norwegian economy in terms of value creation from in-place resources."

Asked whether the government backed Statoil's current "value over volume" strategy, whereby some gas production is held back during periods of low prices, Lien said it was up to companies how they manage their resources.

And that includes majority state-owned Statoil.

"This has to be one of the real beauties of how we have organized government ownership in Norway -- the fact that there is arms-length distance when it comes to these kinds of decisions," he said.

Nonetheless, the government is keen to make sure that all operators on the NCS, including Statoil, push forward when it comes to time-critical development projects.

"You can't have any nonsense from the companies," he said. "There are some obligations that come with being a player of the NCS, and one of them is that you will make decisions that don't waste resources. When it comes to those decisions, Statoil is under the same pressure and expectation from the Norwegian government as everybody else is."

For new field developments, some delay was not a bad thing, Lien added.

"It's a good strategy to work hard on getting costs down, and if that means postponing the investment decision by one year, that's a good strategy," he said.

http://www.platts.com/latest-news/natural-gas/london/interview-norways-energy-minister-doubts-2016-26593531

Supermajor Shell is reportedly considering putting up for sale assets from its $3 billion Norwegian portfolio in the latest divestment programme move following the merger with BG Group.

The Anglo-Dutch player launched a programme to reduce its debt after the BG takeover, and announced it is targeting the sale of around $30 billion worth of assets over the next three years from its combined portfolio as it plans to exit around 10 countries.

The operator has previously said it is seeking to sell a large package of its North Sea assets, from both the UK and Norwegian North Sea.

Shell has now lined up investment bank Rothschild to conduct a review of its Norwegian unit, the Sunday Times reported.

According to report, the group is considering selling of part or all of its Norwegian business, which operates several large fields in the Norwegian North Sea and holds smaller stakes in others fields.

Shell declined to comment on the reports.

Last month, Shell said it had put 16 assets on the market with each asset worth an average of $500 million - making a total of some $8 billion, however, no details on the projects were given at the time.

Shell’s chief financial officer Simon Henry said earlier this month that the group’s UK North Sea portfolio is seeing “improvements”, and that “performance is beginning to look considerably better”.

Henry did not rule out selling assets in this region, saying that, while it is cash generative, “it is not the most profitable asset in the portfolio”.

Media reports in recent months have linked chemical giant Ineos, Denmark’s Maersk Oil and private-equity backed Siccar Point with the sales process. However, Siccar Point last week agreed to take the UK subsidiary of Austrian player OMV for up to $1 billion.

http://www.upstreamonline.com/live/1190851/shell-to-sell-norwegian-assets

Petroleo Brasilerio SA rattled markets last week when it posted a surprise $4.9 billion loss. Buried in the Brazilian oil giant’s 33-page financial statement was a piece of really good news: Its debt levels have tumbled to the lowest in almost three years.

While there’s still a long way to go, the $16 billion reduction since mid-2014 marks a hard-fought milestone in the company’s plan to claw its way back into investors’ good favor. Petrobras, once the gem of Brazil’s economy, has been battered in recent years by an oil rout, a massive corruption scandal and government policies that forced it to sell fuel at a loss. It’s the world’s most indebted publicly traded oil company with $123 billion in liabilities to pay back.

“At the moment, the most important thing for Petrobras is the balance sheet,” said Danilo Onorino, a portfolio manager at Dogma Capital SA, which owns Petrobras bonds.

The surprise loss -- analysts had forecast a profit -- capped a week of extreme volatility triggered by Donald Trump’s unexpected victory in the U.S. presidential race Nov. 8. Investors the world over dumped higher-yielding assets on speculation Trump’s spending plans may push up U.S. inflation and interest rates. In Brazil, five of Friday’s 10 worst-performing Brazilian corporate bonds were issued by Petrobras, according to Bloomberg data.

Onorino said the meltdown creates a buying opportunity.

“In my view, they are quite cheap because of the yield and the potential disposals,” he said from Lugano, Switzerland.

Petrobras has sold or agreed to sell $9.8 billion in assets since 2015 as it tries to win back its coveted investment-grade rating. The deep-water oil producer plans to unload an additional $25 billion in assets through 2018.

Moody’s Investors Service on Oct. 21 rewarded the company with its first upgrade in five years, raising the rating one level to B2. While that’s still five steps below investment grade, Moody’s said the asset sales and a new fuel-pricing policy are positives.

If Petrobras succeeds in trimming the fat on its balance sheet, it’ll look more like other state-controlled oil companies, such as Russia’s Gazprom PJSC and Rosneft PJSC, which enjoy lower borrowing costs than Petrobras, Onorino said. Gazprom’s $1.25 billion in notes due in 2037 yield 6.64 percent, compared with 8.47 percent on Petrobras’ $1.5 billion in bonds due in 2040.

“The difference between Gazprom and Petrobras is Gazprom has a very normal situation with its balance sheet, and Petrobras is getting there,” he said. “I can see Petrobras getting normalized in terms of net debt because of the disposals.”

http://www.bloomberg.com/news/articles/2016-11-14/hidden-in-awful-petrobras-earnings-is-a-bit-of-really-good-news

The value of Australia’s monthly LNG exports rose to AUS$1.75 billion in October 2016, according to independent energy analyst, EnergyQuest.

In its ‘Monthly LNG Report’, EnergyQuest notes that the LNG sector’s performance in October surpassed the previous monthly record of AUS$1.72 billion in Australian LNG export values from January 2015.

The ‘Monthly LNG Report’ monitors the growth in Australian LNG by project, together with developments in major markets, progress by competitors and interactions between Australian LNG projects and domestic gas markets.

Australian LNG export volumes grew by 6.6% (65 cargoes) in October 2016 to 4.3 million t up from 4 million t (61 cargoes) in September 2016.

EnergyQuest Chief Executive Officer (CEO), Dr Graeme Bethune, said: “There was a particularly strong performance by LNG projects on the west coast […] Western Australian projects in October shipped 2.4 million t (36 cargoes), up from 2.2 million t (33 cargoes) in September […] Woodside’s Pluto project shipped 7 cargoes in October, up from five cargoes in September […] Gorgon, operated by Chevron, continues to ramp up and shipped one additional cargo […] Darwin LNG, operated by ConocoPhillips, shipped 0.3 million t (5 cargoes), up from 0.2 million t (3 cargoes) the previous month.”

On Queensland’s east coast, the Gladstone LNG project shipped 1.5 million t (24 cargoes), down slightly from 1.6 million t (25 cargoes) in September.

Dr Bethune added: “Interestingly, the Santos-operated Gladstone LNG project sent its first cargo to Mexico, a country that imports gas from the United States The shipment was delivered to the Manzanillo LNG facility, on Mexico’s mid-west coast, a project which is a joint venture between Mitsui, KOGAS (a GLNG partner), and Samsung […] This consignment means that all three new Queensland LNG projects – QCLNG, GLNG and APLNG – have now shipped one cargo each to Mexico.

“Asian buyers like KOGAS are increasingly looking to new gas markets and as Mexico imports gas from the US, it is interesting to see Queensland gas being imported into Mexico.

“From a broader market perspective, rather than new US LNG supply heading west to Asia, which is a major market concern for Australian and South East Asian LNG players, this cargo was yet further demonstration of the Australian LNG sector being able to ship east to America.”

EnergyQuest also notes that the LNG spot price in Asia stood at US$7/million Btu in October 2016 – the highest it has been this year.

https://www.lngindustry.com/liquefaction/14112016/australian-lng-exports-hit-record/

Russian tycoon Mikhail Gutseriyev and his family plan to float up to 20 percent of ordinary shares in mid-sized oil company Russneft in an initial public offering (IPO) by the end of 2016, Russneft said on Monday.

The stake that Gutseriyev and his family plan to sell on the Moscow Exchange accounts for 15 percent of Russneft's overall share capital, which also includes preferred shares, the company said in a statement.

A pricing range will be announced on Nov. 18, a person close to the company and market sources told Reuters. The actual IPO price will be announced on Nov. 25, one of the sources said.

Russian lenders VTB, Sberbank CIB as well as brokerage firms Aton and BCS will organise the IPO.

The Gutseriyev family controls 75 percent of Russneft's share capital, or 67 percent of all ordinary shares, while the rest belongs to commodities trader Glencore.

In a rearguard action, the Indian government is considering further tweaks and changes to the ongoing auction of 67 marginal oil- and gasfields – a week before the extended deadline of November 21.

While no official information is available on the number of bids or valuations received for these fields, officials, who asked to remain anonymous, have said that these were “far below” government expectations and that work was under way on additional guidelines and changes to the existing ones to woo investors.

One of the options under consideration is clubbing together some of the 67 marginal oil and gas blocks, wherein more viable blocks could compensate for comparatively less viable ones, an official said.

However, no information was available about the demands from some prospective investors that the geographical area of each block be increased, which would give investors the option to explore and develop across larger areas than currently on offer.

It is also possible that the Oil and Natural Gas Ministry will agree to another deadline extension. The initial October 31 deadline has already been shifted to November 21 after bids fell short of government expectations.

Worried over poor response from domestic and foreign private investors, the government’s last hope is aggressive bidding for the blocks by national exploration and production major, ONGC.

Interestingly, all the minor oil and gas blocks now up for bidding had initially been allocated to ONGC, but over the years, the company had either surrendered them after finding the blocks unviable or government had seized them owing to delays in development.

The current auction is the first to be kick-started under the New Exploration and Licensing Policy, under which nine rounds of auction have been completed but the tenth has been nixed to put the Hydrocarbon Exploration and Licensing Policy (Help) in place. Under Help, exploration and production companies will have the freedom to explore and extract any fuel they discover - be it coalbed methane, shale gas, oil or gas - without having to seek fresh approvals for each resource discovered and that too under a compositerevenue sharing agreement.

The total oil and gas reserves in the blocks up for bidding have been estimated at 625-million barrels of oil or oilequivalent of gas, spread across 1 500 km2.

http://www.miningweekly.com/article/further-tweaks-possible-as-indias-marginal-oil-and-gas-block-bids-fall-short-of-expectations-2016-11-14

---

Attached Files

Genscape Cushing inventory week ending 11/11: -18,587 bbl w/w

@Lee_Saks  1h

Last spring, Pastor Jeff Franklin was fretting. He'd committed his congregation to three new international missions and wasn't quite sure where they'd get the money.

Then an oilman knocked on the door.

Franklin's church, Kelview Heights Baptist, is on 10 acres in the middle of this West Texas oil capital. Drillers were never interested before. But now acreage around Midland is so precious - and getting so expensive - landmen are dueling to secure leases for mineral rights under parks, restaurants, churches and thousands of Midland's ranch homes.

"They literally went to every house," said Jim Connell, Kelview's associate pastor. "Who knew we'd get into the oil business?"

As oil prices have recovered, drillers have flocked back to Midland and the surrounding Permian Basin, one of the most productive oil fields in North America and among the few places where companies can make money with crude hovering between $40 and $50 a barrel. Majors, independents and small private companies are scrambling to secure land and mineral rights in a competition some producers call a "knife fight."

As a result, land costs have skyrocketed from $2,000 to as much as $60,000 an acre, which one company paid this summer, raising eyebrows even among peers.


"Oh, yeah, everybody wants the same acreage," Elizabeth Moses, a vice president at Midland-based Diamondback Energy, said after buying 19,000 Permian acres for $560 million. "Landmen are literally knocking on the same doors."

Franklin wouldn't say how much money Kelview Heights Baptist pocketed. But the competition helped. At one point, negotiations with Midland's Arrington Oil & Gas were slowing down. Franklin sensed the church might get stiffed.

"Then the Lord led another landman by," he said.

Arrington cut the deal at the next meeting. Franklin promptly sent the cash to Honduras, for water wells, to Guatemala, for an orphanage and soup kitchen, and to India, for a new wing on a home for widows.


"It's a miracle," Franklin said.

Boom. Crash

The shale revolution came late to the Permian. Operators first perfected horizontal drilling and high-pressure hydraulic fracturing in shale gas fields, like Fort Worth's Barnett and Louisiana's Haynesville, and in newer oil plays, like North Dakota's Bakken and San Antonio's Eagle Ford.

"Everybody thought the Permian was dead," said Pete Stark, a senior director at research firm IHS Markit.

Companies eventually tried fracking there, but the rock was more complex - if drillers figured out how to frack in one spot, that didn't mean they'd succeed a few miles away. It took years of trial-and-error to come up with the right horizontal drilling techniques that allowed them to efficiently tap the reservoirs of oil.

Soon after, drillers began singing the Permian's praises. The basin had dozens of layers of oil-soaked rock, meaning companies could access a lot of oil from one location and dig wells without hardly moving their rigs. Acres of the Permian were still unexplored. And the support that drillers needed - water trucks, service companies and pipelines - were readily available.

U.S. oil prices were surging then, to well over $100 in 2011, and drillers began pumping at rates unseen in 20 years. But all the success eventually glutted the market; oil prices started tumbling in the summer of 2014, falling to a low of $26 a barrel in February. The U.S. rig count plummeted from 2,000 to just over 400, according to data compiled by oil field services firm Baker Hughes. At least 100,000 workers lost their jobs.

There was, however, a bright spot: the Permian. As oil prices stayed stubbornly low, producers found few other plays as economical. Companies like Irving-based Pioneer Natural Resources trimmed operations in other fields and focused on the Permian.

Companies have added about 80 rigs to the basin since May. No other play has grown as much since the bottom of the crash. The closest, Oklahoma's Cana Woodford, is up 16.

Two years ago, one-quarter of U.S. rigs were in the Permian. Now, more than 40 percent are.

$60,000 an acre

The rush for land in the Permian has driven prices to record levels. In 2006, companies spent $2,000 on average per acre of oil land in the Permian, according to IHS Markit. So far this year, they've averaged more than $30,000, almost 10 times higher than prices in the Bakken or Eagle Ford.

"They're paying absurd amounts of money," said Erik Paulson, 30, a landman who works in Midland.

In June, Denver's QEP Resources bought 9,400 acres for $60,000 per undeveloped acre, according to analysts at energy research firm WoodMackenzie. In July, Houston-based Silver Run Acquisition bought 38,000 acres for $29,000 an acre. And in August, companies booked four big deals, including Austin-based Parsley Energy's 9,000-acre buy for at least $35,000 an acre.


The pace slowed in September; it seemed like the big deals had been cut.

But they returned in October. Dallas-based RSP Permian bought 41,000 acres for $2.4 billion, or as much as $47,000 per undeveloped acre. Then, Denver's SM Energy announced it was buying 35,700 acres from QStar of Houston for $1.6 billion in cash and stock, or at least $42,000 per undeveloped acre.

The cost is worth it, said Steven Gray, chief executive of RSP Permian.

"Some of the best wells in the entire basin are out of there," he said

Ten years ago, substantial Permian deals - those over $10 million each - totaled $1.1 billion, or less than 2 percent of U.S. transactions. This year, oil companies have already spent more than $14 billion, representing more than one-third of all U.S. exploration and production sales.

Longtime Permian operators now are watching their land sprout in value. Diamondback, a publicly traded company with prime Midland real estate, bought some of its best acreage 10 years ago for about $2,500 an acre. The company now values it at $60,000 an acre or more.

Discovery Operating of Midland figures some of its leases are worth 30 to 40 times what it paid for them in 1999.

"There's lots of Wall Street money in the Permian right now," said chief operations officer Jeff Sparks. "They look at it as a good investment. I do, too."

Sparks isn't selling, and others wished they didn't have to. Eastland Oil, family-owned for 94 years, has tried to cobble together acreage in three different counties around Midland over the past year or so, only to watch big land companies swoop in and offer double the money. Eastland had two choices: Start matching the offers or selling its rights to the competition. It sold.

"We buy acreage to drill. We don't buy it to turn," said president and owner Robin Donnelly. "So our business model is not functioning right now."

http://www.houstonchronicle.com/business/energy/article/In-Permian-land-rush-oil-companies-knock-call-10610795.php?t=b754c326fc438d9cbb#pq=cH7RvZ

---

Attached Files

Painted Pony Petroleum Ltd. (TSX: PPY) is pleased to announce an expanded 2017 capital budget to accelerate 2017 production. The planned accelerated production, relative to the previously expected 2017 average annual production volumes, is due to a 100 MMcf/d expansion by AltaGas Ltd. of the AltaGas Townsend Facility. Construction is expected to be complete and ready for incremental volumes of natural gas by the end of 2017.

HIGHLIGHTS:

 - Planned accelerated expansion of the Townsend Facility and associated infrastructure by an incremental 100 MMcf/d in 2017;
 - Estimated capital cost reductions for the Townsend Facility expansion are expected to reduce Painted Pony's capital lease fee per Mcfe on the expansion by more than 30%;
 - Increased expected 2017 year-end exit production volumes to 408 MMcfe/d (68,000 boe/d) with a 2017 capital budget of $319 million;
 - Forecasted to deliver annual average daily production growth of approximately 110% through the drill bit, from forecasted 2016 annual average daily production volumes of 138 MMcfe/d (23,000 boe/d) to forecasted 2017 annual average daily production volumes of 288 MMcfe/d (48,000 boe/d); and
 - Participated in the recent Spectra Energy Transmission ('Spectra') open season for the Zone 3 Expansion on the T-North pipeline and secured an incremental 250 MMcf/d of firm transportation with an expected on-stream date in the fourth quarter of 2018.

Pat Ward, President and CEO of Painted Pony, commented 'the production acceleration, increase in liquids focus in 2017, and upward revisions to Painted Pony's 5-year plan will result in free cash flow in 2019 and 2020 with production expected to average 680 MMcfe/d (115,000 boe/d) in 2020.'

2017 CAPITAL BUDGET

Townsend Facility Expansion

Painted Pony has approved the construction by AltaGas of a 100 MMcf/d expansion to the Townsend Facility, expected to be completed and on-stream in October 2017. The Corporation previously expected that an expansion to the Townsend Facility would occur in 2018. The impact of this accelerated expansion is an expected 19% increase in fourth quarter 2017 exit production volumes to approximately 408 MMcfe/d (68,000 boe/d) from previous expectations of 342 MMcfe/d (57,000 boe/d). This will increase annual average daily production by 4% to 288 MMcfe/d (48,000 boe/d) from previously expected annual average daily production volumes of 276 MMcfe/d (46,000 boe/d). With the accelerated expansion of the Townsend Facility, Painted Pony now anticipates 2017 forecasted exit production volumes to be approximately 408 MMcfe/d (68,000 boe/d), a 19% increase in fourth quarter 2017 exit production volumes from previous expectations of 342 MMcfe/d (57,000 boe/d) and exit production growth of 70% when compared to 2016 forecasted exit production volumes of 240 MMcfe/d (40,000 boe/d).The capital cost of this expansion is expected to be 30% - 35% less per MMcf/d of processing capacity than the first phase of the Townsend Facility which was commissioned in July of 2016. The reduced cost is anticipated to reduce the total capital lease fee per MMcf/d for the Townsend Facility by approximately 10%.

Decreased Well Costs

Due to ongoing efficiencies, including faster drill times and completions, total budgeted well costs, including drilling, completions, and equipping costs, have decreased to $4.55 million per well from the previously budgeted amount of $4.8 million per well. These cost savings positively impacted the 2016 capital program and the 2017 capital budget which Painted Pony now anticipates to be approximately $319 million which includes an expectation of drilling and completing 61 net wells. The 2017 capital budget is a 9% increase in capital spending, when compared to previously expected 2017 capital spending levels.

Increased Capital Efficiencies

Painted Pony's ongoing cost efficiencies provided an ability to optimize field operations by accelerating the drilling of 6.0 net wells and the completion of 5.0 net wells in the fourth quarter of 2016 that were previously planned to occur in the first quarter of 2017. As a result, capital spending in 2016 is forecasted to increase by $14 million to $213 million and estimated capital spending in the first quarter of 2017, which includes drilling 22.0 net wells and completing 12.0 net wells, has been reduced from previous estimates by $23 million to $87 million.

Improved Cash Costs

Higher production volumes are anticipated to have a positive impact on Painted Pony's 2017 field cash per Mcfe costs which are now budgeted to be approximately $0.85/Mcfe, a reduction of approximately $0.16/Mcfe or 16% compared to 2016 forecast field cash costs of $1.01/Mcfe. Painted Pony will continue to innovate and streamline field operations as production grows to achieve increasing levels of efficiency while delivering lower operating costs.

Lower field cash costs combined with lower capital expenditures per well will result in the Corporation's leverage ratio improving to a forecasted 2017 year-end net debt to fourth quarter annualized funds flow ratio of 1.3 times, using November 1, 2016 strip commodity prices.

Increased Firm Transportation

Painted Pony recently took part in Spectra's open season for the Zone 3 Expansion on the T-North pipeline and secured a long term transportation agreement for 250 MMcf/d. Construction of the Zone 3 Expansion is expected to be complete in December 2018.

This agreement, combined with previously announced firm transportation contracts, provide Painted Pony with approximately 570 MMcf/d of firm transportation. The Corporation believes this is sufficient egress capacity to support Painted Pony's growth plans through 2019. Long-term firm transportation and natural gas processing agreements with key third-party service providers combine to underpin Painted Pony's multi-year growth plans.

http://www.oilvoice.com/n/Painted-Pony-Petroleum-expands-2015-capital-budget-to-accelerate-production/5a9e2bb110ef.aspx

Chesapeake Energy, which continues to be strapped financially, embarked on a mission to lighten the debt load years ago–first under co-founder Aubrey McClendon, and then more aggressively under his successor, Doug “the ax” Lawler.

Many pieces of the company have been sold off: the Oilfield Services division, all of its Haynesville Shale assets, all of its Barnett Shale assets…we could go on.

Chessy loves to do land deals. In December 2014 Chesapeake sold off 413,000 Marcellus acres mostly in West Virginia . 

Once again Chesapeake is selling off assets in Appalachia. This time they have cut a deal to sell a mammoth 882,000 acres along with 5,600 operating gas wells in West Virginia and Kentucky. However, the land and wells are in the “shallow” Devonian layer. That is, they are conventional (not shale) wells and acreage. Who’s the buyer and how much is Chesapeake receiving?…

http://marcellusdrilling.com/2016/11/chesapeake-sells-882k-acres-5600-conventional-wells-in-wv-ky/

HIGHLIGHTS:

 - Third quarter production averaged 92,077 BOE per day, with 42,598 barrels per day of liquids
 - 25% reduction in third quarter operating expenses per BOE compared to the same period in 2015
 - Positive initial results from recent Fort Berthold high density test, with average production tracking above type curve expectations
 - Preliminary 2017 capital budget of $400 million; approximately 70% allocated to North Dakota with the addition of a second drilling rig
 - Projecting 2017 North Dakota production growth of 25% and total Company liquids growth of approximately 15% (on a Q4 2016 to Q4 2017 basis)
 - Increased 2017 crude oil hedge protection to 17,500 barrels per day
 - Canadian waterflood portfolio optimization with the accretive acquisition of approximately 3,800 BOE per day (45% liquids) of high net-back production, with strong secondary recovery growth potential (closing expected November 2016)

'Enerplus' third quarter results demonstrate our continued success in reducing the company's cost structure and driving margin expansion,' commented Ian C. Dundas, President & CEO. 'Combined with our top quartile capital efficiencies and balance sheet strength, Enerplus is well positioned to reinitiate growth in 2017. Our preliminary 2017 capital budget of $400 million is largely focused on accelerating liquids production which is expected to grow approximately 15% on a Q4 2016 to Q4 2017 basis. Importantly, our capital plans are predicated on profitable and sustainable growth; we expect our capital spending and dividends to be approximately balanced with internally generated cash flow at WTI US$50 per barrel,' concluded Dundas.

http://www.oilvoice.com/n/Enerplus-announces-third-quarter-2016-results-and-preliminary-2017-outlook/887c381ad01a.aspx

Prime Minister Justin Trudeau has set the table for Canada to approve Kinder Morgan Inc.’s Trans Mountain pipeline expansion by announcing environmental measures aimed at placating opposition to the project.

Trudeau unveiled a national carbon price in October, and over the past few weeks has pumped billions into marine protection and “green” infrastructure, as well as begun an overhaul of the federal energy regulator and granted crown protection to a rainforest that essentially blocks a rival proposal. He regularly says it’s his job to get Canada’s resources to market while balancing the environment and economy.

The Liberal prime minister has also backed a hydro dam and natural-gas project favored by British Columbia Premier Christy Clark, as any quid-pro-quo support from her for Kinder Morgan would help him claim consensus ahead of the Dec. 19 deadline for a final decision by the Trudeau cabinet. However, opposition from Vancouver’s mayor, indigenous communities and environmentalists will test Trudeau’s resolve to approve the pipeline and defend the decision against a likely court challenge by its detractors.

“You could interpret all these signs as part of a grand design to make construction of one or two pipelines possible,” said Tom Flanagan, a former adviser to Stephen Harper, Trudeau’s Conservative predecessor. “Let’s hope he has the stomach to see it through if the opposition continues after the announcement of cabinet approval, because I think it will.”

The election of Donald Trump as U.S. president has also raised hopes that TransCanada Corp.’s Keystone XL pipeline will be revived, giving Canada -- home of the world’s third-largest proven oil reserves -- another option for its growing crude production. While Trudeau supports Keystone, he and his officials regularly stress Canada’s need to get its resources to “tidewater,” suggesting the TransCanada project isn’t enough. Alberta Premier Rachel Notley has echoed that, saying the oil-producing province still wants a pipeline to the ocean regardless of Keystone and will back Trudeau’s carbon pricing plan if he gets “energy infrastructure” built.

Proposals in Play

Trudeau believes Canada needs at least one new oil pipeline and is said to consider Kinder Morgan’s expansion -- a 1,150 kilometer (710-mile) route that would roughly triple current capacity -- the favorite of five major proposals. In addition to Keystone, the other projects are TransCanada’s Energy East, currently under regulatory review; Enbridge Inc.’s Line 3, an inland route to the U.S. that Trudeau must approve or reject by Nov. 25; and Northern Gateway, another Enbridge proposal that was approved by Harper only to have its permits rescinded by a court ruling that Trudeau and the company opted not to appeal.

The prime minister must decide whether to do additional indigenous consultation and reissue Gateway’s permits, but he opposes the pipeline’s current route through the Great Bear Rainforest. The Duke and Duchess of Cambridge added the area to the Queen’s Commonwealth Canopy conservation initiative during a recent visit, effectively bolstering its protection. Trudeau has also proposed an oil-tanker ban along its shipping route and has flatly opposed the project in the past.

That makes Kinder the only near-term pipeline headed to the ocean, raising expectations Trudeau will approve it after the recent environmental measures. “What they’re doing is trying to soften the ground of resistance,” according to Nathan Cullen, a lawmaker with the opposition New Democratic Party whose district includes part of the Gateway route and the Petroliam Nasional Bhd natural-gas project the government approved in September.

“A little bit of lipstick on a pig is the most generous I can be right now,” Cullen said in an interview, adding that Trudeau is losing the benefit of the doubt on Canada’s west coast. “He has more than Harper did, but he has less of it than he did a year ago.”

Electoral Coalition

The federal decision is the last step that would clear the way for the pipeline to be built -- barring successful legal challenges, as happened with Northern Gateway -- and comes after the National Energy Board regulator granted conditional approval to the project earlier this year. Trudeau faces pressure from environmental advocates to reject energy projects as he seeks to cut emissions.

Meanwhile, Kinder Morgan Canada’s president, Ian Anderson, recently clarified that he believes fossil-fuel consumption is driving climate change. Trans Mountain cemented support from 41 indigenous communities and expects more endorsements, Anderson said in October. The company will begin construction on the pipeline in 2017 if it’s approved and expects to ship oil by 2019. It declined a request for further comment Friday.

Trudeau was elected on firm environmental pledges, yet hasn’t detailed how he will meet his Paris climate-conference goals as the country confronts weak economic growth and slumping commodities prices that have hurt Alberta.

Last week in Vancouver, the prime minister unveiled C$1.5 billion ($1.1 billion) in funding for ocean protection over five years in a move lauded by environmentalists. Critics, however, were quick to say the money doesn’t make the pipeline acceptable.

Pipeline Detractors

“The proactive way to prevent massive impact from an oil spill on B.C.’s south coast is to not approve” Trans Mountain, Vancouver Mayor Gregor Robertson said. “I strongly urge the federal government to reject Kinder Morgan’s pipeline proposal.”

Signing off on the pipeline would be “one in a series of decisions that seem to fly in the face” of the Paris climate plan, according to Josha MacNab, a regional director at the Pembina Institute, an environmental think-tank. “I don’t think he should underestimate the extent to which Kinder Morgan, if approved, will be a flash-point in British Columbia.”

Trudeau lived in Canada’s westernmost province as a young man and frequently refers to it as his second home. Last week he also announced a C$45 million contribution to an engineering program at Simon Fraser University near Vancouver, saying he was there because “it’s important to stay grounded where your roots are.”

Canadian lawmakers return to Ottawa Monday after a one-week break, their last before the Kinder Morgan deadline. Trudeau’s cabinet will weigh the project’s political impact, environmental risks and economic benefit in its decision.

“The government certainly appears to be setting the table for approval,” said Ed Greenspon, president of the Public Policy Forum, an non-partisan think-tank based in Ottawa. “The prime minister has been consistent in saying climate policies and energy development can co-exist, middle class jobs are top of his agenda, and he won’t leave Alberta out in the cold. He’s taken risks before and looks ready to take some flack here.”

http://www.bloomberg.com/news/articles/2016-11-14/trudeau-clears-path-for-canada-to-approve-kinder-morgan-pipeline

---

Attached Files