Average daily hydrocarbon production 5.22 mmboe, a 0.2% increase compared to Q1 2016, with oil production growth by 0.5% to 4.11 mmbpd

 Development drilling grew by 48% in H1 2016 in accordance with the business plan

 Gas production was up by 7% to 33.23 bcm against to H1 2015 due to new capacity additions

 Refining throughput optimization with light product yield improvement to 55.8% in H1 2016

Upstream

Q2 2016 showed the upward trend in hydrocarbon production (0.2% growth vs. Q1 2016), despite the seasonal decline in gas consumption. Production level reached 5.21 mmboed in H1 2016, increasing by 0.7% vs. H1 2015.

In 2Q 2016, the Company continued to intensify development drilling, having increased this indicator by 16% compared to Q1 2016 to 2.4 mn m. The footage of development drilling increased by 48% t? 4.5 million meters in H1 2016. In June 2016, a new record in daily drilling footage was set at all producing assets of the Company: 40,339 m, translating into record 1,010,684 m drilled throughout the month. New wells commissioning rose by more than 50% compared to H1 2015 to reach 1.2 thousand wells with the share of horizontal wells remaining at about 30% in accordance with the targets established for the year. The share of in-house services in the total drilling footage consistently exceeds 50%.

Liquid hydrocarbon production in Q2 2016 increased by 0.5% vs. Q1 2016 up to 4.11 mmbpd. The key brownfield asset Yuganskneftegaz has shown an upward production trend (+1.5% vs. Q1 of 2016). There were also further improvements at the fields of RN-Severnaya Neft (+3.3%) and on the Sakhalin-1 project (+3.1%).

In 2Q 2016, RN-Uvatneftegaz set a new record in the commercial drilling rate in mainland Russia. The 2,639 m deep well was drilled in 6.5 days. The previous record in commercial drilling rate that was also set at Uvat project in November 2015 was exceeded by 242 m/rig per month (+2%).

In 2Q 2016, six new horizontal wells targeting BV8 (1-3) were commissioned at the Samotlor field with an average start-up flow rate of over 300 ktpd.

The Company continues preparation for the commissioning of the Phase 1 of the Suzun field development scheduled for September 2016. In Q2 2016, construction approached the final stage, and pre-commissioning and start-up operations entered the active phase at all infrastructure facilities involved in the trial start-up process: 1st Start Up Complex of Oil Treatment Facility with capacity of 4.5 mmtpa and the pipeline from Suzun OTF to Vankor OTF, and infrastructure setup at 6 well pads.Preparation of the site for construction of a new 150 ?Wt gas-turbine power station Polyarnaya at the Vankor field was started in April 2016. A new power station will be using the existing infrastructure to satisfy the growing demand for electric power at the Vankor cluster fields - Suzun, ??gul and Lodochnoye fields, which are currently at different stages of development. Three 110 KV substations and 170 km of 110 KV electric power transmission lines will be built for this purpose.

Gas production amounted to 33.23 bcm in H1 2016 , which is 6.9% higher than in H1 2015. Growth in gas production was driven by the launch and trial run of the 2nd stage of Novo-Urengoy gas and condensate treatment facility (Rospan) in Q4 2015 and the commissioning of a gas treatment unit at Barsukovskoe field (RN-Purneftegaz) in December 2015, and by development of the Northern Chaivo (RN-Shelf Dalny Vostok) in the Sakhalin shelf.

Associated petroleum gas (APG) utilization level increased to 90% in H1 2016, compared to 87% in H1 2015.

In H1 2016, over 2,400 km of onshore 2D seismic surveys, and over 4,800 sq.km of onshore 3D seismic surveys were acquired, exceeding the results of H1 2015 by 17% and 10% respectively. A total of 11 exploration and appraisal wells were tested with a success rate of 91%. 42 new deposits and 4 new fields were discovered with ABC1 + C2 reserves of about 35 mmtoe.

In H1 2016, 2D and 3D seismic acquisition operations started at Albanovsky and Vostochno-Pribrezhny license blocks in the Barents Sea and the Sea of Okhotsk. Preparation is underway for the full-scale exploration in the license blocks of the Laptev Sea, East Siberia Sea, Chukchee Sea, Kara Sea, Barents Sea and the Black Sea, that will include 2D and 3D seismic surveys, airborne gravity and magnetic surveys, geochemical surveys, and site investigation surveys.

Jointly with its strategic partner Statoil, the Company started drilling two exploration wells in Magadan-1 and Lisyanskiy areas of the Sea of Okhotsk under the carry financing arrangement. Modern drilling equipment prepared in a special way and upgraded, was employed for this purpose.

In April 2016, Rosneft commenced the drilling of an extended-reach horizontal development well at Lebedyanskoye oil and gas condensate field in the continental shelf of the Sea of Okotsk. The well with the measured depth of over 5, 000 m was constructed and completed in July 2016 with the start-up flow rate over 400 kbpd. A total of three horizontal production wells with the length of 5, 000 to 7, 000 m are to be drilled within the project scope.

Drilling operations carried out in the shelf of Vietnam from Hakuryu-5 semi-submersible drilling rig were completed in Q2 2016. Drilling operator is RN-Vietnam. PLDD well discovered Wild Orchid gas condensate field at Block 06.1. Volume of reserves and commercial attractiveness of the discovery are to be confirmed. There is a potential synergy, given the proximity of Lan Tay platform which is also operated by RN-Vietnam.

http://www.oilvoice.com/n/Rosneft-announces-second-quarter-and-first-half-2016-operating-results/b60c90c2ec99.aspx

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Militants blew up another crude pipeline in Nigeria's Niger Delta, a youth and protest leader said on Thursday.

Protesters also continued to block the entrance to a Chevron oil depot in the restive southern region for a third day.

On Wednesday, a previously unknown group called Delta Greenland Justice Mandate said it had attacked a crude pipeline belonging to state oil firm NNPC and local firm Shoreline Natural Resources in Urhobo in Delta state.

"It is true but I don't have details yet," said Collins Edema, a youth leader. He said the pipeline was on fire, but Reuters was unable to confirm this and it was not immediately possible to get more details.

He also said protesters, mostly unemployed youths, were continuing a demonstration started on Tuesday at the gate of a Chevron oil depot to demand jobs and housing, claiming the facility had destroyed their settlement.

"Our protest is going on peacefully today on Thursday. Our community workers inside the tank farm have joined the protest as we speak," Edema said.

"Nobody is going in and out of the facility since we've started but Chevron has airlifted their senior staff from there," he said, a claim Reuters could not verify.

Chevron confirmed a protest had taken place but did not say whether oil production had been affected.

Edema said the protesters might shut down Chevron's crude flow in Abiteye, Jones Creek and other operations in the area if the company does not agree to their demands.

Communities in Nigeria's southern swampland often complain about oil pollution and houses being moved to make way for drilling. They also say they live in poverty despite sitting on much of Nigeria's oil wealth. The Niger Delta region has been hit by a wave of militant attacks on oil and gas pipelines, reducing Nigeria's crude output by 700,000 barrels a day, according to state oil company NNPC. The militants, which are splintered in many groups, say they want a greater share of Nigeria's oil wealth - which accounts for around 70 percent of national income - to be passed on to communities in the impoverished region and for areas blighted by oil spills to be cleaned up.

http://www.reuters.com/article/us-nigeria-oil-idUSKCN10M10Y

Iraq and a group of major oil companies includingBP and Royal Dutch Shell have agreed to resume production of several development projects in the country that had been mothballed due to low oil prices, reports revealed on Thursday.

Iraq oil officials have come to agreements with BP, Shell and Russia's Lukoil to restart investing in oil field developments that are expected to see crude production increase next year, Reuters reported.

The Iraqi officials suggested the country's crude output should increase by 250,000-350,000 barrels per day (bpd) in 2017 from the current 4.6m bpd, adding to existing oversupply concerns.

On Thursday oil prices were on the slide again, while the market continued to digest the US Energy Information Administration revised its outlook for US crude production higher.

West Texas Intermediate crude was 0.4% lower to $41.54 per barrel and Brent was at $43.99.

Oil prices have recently entered what analysts atRBC Capital Markets called "a sort of bear trap", as despite daily global supply nearing the point where its overhang turns to a deficit, "a deluge of bearish headlines has kept the market on its heels".

2016 has seen the 'fragile five' sovereign producers - Iraq, Algeria, Nigeria, Libya, and Venezuela - struggle, while traders worry that Nigeria and Libya will soon add to the oversupply.

RBC believes the most significant bearish risks are overdone or have already been largely priced in.

"We maintain our conviction that oil prices will grind higher through the balance of this year and into next (even if choppy in the near term), barring a significant deterioration in the 'macroverse'," analysts wrote on Wednesday.

"In our view, investors should remain cognizant of the distress remaining across much of OPEC (namely Nigeria and Libya) and should side-step the numerous bear traps lurking in the market."

http://www.digitallook.com/news/news-and-announcements/oil-reuters--1664322.html

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A recovery in oil output and exports helped Petrobras reverse three quarters of straight losses as the Brazilian producer emerges from two years of graft investigations and falling crude prices.

The rising production and shipments helped compensate for falling fuel demand amid Brazil’s ongoing recession, the company said in a filing Thursday. Petroleo Brasileiro SA, as the Rio de Janeiro-based producer is formally known, also reduced spending on offshore well interventions.

"Petrobras is one of the very few companies in the world that has succeeded at increasing output even amid the oil downturn," Luana Siegfried, an equity research associate at Raymond James, said by phone from Houston.

Petrobras is trying to emerge from the combination of a domestic recession, persistently low oil prices and a sweeping corruption scandal that has triggered a series of write-offs and a class-action lawsuit in the U.S. The company is pursuing spending cuts and is negotiating discounts with oil rig suppliers to help reduce debt.

“Petrobras is becoming more predictable,” Chief Financial Officer Ivan Monteiro told reporters in Rio.

Pedro Parente, who took over as chief executive officer on June 2, has made progress on a $15.1 billion divestment program designed to reduce the largest debt load in the industry. The producer’s debt surged during the commodities boom because the company was selling imported fuel at a loss to help the government control inflation, and invested heavily in unprofitable refineries. Reducing debt through partnerships and asset sales is one of the company’s biggest challenges, Parente said on Aug. 3.

The producer reported a second-quarter profit of 370 million reais ($118 million), compared with 531 million reais a year earlier, according to the filing. The state-controlled oil company posted 20.3 billion reais in adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda. That was in line with the 21 billion-real average of four analyst estimates compiled by Bloomberg.

Petrobras booked a 1.2 billion-real impairment after reviewing its Comperj refinery project. A voluntary dismissal program cost another 1.2 billion reais during the quarter, and the company also accounted for some licenses it returned to the oil regulator. Those charges were the reasons why the producer’s net income missed some forecasts, Monteiro said.

"These three non recurrent items explain the difference between what analysts expected and the company’s results," Monteiro said.

Potential buyers have expressed growing interest in assets Petrobras plans to sell, including the propane unit Liquigas Distribuidora SA and BR Distribuidora, a fuel distribution unit, Monteiro said. The company continues to hold talks with Brookfield Asset Management Inc. to sell a stake in the Nova Transportadora do Sudeste SA pipeline network, he said.

Petrobras is sticking to its divestment target and has already agreed to sell almost $4.6 billion assets in Argentina, Chile and Brazil, including a majority stake in the Carcara offshore oil field to Statoil ASA for $2.5 billion. The company plans to release a new strategic plan in September.

http://www.bloomberg.com/news/articles/2016-08-11/petrobras-reports-370-million-real-second-quarter-profit

Wood Group and trade unions Unite and RMT have agreed to suspend strikes announced on Tuesday and restart the process to resolve a dispute over pay cuts and working conditions for Wood Group workers employed on Shell's North Sea oil and gas platforms.

The trade unions said they had planned strikes by workers of Wood Group, an energy services company, on Curlew, Brent Alpha, Brent Bravo, Nelson, Gannet, Shearwater, Brent Charlie platforms starting Aug. 15 through Sept. 3.

A Shell spokesman said the company encourages Wood Group's employees and management to continue their discussions in an effort to reach agreement.

Hundreds of maintenance workers on North Sea platforms had started a 48-hour strike over a pay dispute but field production or maintenance schedules were not affected, Shell said on Aug. 4.

As many as 120,000 oil workers are expected to have lost their jobs by the end of this year in an industry-wide clampdown on costs as weak oil prices have reduced profits.

http://www.reuters.com/article/britain-northsea-strike-idUSL1N1AT00N

 

The U.S. Energy Information Administration reported another overall expansion in oil stockpiles in the week to Aug. 5. The culprit: Crude oil? Gasoline? Diesel? Not this time: all the big growth was in the category called ‘other’. While total oil and product inventories grew by 2.5 million barrels, those in the ‘other’ grouping -- stuff like vacuum gasoil, natural gas liquids and blending components -- expanded by 3.6 million barrels to a record.

http://www.bloomberg.com/news/articles/2016-08-10/time-to-pay-attention-to-what-oil-dudes-call-other-chart

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WellDog (what a great name!) announced on Monday the launch of a new service called Shale SweetSpotter (another great name!).

Clever marketing folks at WellDog, we’ll grant them that. Shale SweetSpotter is “the first commercial reservoir-evaluation analysis technology specific to unconventional natural gas.” In English please!

“We’ve just developed a way to tell drillers where oil and gas is locked away in shale layers in the acreage they’ve leased.”

Apparently it’s pretty darned good. WellDog partnered up with Shell to test their service in the Marcellus and the field trials were declared “successful”…

http://marcellusdrilling.com/2016/08/welldog-launches-shale-sweetspotter-after-successful-marcellus-test/

Unusually hot weather coupled with cheap fuel prices caused U.S. power producers to burn a record volume of gas last month to meet soaring demand for electricity for airconditioning.

April and May were cooler than normal across the continental United States, depressing airconditioning demand, but June and July were both much hotter than usual (tmsnrt.rs/2b80Jhx and tmsnrt.rs/2b80CSY).

The result is that power producers’ gas consumption has surged during June and July and the volume of gas put into storage has been much lower than usual for the time of year (tmsnrt.rs/2b815Vh).

The particularly intense heatwave during the second half of July sent daily gas burn surging to a record and resulted in a highly unusual summer-time drawdown in gas stocks in the week ending on July 29.

Over the last week, temperatures have been close to normal. But another heatwave is starting and is expected to persist through the rest of the week, driving up gas consumption again (tmsnrt.rs/2b3cp0P).

According to the U.S. Energy Information Administration, U.S. power producers generated 4,950 gigawatt-hours from gas-fired units in July, an increase of 9 percent from the previous record set in July 2015.

Power plants consumed an estimated 36.8 billion cubic feet of gas per day in July, up 8 percent compared with the same month in 2015 (“Short-Term Energy Outlook”, EIA, Aug 2016).

The record gas burn reflects a combination of a structural shift (coal-fired power stations are being phased out in favor of cleaner burning gas units), weather (temperatures were well above normal in June and July) and fuel prices (gas is currently competitive with other sources of generation).

Gas-fired generation has been increasing since the late 1980s because gas units are quicker and cheaper to build, offer more operational flexibility, and have fewer environmental problems.

Gas-fired plants accounted for almost 33 percent of all utility-scale power production in 2015, up from 28 percent in 2014 and 20 percent in 2006, according to the Energy Information Administration.

Because of their greater operational flexibility, gas-fired plants are used to meet marginal electricity demand in summer when consumption peaks as temperatures rise and airconditioners crank up.

In most years, electricity consumption peaks in July or August, when temperatures are normally highest, and July and August are also the months when power producers burn most gas.

Power producers’ gas combustion is therefore closely tied to average temperatures and July 2016 was one of the hottest on record (tmsnrt.rs/2b3bYnn).

Low fuel prices accelerated the shift toward gas during the first half of 2016.

For much of the first half of the year, gas prices were among the lowest for more than a decade, encouraging maximum gas use.

Low gas prices have also caused gas production to plateau after strong growth in 2014/15 ("U.S. gas prices must rise to rebalance the market", Reuters, Jul 15).

Record gas combustion by power producers has helped draw down the large volume of natural gas stocks which built up during 2015 and the first few months of 2016.

Gas stockpiles remain at a record level for the time of year but have been building more slowly than usual and the year-on-year surplus has been shrinking consistently since April.

Gas stocks are now just 378 billion cubic feet (13 percent) higher than at the corresponding point in 2015, down from a surplus of 1,014 billion cubic feet (69 percent) in March

http://www.reuters.com/article/us-usa-natgas-kemp-idUSKCN10M02S

Crescent Point Energy Corp reported a smaller quarterly loss as Canadian oil and gas producer cut costs.

Oil and gas producers, faced with prolonged weakness in crude prices, have been slashing dividend, curbing capital spending and scaling back drilling activity.

Crescent said on Thursday its cost reduction initiatives helped lower "transportation and hauling, chemical, labor and service costs, as well as logistics around maintenance."

Operating costs totaled C$331 million ($254 million) in the first half of 2016, about C$40 million lower than its estimate.

Crescent said it expected average operating expenses to be about C$11.40 per barrel of oil equivalent (boe) for 2016, about 85 Canadian cents lower than the original estimate.

Crescent maintained its full-year capital budget of C$950 million and production forecast of 165,000 barrels of oil equivalent per day (boepd). It said it would revisit the numbers in the second half of the year.

The company has hedged 45 percent of its oil production for the rest of the year and 29 percent for the first half of 2017, taking advantage of recent rise in oil prices.

U.S. benchmark oil prices have shot up nearly 60 percent since they touched a 12-year low of $26 in February.

The Calgary-based company's net loss narrowed to C$226.1 million, or 45 Canadian cents per share, in the second quarter ended June 30 from C$240.5 million, or 53 Canadian cents per share, a year earlier.

Production rose 10.3 percent to 167,218 boepd.

However, funds flow, a measure of the company's ability to fund new drilling, fell by nearly a quarter to C$404.4 million due to lower oil prices.

http://www.reuters.com/article/crescent-point-results-idUSL3N1AS393

Investment firm SailingStone Capital Partners recently purchased enough stock that the firm now owns 11% of Range Resources.

That’s more than enough to exert great power and control. And so they have. That 11% stake in the company has “encouraged” (forced?) Range to grant SailingStone a seat on the board of directors.

We were, at first, concerned. Is this yet another corporate raider out to force a company (Range) to layoff employees and sell assets in a bid to force the stock price higher so they can dump it and make a big profit? We don’t think so.

We find no evidence that SailingStone is anything other than an investor with a lot of money who likes what they see in Range.

http://marcellusdrilling.com/2016/08/sailingstone-capital-buys-11-of-range-stock-gets-board-seat/