FAR Requests Arbitration In Row Over Senegal Oil Project

Woodside Petroleum on June 21 confirmed that fellow Australian energy company FAR Ltd. had requested arbitration in an ownership dispute that has delayed a promising oil project off Senegal.

The deepwater SNE project is being closely watched as it would be the first oil development in the West African nation in an offshore area that has recently attracted oil giants BP, Total and CNOOC Ltd.

Woodside, Australia’s biggest independent oil and gas producer, said in a statement that FAR had “apparently initiated arbitration proceedings.” That came after FAR said on June 20 that it had made a request to the International Chamber of Commerce in Paris to start arbitration.

The project was to start production as early as 2021 but has faced delays due to the ongoing ownership dispute between the two Australian energy companies.

Woodside bought a 35% stake in the oil project last year from U.S. energy major ConocoPhillips and as part of the deal was due to become the operator later this year.

Woodside said earlier this month that minority stakeholder FAR Ltd. had advised that it would not support arrangements for Woodside to take over as operator.

FAR contends that it should have had pre-emptive rights over the ConocoPhillips stake, which was sold for what was considered a cheap price of $350 million, and had said the Senegalese government was yet to approve the deal.

However, Woodside said in its statement on June 21 that Senegal’s energy minister had issued an order confirming the company’s participation in the project.

—Reuters

Baker Hughes, GE Reach Agreement With DOJ To Complete Merger

General Electric Co. won U.S. antitrust approval to merge its oil and gas business with Baker Hughes Inc. to form a new publicly traded company, the Justice Department said on June 12.

GE and Baker Hughes announced the deal in October months after Halliburton’s effort to buy Baker Hughes collapsed under pressure from the Justice Department.

Under the agreement, GE will combine Baker Hughes with its oil and gas business, creating a company with $23 billion in annual revenue, the companies said.

GE will pay existing Baker Hughes shareholders $7.4 billion for a special dividend.

Following the approval, shares of Baker Hughes added slightly to gains to close up 1.1% at $56.16.

GE is already the world’s largest oilfield equipment maker, supplying BOPs, pumps and compressors used in E&P. It has also invested heavily in large data processing services just as the oil industry eyes its potential to boost oil recovery.

Baker Hughes is seen as one of the world leaders in horizontal drilling, chemicals used to fracture and other services key to oil production.

The deal was approved on the condition that GE sell its water and process technologies business, the department said. The asset sale was required because GE and Baker Hughes are two of four companies that sell refineries the specialized chemicals they need to remove impurities from hydrocarbons, the department said in a court filing.

GE will sell the assets to French waste and water group Suez for $3.4 billion, the company said in a statement.

Baker Hughes has some 35% of the market for refinery process chemicals, while GE has about 20%, the department said in a court filing.

“Today’s milestone represents significant progress toward creating an oil and gas productivity leader,” the companies said in a statement.

The EU approved the deal in late May.

—Reuters

BHP Billiton Names Ken MacKenzie As New Chairman

BHP Billiton Ltd. said June 16 its board of directors has elected Ken MacKenzie as the company’s new chairman.

MacKenzie, an avid sailor, is not afraid to rock the boat. In his first two years running Australian packaging group Amcor Ltd., Canadian-born MacKenzie replaced 75% of the firm’s top 80 managers.

He implemented an aggressive turnaround plan, oversaw a company-changing $2 billion acquisition of the Alcan packaging businesses and pushed through a spin-off of its Australian boxes and bottles arm.

Named on June 16 to succeed Jac Nasser as BHP chairman from Sept. 1, MacKenzie’s early challenge will be to deal with calls for a revamp at the world’s biggest miner from activist shareholders.

MacKenzie’s track record included a near doubling of Amcor’s return on capital to 20% and boosting its share price 150% over 10 years.

A trained engineer, he implemented a turnaround plan at Amcor called “The Way Forward.” It was billed as “an aggressive get-fit program” for the company. The objective was simple: Amcor’s different businesses were to have strong positions in their markets. Businesses in weak positions were to be fixed, sold or closed.

Oil Services Firm CGG Files For Bankruptcy

CGG said on June 14 it had filed for bankruptcy in France and the U.S. as part of a financial restructuring to reduce its debt burden.

The French oil services firm, which specializes in geoseismic surveys and is listed in Paris and New York, said the restructuring would eliminate $1.95 billion in debt from its balance sheet.

“CGG will continue normal business operations during this process, and the restructuring transactions will not affect relationships with our clients, business partners, vendors or employees,” CEO Jean-Georges Malcor said in a statement.

“We expect that our financial restructuring can move forward quickly to strengthen our balance sheet and to position the company well for the future,” he added.

With debt in excess of $3 billion, the restructuring could be one of the biggest France has seen in years. It calls for unsecured debt to be converted to equity, maturities on secured debt to be extended and $500 million in new money to be raised.

The company struggled to keep up with payments on its debt as the big oil groups that use its services proved reluctant to lift exploration spending despite rising oil prices.

French state public investment bank Bpifrance Participations owns a 9% stake in CGG.

Tullow Oil Names Les Wood As CFO

Africa-focused oil company Tullow Oil said it had appointed Les Wood as its finance head after its CFO Ian Springett stepped down due to ill health.

Tullow, which has production assets in Ghana and exploration acreage in Mauritania, Namibia and Zambia, named Wood, vice president of finance and commercial, as interim CFO in January after Springett took an extended leave of absence for medical treatment.

Wood, who joined Tullow in 2014, previously spent 28 years at BP, including in regional CFO roles in Canada and the Middle East. Springett, also an ex-BP regional finance head, had been in Tullow’s top finance job since 2008.

European Commission Approves Shell’s $3.8 Billion North Sea Sale

The European Commission approved on June 16 Royal Dutch Shell’s $3.8 billion sale of North Sea oil and gas assets to private-equity-backed Chrysaor.

“The Commission concluded that the proposed acquisition would not raise competition concerns because of its limited impact on the market structure,” the Commission said in a statement.

Shell welcomed the “important milestone” toward the completion of the deal, which is expected in the second half of this year.

Egypt Reduces Arrears Owed To Foreign Oil Companies To $2.3 Billion

Egypt has reduced arrears owed to foreign oil companies to $2.3 billion, the Egyptian oil ministry said in a statement on June 8.

The country repaid $2.2 billion in three weeks, the statement said.

Once an energy exporter Egypt has turned into a net importer in recent years, squeezed by declining production and increasing consumption.

Cairo has pledged to eliminate the arrears by the end of June 2019 and not accumulate more. The goal is part of its drive to draw new foreign investment to an energy sector that is attracting interest following several major gas discoveries.

Statoil Denies Patent Infringement, Keeps Drilling In Barents Sea

Statoil said last week that it would keep drilling exploration wells in the Barents Sea using what it called “regular equipment” after a court upheld an injunction in a patent dispute over specialized drilling technology.

Statoil said the Stavanger court had lifted an injunction on the use of its Cap-X technology in the Blaaman well, where drilling was suspended earlier but had upheld a ban on the four other Arctic wells planned to be drilled this year.

When presenting Cap-X in 2016, Statoil said it would help reduce drilling costs. Small Norwegian firm NeoDrill said Cap-X included essential parts of NeoDrill’s CAN technology, developed since 2001, and to which Statoil had access as NeoDrill’s minority stakeholder since 2010.

“Statoil disagrees that there has been a patent infringement and this will then now be concluded in Oslo District Court,” Morten Eek, a spokesman for Statoil said by email.

Statoil also said the injunction was pending NeoDrill posting $2.4 million security.

Kyrre Tangen Andersen, a lawyer representing NeoDrill, confirmed that the court had asked NeoDrill to post the security and said the firm was working on it. He added the court had agreed to lift the injunction on the Blaaman well because its suspension would had been too costly.

Drilling exploration wells can cost tens of millions of dollars, and Arctic wells are more expensive due to the need to use rigs that can withstand harsh environments.

Statoil’s spokesman said the company was planning to complete the Blaaman well this summer, while it was currently drilling the Kayak well in the Johan Castberg field by using “regular equipment.”

Halliburton Appoints Christopher Weber As CFO

Christopher (Chris) Weber was named executive vice president and CFO at Halliburton Co., effective June 22. Weber joins Halliburton from Parker Drilling Co., a global provider of drilling services and rental tools, where he served for four years as senior vice president and CFO.

Weber has more than 20 years of experience in the energy industry, holding key roles in finance, strategic planning, corporate development and operations. Previously, Weber served as the vice president and treasurer of Ensco Plc, one of the world’s largest offshore drilling companies, where he led the company’s global treasury and risk management functions. He joined Ensco following the acquisition of Pride International, where he spent five years in various management positions with increasing responsibility.

Prior to Pride, Weber worked with The Boston Consulting Group advising oil and gas and electric utility companies on strategic, financial and operational issues, in both Houston and London.

DEA Appoints General Manager, Opens Office In Brazil

DEA Deutsche Erdoel AG has appointed Christoph Schlichter as a general manager for Brazil, where the company opened an office.

In addition, DEA will conduct intensive studies to analyze farm-in opportunities within existing licenses in Brazil, the company said.

“We’re interested in a long-term commitment in the region and are prepared to make relevant investments,” DEA Deutsche Erdoel CEO Thomas Rappuhn said.

Schlichter added, “DEA’s aim is to establish itself as an operator in Brazil.” Schlichter joined DEA in 2001 as vice president of domestic oil production. He has also held the positions of managing director of DEA’s subsidiary in the U.K. and senior vice president of production for DEA’s operations in North Africa.

Faroe Islands Looks To Restart Hunt For Oil, Gas

Oil companies are interested in restarting the hunt for oil and gas in the scarcely explored seas off the Faroe Islands neighboring the more mature U.K. North Sea, the head of the Faroese Geological Survey said.

No economically viable discoveries have been made on the Faroese Shelf, but the tiny nation hopes to entice energy firms to restart exploration as it shows them new geological data in London on June 21.

“Oil firms have in many ways shown interest. We are having meetings, they buy data from us, visit us on the Faroe Islands ... So there is an interest and they are looking at the possibilities,” survey director Niels Christian Nolsoe said.

He declined to identify any of the companies but said bigger firms could put up the necessary cash, adding that companies present in the U.K. Shetland region also might be interested.

The seabed is mostly covered by thick basalt layers, which make the Faroese offshore areas difficult to explore despite promising geological and seismic surveys.

The seismic data now available and collected by companies such as Norway's PGS give a much better understanding than when exploration started some 16 years ago, Nolsoe said.

In the fourth licensing round, running until February 2018, the Faroe Islands is offering licenses in an area covering 30,000 sq m (322,917 sq ft) on the eastern part of the shelf bordering the western Shetland region.

Norway Offers Record Number Of Blocks For Arctic Oil Exploration

Norway offered a record number of blocks for oil and gas exploration in the Arctic Barents Sea on June 21, brushing off concerns about the risks of drilling in the remote, icy environment.

The oil ministry proposed 102 blocks, comprising 93 in the Barents Sea and nine in the Norwegian Sea, despite calls from the Norway’s Environment Agency to remove about 20 blocks near Bear Island, an important nesting site for Arctic birds.

The application deadline for Norway’s 24th Arctic licensing round is Nov. 30, and the aim is to announce awards during the first half of 2018, the ministry said.

The 93 blocks proposed in the Barents Sea beat the previous record of 72 blocks offered in Norway’s 22nd round. The country’s Norwegian Petroleum Directorate (NPD), which regulates the industry, said drilling in the Barents Sea was Norway’s best chance of making new oil and gas discoveries.

“Therefore it’s important to facilitate acreage for exploration in this area,” the NPD said in a statement. “There’s great interest, which also reflects the fact that 2017 is set to become a record year for exploration in the Barents Sea.”

—Staff & Reuters Reports

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