Also announces Humpback well results offshore the Falkland Islands

Noble Energy, Inc. (NYSE: NBL) announces that the Big Bend oil development in the deepwater Gulf of Mexico commenced production on October 26, 2015. The single-well field is ramping as expected and is anticipated to reach a maximum gross production rate of approximately 20 thousand barrels of oil equivalent per day (MBoe/d) over the next couple of weeks. Approximately 90 percent of the volumes being produced are oil. In addition, the Company has continued to accelerate the Dantzler development and now expects first production from the Dantzler field by early November. Big Bend and Dantzler, located in Mississippi Canyon 698 and 782, respectively, are subsea tiebacks to the third-party Thunder Hawk production facility. Combined, the fields are estimated to contribute a maximum net production rate of 20 MBoe/d to Noble Energy.

Gary W. Willingham, Noble Energy's Executive Vice President of Operations, said, "We continue to build on our strong track record of major project execution with Big Bend coming online less than three years from discovery and within our sanctioned budget. Big Bend is the first of three major projects planned to come online for us in the Gulf of Mexico over the next nine months, contributing significant oil production and cash flow to the business. Short cycle times to first production, strong well deliverability, and low production costs from our Gulf of Mexico projects deliver attractive returns even in today's environment."

Noble Energy operates Big Bend with a 54 percent working interest. Other interest owners are W & T Energy VI, LLC (a wholly owned subsidiary of W & T Offshore Inc.) with 20 percent, Red Willow Offshore, LLC with 15.4 percent and Houston Energy Deepwater Ventures V, LLC with 10.6 percent.

The Company is also the operator of Dantzler with a 45 percent working interest. Partners include Ridgewood Energy Corporation (including ILX Holdings II, LLC a portfolio company of Riverstone Holdings, LLC) with 35 percent working interest and W & T Energy VI, LLC with 20 percent.

Noble Energy also announced that the Humpback well offshore the Falkland Islands reached total depth and is being plugged and abandoned. Humpback was drilled in the Fitzroy sub-basin of the Southern Area License and encountered non-commercial quantities of crude oil and natural gas. Full well assessment and the integration of drilling results into the Company's geologic models is ongoing to determine remaining exploration potential in the Southern Area License. The geologic play including Humpback is only one of a number of prospect play types in the Southern Area License.

The rig which drilled the Humpback well will be released to another operator before returning to Noble Energy to spud the Rhea prospect in late 2015 or early 2016. Located in the Northern Area License offshore the Falkland Islands and approximately 265 miles from Humpback, Rhea is in a proven petroleum basin near existing oil discoveries. Rhea is a Cretaceous-aged prospect with multiple reservoir targets and total estimated gross mean unrisked resources in excess of 250 million barrels of oil.

The Company now expects total third quarter 2015 exploration expense to be approximately $200 million, which includes the majority of net costs related to the Humpback well.

CGG announces that it has been appointed as technical consultant by the Gabonese Republic’s Ministry of Petroleum and Hydrocarbons to help with the promotion of its 11th Licensing Round focusing on five highly prospective deepwater blocks.

The round was formally opened on 27th October 2015 by His Excellency, Minister for Petroleum and Hydrocarbons, Mr. Etienne Dieudonné Ngoubou, at this week’s 22nd Africa Oil Week conference in Cape Town South Africa. The round will then be promoted by a series of road shows starting in Libreville on 24th November, followed by Paris on 26th November, Singapore on 30th November and Houston on 3rd December 2015. A delegation from the Direction Generale des Hydrocarbures (DGH) as well as a technical team from CGG will be attending to answer any questions.

The round will be open for five months starting on 27 October 2015 and bids can be submitted from 15 February 2016 onwards and by no later than 31st March 2016. Prequalification for the bid round will require the purchase of a minimum amount of seismic data.

The deep water of Gabon has significant unexplored potential within a structurally complex setting, particularly in the pre-salt section. In response to the exploration challenges, CGG has been appointed to advise the Gabonese Republic on the promotion of the 11th Licensing round and has worked directly with the Ministry to acquire over 25,000 km2 of new 3D BroadSeisTM multi-client seismic data as part of an integrated geoscience program to support it. The new survey will enable better imaging of this exciting and underexplored area, and covers areas downdip and adjacent to recent pre-Aptian salt discoveries, such as Leopard, Diaman, Ruche and Tortue. It will benefit from integrated gravity and magnetic interpretation to enhance the pre-salt imaging and additional, complementary datasets including offshore hydrocarbon seeps and a full geological prospectivity report will be available.

Jean-Georges Malcor, CEO, CGG, said: “Ever since we acquired our first geophysical survey there in 1932, CGG has actively supported Gabon’s development of its natural resources. We are delighted to continue our fruitful cooperation with the Gabonese Republic by offering our full portfolio of Geoscience expertise to help promote the 11th Licensing Round. Given the high quality of the intermediate results we have seen so far from our recent BroadSeis survey, we expect the final results to be a significant resource for clients to de-risk this promising exploration arena. We are pleased to announce that several companies have already pre-committed to the dataset.”

Across the offshore industry, two approaches to financing and project spend are apparent: life cycle value versus short term costs. This is according to Trelleborg’s offshore operation’s roundtable members, who analyzed findings from the company’s Next Level Report at Offshore Europe in September.

Panelists agreed that although it is tempting for organizations to look for larger upfront savings - especially whilst budgets are under scrutiny due to lower oil prices - in fact, sustainable marginal gains can reap greater rewards long term and should be favored. One panelist’s example was a multibillion dollar project in which an operator may be averse to introducing innovative solutions as they only appear to save $10m. While this may seem a small saving in the overall project spend, cumulative savings of this amount could hugely benefit the project’s overall costs.

That said, the reduced oil price appears to be creating an incentive for businesses to communicate more openly through supply chains to establish smarter ways of doing business. As such, panelists stated that now is the time for supply chains to collaborate, invest and embrace innovation. Otherwise, decisions makers could make short term cost savings on long term issues, which could reoccur if not properly addressed.

Overwhelmingly, the key message from the roundtable was one of change. Members stressed that against a backdrop of challenges, the industry should remain optimistic and proactive. An openness to innovation and clear communication between stakeholders is paramount to ensuring a leaner, quicker and more exciting market in the future.

Trelleborg surveyed decision makers to identify ways in which the industry can respond to pressure against a backdrop of slowed market growth. Responses were analyzed for its Next Level Report, and formed the basis of the roundtable discussion.

You can watch Trelleborg’s roundtable here.

Last week DW celebrated its 25-year anniversary with their DW25 Conference in London. Through the course of the afternoon, speakers offered insight into oil & gas business challenges and opportunities, spanning a multitude of industry sectors. The keynote speaker James West, Senior MD and Partner at Evercore, was joined by panelists Graham Bennett, Vice President at DNV GL, Bob Drummond, CEO at Hydrasun Group, Neil Hartley, Managing Director at First Reserve and Tony Hodgkins, Commercial Director at ORCAS. DW speakers were Chairman John Westwood, Research Director Steve Robertson, with Andrew Reid, CEO as moderator.

1.Saudi Arabia was noted as having major challenges including a huge budget deficit which can only be addressed by a significant rise in the oil price. Without this, its demographic situation holds potential for social unrest. Some other oil producers could already warrant the status of ‘failed states’.

2.The Middle East was, however, highlighted by several speakers as remaining a bright spot for both oilfield services and equipment.

3.Global E&P spending is expected to drop 20% in 2015. Onshore, North American drilling and oilfield services have been hit hardest by the oil price collapse, though offshore drilling tells a different story, with the long-forecast rig oversupply being the key issue.

4.In 2016 North American spending is expected to decline further and higher incentives are required to sustain drilling and exploration. However, a 2017 rise in the US onshore rig count is expected and a number of oilfield services & equipment sectors are forecast to show significant growth from their present lows.

5.In the offshore rig markets, new construction activity could be limited for the next five years.

6.The impact of the oil price downturn on the offshore segment has to some extent been masked by the long-lead time of field development projects.

7.Offshore, commercial relationships and business models must change. The FPSO sector for example, faced major challenges even before the oil price fall and there is now a real need to standardize the approach to design.

8.The North Sea is “stuck in a time warp”, with high costs and low productivity, a result of “poor planning and management”.

9.The oil price fall has raised the potential of North Sea decommissioning which is now “definitely going to happen”.

10.Emerging sectors such as FLNG and offshore wind are growing and now significant in scale.

11.The oil & gas supply chain is overpopulated by too many small companies and there is a major need for more corporate consolidation in order to improve efficiency.

12.Institutional equity energy allocations for the oil services industry are the lowest of all groups compared to historical averages.

13.Though hit by pricing pressure, the impact on MMO-related (Maintenance, Modifications and Operations) activity has been comparatively lower than others.

14.The downstream maintenance market will display a rapid recovery due to investment in new infrastructure for North American crudes and upgrades of international facilities.

15.It was noted from a private equity view however, that although there will be challenging investment decisions, significant opportunities do exist.

16.Fossil fuel investors are being targeted by organized opposition pushing for disinvestment; however, natural gas can play a key part in the move towards a greener future by displacing coal in power generation.

17.Oil & gas is a 155 million boe/d industry with major long-term prospects.

18.Ultimately, oil prices will increase due to growing demand outpacing supply.

19.“The decline curve never sleeps” and some 448,000 new development wells are needed from 2015-21 to offset production decline and rising oil & gas demand.

Finally, John Westwood closed the event, adding “When we formed Douglas-Westwood in January 1990 Brent crude was $23.73 a barrel. Applying the US $ inflation index this equates to a 2015 price of $43.20. Today (23rd October 2015) Brent Crude is $46.50.”

Douglas-Westwood extends its sincere thanks to everyone participating in the event and to all our clients and friends we have worked with over the last 25 years.

Statoil has completed a farm-in transaction with ExxonMobil Exploration and Production South Africa Limited (ExxonMobil), acquiring a 35 percent interest in the ER 12/3/154 Tugela South Exploration Right.

The remaining interests are held by the operator ExxonMobil (40%) and co-venturer Impact Africa Limited (Impact Africa) (25%).

“This opportunity is in line with Statoil’s exploration strategy of access at scale. It represents access into a frontier basin where we believe we see indications of an active petroleum system and which has impact potential,” says Nick Maden, senior vice president for Statoil's exploration activities in the Western Hemisphere.

“The position strengthens and increases the optionality in Statoil’s long-term international portfolio. We look forward to working with ExxonMobil, Impact Africa and the South African government to explore for oil and gas in this new area for Statoil,” says Maden.

The Tugela South Exploration Right covers an area of approximately 9,054 square kilometers. It is located offshore eastern South Africa in water depths up to 1,800 meters.

The farm-in represents a country entry for Statoil into South Africa. Statoil enters in an early exploration phase with a step-wise exploration program. Work commitments between 2015 and 2017 include the acquisition of 1,000 square kilometers of 3D seismic data and geology and geophysics (G&G) studies. There are no commitment wells during this exploration period.

The information obtained from the initial studies and seismic survey will form the decision basis for the co-venturers’ next steps in the Exploration Right.

Global-leading energy services company Proserv has secured a contract with a value of more than 20 million NOK (approx. £1.6 million) to provide topside control equipment at one of the largest field discoveries on the Norwegian Continental Shelf.

The agreement will see Proserv supplying Aibel, on behalf of Statoil, with a hydraulic power unit (HPU) and three chemical injection panels to be used on the prestigious Johan Sverdrup development’s drilling platform.

To deliver the products, Proserv will make the most of its international network with staff at Proserv’s base in Norway working in collaboration with their Dubai colleagues.

Contract win underpins Proserv’s track record of developing existing technologies that can co-exist together and be retrofitted.

Henrik Johnson, Proserv’s regional president for Scandinavia, said: “To be involved with such a high-profile development is a major endorsement of Proserv’s capabilities. Our global footprint and reputation for working effectively across the company’s international operations, combined with our track record of developing existing technologies that can co-exist together and be retrofitted, played a key role in securing this contract.

“As a result, this ensures innovative and cost-effective solutions to clients while this latest contract also further secures jobs in what is a testing time for the oil & gas industry as a whole.”

The work is due for completion by June 2016 and the HPU will be delivered with remote controlled cleaning system for hydraulic oil.

Proserv’s chemical injection panels will service a total of 80 injection lines. The panels allow for each line to be remotely operated and monitored for flowrate and pressure.

Proserv, which operates worldwide through 29 operating centers based in 11 countries, has a 40-year track record in delivering world-class solutions for the energy industry, particularly in the drilling, production and subsea market sectors.

Gobbler Boats is committed to protecting the environment. Its new Gobbler Offshore 290 Oil Spill Recovery Vessel (OSRV) not only excels at remediation, but harnesses the latest in environmentally sound fire suppression technology. The boat comes standard with a Sea-Fire pre-engineered system and 3M's innovative Novec™ 1230 Fire Protection Fluid.

"Sea-Fire is a well-known and respected brand in the marine marketplace," said Simon Jauncey, Gobbler Boats' technical manager. "Its products are well-engineered, produced in ISO9001 approved facilities and are technologically on the leading edge."

"We chose Novec 1230 because it's in line with Gobbler Boats' ethos of protecting the environment," continued Jauncey. 3M's next-generation fire suppression fluid is a replacement for Halon. Electrically non-conductive and non-corrosive, expensive machinery and electronics aren't damaged during discharge. With a low toxicity value, it also offers the highest margin of safety for workers within occupied spaces. Environmentally clean, it has a global warming potential of 1—the same as CO2—and will not deplete the ozone.

What makes the 29' Gobbler Offshore 290 unique is that it doesn't store recovered oil, instead it tows 3,434 gal. detachable bladders behind the vessel. This allows the boat to operate almost non-stop and collect up to 6,400 bbls of 98% water-free reusable oil per day. It will operate in less than 1.5' of water, making it ideal for shoreline work, but carries a Lloyds G3 certification for offshore coverage to 60 nm. With an 8.5' beam, it's easily trailerable, or stowed on a ship or platform. The boat was awarded the Seawork 2015 Spirit of Innovation trophy and was a category winner for Vessel Design & Construction.

The company's website is www.gobblerboats.com.

Sea-Fire is dedicated to protecting people and property at sea. The company manufactures a wide range of state-of-the-art marine fire suppression systems for commercial and recreational vessels.

To learn more about Sea-Fire engineered and pre-engineered fire suppression systems, including NOVEC 1230, visit the company at METSTRADE 2015, 17–19 November, stand 2.208 or the International WorkBoat Show, December 1-3, New Orleans, Louisiana, booth 1944.

Statoil has decided to cancel the contract with Songa Trym, four months before the expiration of contract on 4 March 2016.

Songa Trym (Photo: Kjetil Larsen - Statoil)

Statoil has previously notified Songa Offshore that the rig would be suspended for a period, and Statoil has tried to find other assignments for the rig after the suspension period and up to the expiration of contract.

“We informed the supplier earlier in October about suspending the contract after the rig has completed the drilling operation on the Tavros well on the Visund field. Statoil has hoped for further activity in the remaining contract period, but we now realize that we must cancel the contract, as we have not succeeded in finding more assignments. We regret that we need to cancel the contract before it expires,” says Tore Aarreberg, head of rig procurements in Statoil.

Wood Group has secured a new multi-million dollar contract to provide engineering services to BP's existing subsea infrastructure in the Gulf of Mexico, UK and Norwegian continental shelves and offshore Azerbaijan.

Wood Group Kenny (WGK) will deliver program, project and integrity management and operational support for subsea projects under the five year contract, which is effective immediately.

The contract will be delivered from WGK&'s offices in Aberdeen, London, Norway, Houston and Baku and adds to WGK's work with BP globally. WGK continues to perform work under a contract held since March 2007 to provide engineering and project management services to BP's portfolio of future subsea projects.

Bob MacDonald, CEO of Wood Group Kenny said: “This significant contract demonstrates our unique independent model and our ability to deliver a complete portfolio of subsea services across global projects. “Wood Group has over 40 years of experience working with BP. We look forward to continuing our close partnership with this long-term client on this project, which will see us provide operational support for many of the assets we helped to design. Our key focus will be on effective and efficient delivery in this challenging climate."

This is the second major contract secured with BP this year. In February, Massy Wood Group, a company jointly owned by Wood Group PSN (WGPSN) and the energy division of Massy Holdings Limited commenced a five year contract, with a potential value of up to $250 million, to provide services to BP's 13 upstream offshore facilities, and 2 onshore assets in Trinidad & Tobago.

Global integrated drilling waste management and environmental services firm, TWMA, has been awarded two major contracts, building on a strong relationship with Maersk Oil North Sea UK (Maersk Oil) spanning more than a decade.

The projects, which are led by an Aberdeen-based team, involve work on the Culzean development – one of the largest gas discoveries in recent years in the UKCS – and the continuation of provision of innovative technology across Maersk Oil’s Central North Sea operations.

To ensure the company continues to offer the best, most cost-effective and safe solutions available to the global oil and gas industry, multi-million pound equipment investments are being made. The new work will also result in the creation of up to 20 new jobs.

TWMA men at work

Neil Potter, Chief Operating Officer at TWMA, said: “We are delighted to have been selected to support Maersk Oil on these projects as they expand their drilling activity within the UK sector of the North Sea.

“Our experienced, skilled team are working closely with Maersk Oil and have been since the award to carry out the pre-fabrication R&D activity needed for the Culzean operations. To date, this has included working on-site in Singapore with rig builder Hercules to develop solutions where we aim to use our proven technical know-how to design, manufacture and install best-in-class technology to handle Maersk Oil’s drilling waste processing requirements.

“By delivering exceptional results that improve operational efficiency while maintaining a quality service over a considerable period of time, we have nurtured a strong working relationship with Maersk Oil. We are delighted to have been awarded a new scope of work on the prestigious, high-profile Culzean development and a renewed agreement for the continuation of our services across Maersk Oil’s Central North Sea projects.

“Despite extremely challenging market conditions, TWMA has maintained high-levels of investment in R&D which is exceptional in the current climate and demonstrates our awareness of the need to continue to build on our strengths and offer the best possible integrated drilling waste management services and environmental solutions.’’

The Culzean project involves TWMA providing drilling waste processing and waste management services for five years with the option of two one-year extensions.

Delivered using a 950kW electric drive within TWMA’s proprietary TCC RotoMill and EfficientC equipment, the Culzean project will also see TWMA recruit up to 20 personnel to support the existing workforce within the engineering, commissioning and operations phase.

The second contract will provide existing drilling waste processing and management services for Maersk Oil’s Central North Sea projects, again utilising the firm’s TCC RotoMill and EfficientC technologies. The new agreement will continue for the next three years, with the option for two one-year extensions.

Brazil will lead global growth in the Floating Production, Storage and Offloading vessel (FPSO) industry despite the country’s national oil company, Petrobras, recently facing allegations of corruption, says research and consulting firm GlobalData.

Petrobras registered its biggest ever loss in 2014, partly due to the write-down resulting from the corruption scandal, which in turn resulted in spending cuts on its future projects.

GlobalData’s report* states that despite the challenges, Brazil has spearheaded recent growth in the global FPSO industry, with the country deploying 17 FPSOs between 2009 and 2014.

Adrian Lara, GlobalData’s Senior Upstream Analyst, says: “Petrobras’ strategic plans in 2013 and 2014 had almost 40 FPSOs deployed in Brazil through 2020. Based on the company’s latest plan, there are currently seven FPSOs still on time for delivery, whereas 11 have had their delivery date moved back a couple years and about 12 FPSOs are now expected after 2020.”

While Petrobras is planning to spend $108.6 billion, or 83% of its total capital expenditure, on the exploration and production sector as part of its 2015-2019 Business and Management Plan, corruption allegations have hampered its ability to execute the planned projects, including those involving FPSOs.

Lara comments: “Planned projects have been affected in large part by the ongoing investigation into corruption. In particular, domestic shipyards have been hit hard.

“Sete Brasil was set to build 29 offshore rigs for Petrobras but has scaled back to 15. The uncertainty around when and how many rigs will be available will have a knock-on effect on FPSO delivery dates.”

Despite these challenges, Petrobras plans to prioritize oil production projects focusing on sub-salt resources and will deploy and operate a higher number of FPSOs than any other company in the world by 2019, according to the report.

Matthew Jurecky, GlobalData’s Head of Oil & Gas Research and Consulting, concludes: “FPSOs are an ideal development option for offshore oil fields given current uncertain oil prices, as they can easily be scaled up if the market improves, or scaled down to maintain economic viability despite low oil prices.

“For example, the Sea Lion development in the Falkland Islands is progressing through reducing the initial scope despite being a frontier project.”

*Global FPSO Industry Outlook – Brazil Leads Record FPSO Deployments Despite Deteriorated Project Economics

Harris CapRock Communications has received a contract extension for satellite and remote communications services. The contract includes the transition to Harris CapRock’s Advanced VSAT network for three oil production platform sites in the Gulf of Mexico.

Since launching its Advanced VSAT solution, Harris CapRock Communications has transitioned more than 30 energy customers and is adjusting bandwidth on demand to over 100 sites in the oil and gas industry’s most productive regions around the world. Harris CapRock was recently named the most impactful service provider in the oil and gas sector by Via Satellite’s 2014 Excellence Awards Program.

Harris CapRock Communications is a premier global provider of managed satellite, terrestrial and wireless communications solutions for the maritime, energy and government markets. Harris CapRock owns and operates a robust global infrastructure that includes teleports on six continents, five 24/7 customer support centers, a local presence in 23 countries and more than 240 global field service personnel supporting customer locations across North America, Central and South America, Europe, West Africa and Asia Pacific.

McDermott International, Inc., (NYSE:MDR) has announced it has received regulatory approval for its McDermott Marine Construction Ghana Limited (MMCGL) joint venture to pursue key offshore opportunities in Ghana. McDermott and MMCGL officials made the announcement during the 2015 Africa Oil Week in Cape Town, South Africa.

The Petroleum Commission Ghana notified MMCGL that it has been granted regulatory approval to develop contracting abilities to support the country’s burgeoning subsea and offshore engineering, procurement, construction and installation (EPCI) industry.

“This critical approval opens the way for McDermott’s participation for growth in Ghana with partner Hydra Group of Accra,” said Robert Gillespie, McDermott’s Commercial Director for Europe and Africa. “From its inception, the goal for the MMCGL joint venture is to support local growth and experience transfer in Ghana to ensure delivery of effective offshore solutions.”

Delali Otchi, CEO of Hydra Group, said the important regulatory approval “is just the beginning for the MMCGL joint venture to bring local and international expertise in support of the development and growth of Ghana’s offshore oil and gas industry.”

Established in 2006, HIOSL serves the Nigerian oil and gas industry with a wide range of maritime, security and logistics services. The Lagos headquartered company has ambitious plans to become the leading marine logistics provider in the Nigerian offshore industry.

Currently undergoing sea trials in Singapore, Guardian 2 is expected to be directly employed when she arrives in Port Harcourt, Nigeria, in December. HIOSL will then have five patrol vessels in its fleet.

HIOSL Managing Director Louis Ekere, stresses: “We have had very positive experiences with our first Damen FCS 3307 Patrol – Guardian 1. She has been engaged since day one, working on behalf of the International Oil Companies.”

Guardian 1 has largely been carrying out security patrol services for the IOCs, working alongside the Nigerian Navy, as well as transferring crew and supplies. “Guardian 1 is definitely the best vessel in the field in terms of speed and intervention abilities. Furthermore, with her unique Damen Sea Axe hull, she has fantastic seakeeping ability and still provides efficient fuel economy, even in rough terrain.” (Guardian 1 was actually named “Best Offshore Patrol Boat” by Work Boat World in 2014.)

“We chose Damen again for a number of reasons, one of which is the reliability of the vessel. This patrol vessel is an excellent business model. She is robust, fast, with the required speed to intercept in critical situations. Our principals - the IOCs - have also been impressed. Damen’s speed of delivery was also another important factor. In addition, we are very pleased with the level of professionalism and after sales services at Damen.”

After sales support is provided by Damen’s new Service Hub, which was opened in Port Harcourt in early 2015. Martin Verstraaten, Damen Regional Service Manager Africa, says: “The decision to establish the Service Hub ensures local presence, quick response times, Field Service Engineers and a local Site Manager on the ground. This dynamic team has close contact with local repair facilities, cooperation with local suppliers and builds up a strong relationship with our customers.”

Further expansion

HIOSL already has plans for a Guardian No. 3 and No. 4, with the further additions likely in the first half of 2016. As well as patrol vessels, HIOSL is considering expanding its fleet with Platform Supply Vessels. “This will take our company to the next level. We strive to ensure we deliver on our promises to the IOCs in terms of safety, reliability and effectiveness. We also want to make sure we are delivering what the IOCs require and this is one reason we want to work with highly experienced companies like Damen. The IOCs know that we are a professional, well-managed organization, offering excellent service. And even though the oil price has dipped, oil companies are still keen to explore and develop.

“We are on track with our own strategic expansion. We try not to overreach ourselves and acquire assets on a speculative basis. As soon as Guardian 2 is registered in Nigeria, she will be out to work!”

As part of the contract, Damen provides five days of training but HIOSL was also keen for additional training options. Mr. Ekere adds: “This extra training would help the crew make sure the vessel performs to its optimal level and realizes its full lifespan.”

In addition to patrol vessels and tugs, HIOSL provides equipment to the IOCs, supplies house boats, barges and cranes and the company operates one of the largest crawler cranes in Nigeria. With offices in Lagos, Port Harcourt and Warri, HIOSL has a core staff of around 100 and a total of 400.

NYC-based PIRA Energy Group reports that Brent crude prices staged a modest recovery from late August through mid-October, but then prices ran into strong headwinds. In the U.S., commercial oil inventories fell this past week. In Japan, crude stocks posted a strong draw. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

European Oil Market Forecast

Brent crude prices staged a modest recovery from late August through mid-October, but then prices ran into strong headwinds. However, the price increase of over $2/Bbl on October 28 could be an early taste of a rally that PIRA expects once the January contract is the front-month price and December inventory declines become evident. Refinery margins will hold up better than generally expected.

More Intensive Price Weakness at Henry Hub Overshadows Broader Market Weakness

The broader market downturn has gathered momentum despite many prices decoupling from Henry Hub in late October. While the dust has not settled, all upstream markers are now floundering near the $2 mark, closing this year’s longstanding gap between Dominion South and Westcoast St. 2 prices. The stepped-up assault against HH due to storage congestion in the Producing Region will end sooner rather than later, specifically when withdrawals commence. However, that is not likely until mid-November, and the timing and sustainability of a price recovery is murky given bearish weather risks.

Exports/Renewables Push Germany Up; France Bearish

PIRA’s price forecasts for Germany have been moved up on the back of a less bearish demand outlook, resilient exports, and a downgraded renewable generation outlook. The timing of the lignite stand-by reserve is slightly more bullish than expected, but the interaction between this stand-by reserve and market prices will depend on details of the dispatching. However, hedging of these units is no longer needed, which is bullish for the back of the forward curve.

Asian LPG Prices Push Higher

Asian LPG prices jumped higher on stronger crude and as speculators expected Saudi contract prices for November to increase by as much as $40/MT from current levels. The propane FEI gained 7.8% to $471 by Friday’s settle. Butane gained to widen its premium over propane to over $20/MT. With both LPG components trading at a premium to naphtha, the feedstock is priced out of petrochemical usage.

Near-Term Coal Pricing Outlook Remains Soft; 4Q16 Pricing Turns Somewhat Bullish

Despite some strengthening currencies vs. USD, Pacific Basin physical prices moved slightly lower in October due to a weaker oil market, Chinese coal pricing cuts, and insufficient supply discipline from Australia. With no clear evidence that China’s thermal coal imports will soon stabilize, PIRA maintains a bearish outlook for the Pacific Basin. Atlantic Basin prices moved somewhat higher in October, with stronger European coal burn giving CIF ARA (Northwest Europe) and FOB Richards Bay (South Africa) prices a boost. Similar to the Pacific, we have lowered our previously bearish forecast again, although we are now above forward for 4Q16.

Ethanol Prices Exhibited a “V-shaped” Pattern in October

U.S ethanol prices fell early in the month, but they rebounded during the second half as the market tightened. D6 RIN prices soared.

Wheat Shorts Cover

Friday’s Commitment of Traders report confirmed one worst kept secret in the markets while the heavily-watched wheat short declined enough to give the Chicago market a bit of a breather, though Kansas City saw the addition of more shorts.

Climate Policy in Flux in Canada

The victorious Liberals had the least specific climate platform and we do not expect changes to Canada’s GHG targets for global negotiations. Provincial premiers will join the talks. A broader climate policy discussion will follow. Ontario and Quebec announced aggressive 2030 goals, and Ontario continues planning for a carbon market link with California and Quebec. Alberta’s new government tightened the large emitter carbon program, impacting oil sector and pressuring coal. British Columbia began working to limit carbon intensity of LNG.

Canadian Elections: Liberal Victory Does Not Materially Change Oil Pipeline Outlook

The surprisingly decisive majority win of the centrist Liberal Party in Canada’s October 19 federal election does not materially change PIRA’s long-term outlook on new Canadian oil pipelines. PIRA still believes that at least one new Canadian pipeline project will come online at some point after 2020. This is in line with our view that crude price weakness and a slowdown in western Canadian production growth have delayed the urgency for new pipeline capacity until post-2020. That said, the Liberals’ support for a carbon price and promise to strengthen the environmental review process for oil projects have the potential to increase costs or contribute to delays for the oil industry.

Global Equities Slightly Lower

Overall global equities were down slightly on the week, though the U.S. S&P 500 gained a bit. For the U.S., retail and consumer discretionary were the best performers. Energy was little changed. Internationally, all the tracking indices lost ground with emerging markets, emerging Asia, and BRICs putting in the worst performances. With regard to individual markets, Argentina did the best for the week, posting a nearly 10% gain, and holds a 33% year-to-date gain, in dollar terms.

Asia-Pacific Oil Market Forecast

High stocks, both crude and product, along with October crude stock building because of refinery maintenance were enough to force prices to retrace earlier gains. Another short-term negative for price is the desire by some companies to reduce inventories for end-year accounting purposes (LIFO). Longer term, the market will increasingly need additional barrels, even after accounting for the return of Iranian barrels in spring 2016. By 2Q16, the market will have to begin signaling that more oil will be required and prices should begin a more sustained recovery.

Strong Supply Undermines Focus on Improving Demand

Buyers of Russian contract gas are not wasting any time in pursuing the minimum annual total even if they believe that oil-indexed prices will move lower. With LNG supply building on the water, pressure on spot prices will increase over the Gas Year and contract gas buyers want to be in a flexible place to take advantage of the price weakness.

Western Grid Market Forecast

Compared with September, spot on-peak power prices were down across the board in October, led by a $3/MWh drop at Mid-Columbia. Palo Verde prices fell by ~$2/MWh and the California hubs saw only slight declines. Warmer than normal weather and generation/transmission maintenance lent support to California electricity prices. Changes to the forecast include downward revisions to gas prices through the first half of 2016 and a lower hydro generation forecast based on early runoff projections. As a result, we remain bullish on Mid-Columbia heat rates through 1Q16. Southwest implied gas heat rates should also benefit from lower gas prices, with CCGTs again displacing higher cost coal units in the Southwest. However, all markets look weak during 3Q barring sustained hotter than normal conditions.

Dry Bulk Freight Market Struggles to Find Upward Momentum

Cape freight rates weakened during October with the 5TC average falling from just under $15,000/day to close to $9,000/day. Bunker fuel prices remain low, providing little support for rates. Australian iron ore exports dipped slightly month-on-month from strong September levels, with Brazilian iron ore loadings showing a similar trend. New Cape deliveries have started to outstrip Cape demolition, leading to a return to Cape fleet expansion. PIRA has taken a more bearish outlook for Cape freight rates through 2016, largely due to a notable drop in Cape port delays and low bunker prices capping rate increases.

U.S. Ethanol Demand Up; Stocks and Production Decline

U.S. ethanol-blended gasoline manufacture has risen for three consecutive weeks, reaching a near-record 9,162 MB/D the week ending October 23. Ethanol inventories declined by 599 thousand barrels to 18.3 million barrels, the lowest level of the year.

Constructive Tone of Economic Data Is Resulting in Improved Market Sentiments

The mood in global financial markets brightened considerably during October, as major market indices climbed back to levels last seen in mid-August. Recent dovish actions by developed world central banks likely played a role in boosting market confidence. But encouraging data from developed and emerging economies were much more important influences in all likelihood. This report also discusses U.S. GDP and other recently released third quarter data.

U.S. Commercial Stocks Draw

For the first time in several weeks, overall U.S. commercial oil inventories fell this past week. Strong reported demand, up 830 MB/D on the week, at the same time as refinery operations are still being impacted by large scale plant maintenance, caused product stocks to decline. The crude stock build moderated as runs increased and crude imports declined. The year-on-year stock surplus still managed to increase almost 5 million barrels to 170 million barrels as this week last year had an even larger stock decline.

Production Anemic, Demand Strong Implies More Upside Risk to U.S. Exports

Year-on-year net shipments of U.S gas into Mexico remains stout. For October, exports are projected to average ~2.9 BCF/D, a whopping gain of ~0.9 BCF/D year-on-year. Growth is being driven by both rising demand and dwindling supply. Notably, domestic natural gas production is running ~0.5 BCF/D lower year-on-year, a development that will likely persist as PEMEX budgets remain constrained and gas rig counts remain at record lows. But higher demand reflects a trend with staying power as new gas EG capacity and industrial projects come online. PIRA’s Reference Case exports to Mexico appear increasingly subject to upside risks if new pipeline interconnectivity comes online next year in a timely fashion.

Biofuels Programs Move Forward in Over 60 Countries

The market for ethanol in China has opened up. The country plans to resume building corn-based ethanol plants after a decade-long ban.

S&P 500 Continues to Gain

The S&P 500 posted a fourth week of gains. Also, all of the related indicators improved again (Russell 2000, volatility, high yield credit and emerging market credit). Overall, commodities eased, as did ex-energy. Oil was also lower. Palladium, which had posted six straight weeks of gains, was modestly lower for the third straight week, while aluminum fell again. With regard to currencies, the U.S. dollar was mostly stronger, most notably against the euro and key eastern European currencies.

Japan Crude Runs Soon to Rise, Crude Stocks Post a Strong Draw

Crude runs eased again and should be reaching a seasonal bottom as turnarounds begin to wind down. Crude imports were very low and stocks drew 5.5 MMBbls. Finished product stocks built slightly due to higher naphtha and kerosene stocks. Product demand, while lower for the single week, has begun to rise on a trend basis. The indicative refining margin was modestly higher on the week as all the cracks other than gasoline improved.

Bangladesh Revises Gas Rates in Preparation for LNG

The government of Bangladesh decided to combine the rate for locally extracted natural gas with re-gasified imported LNG as recommended by a six-member expert committee. Meanwhile, the government is set to prepare the final draft in consultation with Excelerate Energy (EE) for installing the LNG terminal at Moheshkhali. As per the deal, the company will implement the project on build-own-operate-transfer (BOOT) basis to meet the growing demand of the gas and it would be transferred to the government after the 15 years.

Lower Refinery Maintenance, Higher Crude Runs Drive Expected November and December Crude Stock Draw

The latest view of the October U.S. crude balance indicates that monthly end-October crude stocks will set a new U.S. record, surpassing the previous April 2015 peak by 1.3 million barrels, to 485.1 million barrels. We believe that stock levels will fall quickly from that level, however, as refinery CDU outages rapidly decline and crude runs pick up. We also expect domestic crude supply — crude production plus balance item — will continue to erode, while crude net imports should be largely unchanged from October levels. For the first quarter of 2016, higher crude runs, lower domestic crude supply, and somewhat lower crude oil net imports result in a significantly lower stock builds, compared to the first quarter of 2015.

Henry Hub Free Fall in the Face of New U.S. Supplies Implies Weakness for NBP

Extremely strong gas exports out of Norway and Russia are playing a role in cooling off NBP prices, but it is more LNG supply that would accelerate a decline in November and December assuming normal weather. Confidence levels regarding the speedy availability of attractively priced Atlantic Basin cargos are justifiably high given weak demand in Asia, combined with an ongoing surge in supply there.

Slow Capital Formation Has Inhibited Oil Demand

The decline in oil prices has not led to the promised increase in GDP. In fact, labor productivity growth, the presumptive engine of increased GDP growth, has actually slowed in the developed countries. Slower labor productivity growth is attributable to slower rates of capital formation. Because oil and capital are complementary factors of production, oil demand growth has also been adversely affected. We believe that capital formation has been delayed. The factors that pull the economy out of recession are out of sequence. Instead of residential and non-residential fixed investment being the prime movers for GDP growth, as has been the case in past recoveries, the current recovery in the U.S. was led by the household sector. Expansionary monetary policy repaired household balance sheets, which led to increased household consumption. We believe that in the next two years there will be a substantial pick-up in business fixed investment. Following the Keynesian paradigm, this will be followed by a new bout of consumer spending. Both the increase in capital formation and the subsequent increase in consumer spending will lead to increased oil demand growth.

North American GHG Quarterly Update: Canada

The victorious Liberal party had the least specific climate platform of the three major parties in the election, and we do not expect changes to Canada’s GHG targets for the global UNFCCC climate negotiations. Provincial premiers will join the Paris talks, highlighting the new focus on provinces. A broader climate policy framework will be discussed after Paris, as additional policies will be needed for Canada to meet 2020 and 2030 targets. Ontario in May announced an aggressive 2030 emissions target of a 37% reduction vs. 1990; Quebec followed in September with a 2030 target of a 37.5% reduction. Both provinces will likely need to address the transport sector to meet targets. Ontario continues planning for a carbon market link with California and Quebec, with the program start as early as 2017. Alberta’s new NDP government has set up a Climate Change Advisory Panel to drive discussions and advise the Minister. Alberta also tightened its large emitter carbon program, with greater intensity reductions and higher compliance fees impacting the oil sector and pressuring coal generation. British Columbia began work on regulations designed to limit the carbon intensity of LNG projects.

U.S. August 2015 DOE Monthly Revisions

DOE released its final monthly August 2015 (PSM) U.S. oil supply/demand data last week. August 2015 demand came in at 19.81 MMB/D, which is 50 MB/D lower than what PIRA had carried in its monthly balances. Compared to the DOE weeklies, total demand was lowered 429 MB/D, largely a function of the 704 MB/D reduction in “other.” Distillate was revised higher by 201 MB/D and resid demand raised 82 MB/D. Total demand for August 2015 versus August 2014 grew 414 MB/D, or 2.1%, a slowdown from the 700 MB/D growth versus year-ago seen in June and July 2015. Kero-jet demand again outperformed the barrel average, higher by 4.9%, similar to what was seen in July. Distillate lagged the barrel average, up only 0.3%, while gasoline and “other” also underperformed slightly, but each still up about 1.7% versus year-ago.

North American Gas Forecast Monthly

For many months, PIRA has warned of an impending Producing Region (PR) “storage crisis” unfolding in the early stages of the heating season due to the capacity constraints and record high seasonal storage carries throughout the summer. With threadbare margin available to avoid extreme congestion and a related meltdown of Henry Hub (HH) prices, the past month’s mild weather, and more of the same expected for November have been more than the market could handle. Consequently, the past week’s HH cash price crash from the mid-$2.50s toward $2/MMBtu should not be perceived as an “out of the blue” shock.

October Weather: U.S. and Japan Warm, Europe Cold

October weather for the three major OECD markets turned out to be 3% colder than the 10-year normal and the resulting oil-heat demand effects were 64 MB/D above normal. On a 30-year-normal basis, the markets were 7% warmer.

Gas Flash Weekly

For some time, PIRA has emphasized downside Henry Hub (HH) prices risks as the heating season looms and available Producing Region storage capacity dwindles. The more than 40¢ plunge in the November contract in its last six days took it to its lowest level in more than three years. Together with this week’s acute weakness in the HH cash market, these issues have highlighted a transition of storage congestion from a near-term threat to a very real factor impacting both injections and HH prices.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

iSURVEY, a leading provider of survey and positioning services to the global oil and gas, offshore renewables and telecommunications markets, has secured a framework contract with Total E&P UK Limited for the provision of rig move navigation and positioning services.

Andrew McMurtrie, managing director at iSURVEY Offshore Limited

With an Effective Date of 12 October 2015, the three year framework contract will give the iSURVEY team the opportunity to provide platform, rig and vessel-based positioning services to Total’s offshore operations in the UKCS.

Total currently has multiple drilling rigs on hire, all of which have the potential to require positioning during moving operations.

Andrew McMurtrie, managing director of iSURVEY, said: “This framework contract award is testament to the quality of work and results iSURVEY regularly provides for our clients. It is extremely promising to see that the services offered by iSURVEY are being recognised within the industry.

“Having launched our Aberdeenshire base in 2014, the past year has seen iSURVEY’s UK side of operations grow in a very short space of time, and we look forward to continuing the expansion of our services and working closely with Total over the coming years.”