Oil Report: Drilling Ends in the Arctic, Opens in Libya
Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB) announced Wednesday that it is winding down its 500-worker, 20-vessel exploratory drilling force in the Arctic Ocean. The company has completed preliminary drilling at the Burger-A Prospect and Sivulliq Prospect wells off the coast of Alaska, and is heading out of the region before winter sets in.
In the company’s third-quarter 2012 earnings release, CEO Peter Voser said, “We’ve made progress with out Alaska exploration programme, commencing drilling operations in the Beaufort and Chukchi seas, as the industry continues to assess offshore potential there. This will be a multi-year exploration programme, demonstrating Shell’s commitments to high standards on sustainable development and safety.”
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Shell’s operations in the area have been bogged down for years due to permit delays, legal challenges, opposition from environmental protection groups, ice flows, and equipment issues. The company plans to continue working in the area as soon as it can come 2013, pending the certification of an oil-containment barge.
Shell posted a 2 percent increase to $7.13 billion in income attributable to shareholders for the third quarter, led by liquid natural gas. LNG sales volume as 4 percent higher than a year ago, attributed to the Pluto project in Australia. Revenue fell from $123.4 billion in the third-quarter of 2011, to $112.1 billion in 2012, a 9.1 percent drop.
On October 25, Shell announced an agreement with Hess Corporation (NYSE:HES) for interests in the Beryl area fields and the Scottish Area Gas Evacuation System. Shell and Hess previously signed a deal in May in which Shell acquired Hess’s 15.6 percent stake in the Schiehallion field. Shell now owns 49 percent of the equity in the field. According to the statement, “Shell is a leading operator in the UK sector of the North Sea and intends to maintain this position.”
Separately, British Petroleum (NYSE:BP), which operates the Schiehallion field, has announced its commitment to drilling 17 exploration wells in Libya. Despite the war, Libya, a member of OPEC, wants to raise its oil production to 1.8 billion barrels per day by in 2013. The move looks in line with BP’s strategy as outlined in its third-quarter earnings.
For its part, Exxon Mobil (NYSE:XOM) announced estimates for the third-quarter of 2012. Earnings dropped 7 percent to $9.57 billion from the quarter a year ago, and earnings per share of $2.09 reflects a drop of 2 percent. Oil-equivalent production dropped 7.5 percent from the quarter in 2011. There was nothing in the release about the company’s bid to exit its development contract for the West Qurna-1 oil field in Iraq.