Incidental stuff

http://af.reuters.com/article/commoditiesNews/idAFL4E8KQ4TZ20120926

...Talisman Energy Inc will have new crude oil and condensate production coming online in Vietnam and Papua New Guinea in the next two years to meet growing demand in Asia, a company official said on Wednesday.
The Canadian company expects to start drilling at the Hai Su Trang and Hai Su Den fields offshore Vietnam in the fourth quarter with crude production to start in the middle of next year, Paul Blakeley, an executive vice president at Talisman, told Reuters on the sidelines of an industry conference.
The field's production will peak at about 15,000 barrels per day (bpd) and its output will be tied to export facilities at neighbouring Te Giac Trang field, said Blakeley, who oversees Talisman's operations in the AsiaPacific...

In reply to Spurticus, post #1075

Yup - already known. Short peak though, I believe...

If anyone knows: will Soco receive any royalties for the use of their FPSO or was it a condition of TGT development?

In reply to jseth123, post #1077

Bit of both, I believe. I understand that there was a capital contribution from Talisman.

I shouldn't mind a peek at this :-

http://geofiscal.ihs.com/worldwide-geofiscal-reports/far-east/15-2-01-hst-1x-geofiscal-report.html
Information on Vietnam, 15-2/01-HST 1X Geofiscal Report
A full engineering, economic and geological field valuation in one document

Yours for $995.00 ;-)

In reply to davjo, post #1079

Yours for $995.00 ;-)

...well they've got to make some money out of that field somehow...... ;-)

I see that Gulf Keystone Petroleum (LON:GKP) have this morning launched an issue of convertible bonds. If is interesting to compare the terms with the convertible that  SOCO issued in 2006:

• GKP's bonds are 5 years, not 7 years with a 5 year put
• GKP's coupon is much higher - indicated at 5.875% to 6.625% compared to the 4.50% paid by SOCO. This is despite interest rates having completely collapsed in the meantime.
• GKP's conversion premium is 25% to 30%, compared to the 42% actually achieved by SOCO (which remains one of the very highest conversion premiums seen in recent years)

It will be interesting to see how that issue goes, given the extremely weak risk appetite out there. I would think it should go well and be priced near the bottom of the range, despite the fact that what is predominantly Kurdistan/Iraq risk should carry some sort of premium over Vietnam.

What it does show, though, is what a good piece of funding SOCO's 2006 convertible was, especially in view of the subsequent financial crisis and the fallback in the share price. It would have been a dilutive struggle to develop TGT if they hadn't got the money in the bank!

ee

ps...its early morning, so I had forgotten the potential additional risk of disputes on the Turkey/Syria border which might have an impact on monetisation from Kurdistan?

There is an interesting table buried in ENI's 2012 Oil and Gas Review (p118):

It shows that although there has been a strong rise in light sweet production (which has almost certainly continued, thanks to TGT), production of medium sweet crude has continued to decline - and is probably now around half what it was 12 years ago. Production overall is pretty flat.

Vietnam Crude Production by Quality (mbopd)

If TGT production could be ramped up towards 100,000 bopd, this seems likely to represent a 25-30% increase over prior production levels.

Also of interest is the table on p40 which lists the worlds top ten importers of hydrocarbon liquids in all forms in 2011......

....top is the USA...... then China (6.14mn bopd), Japan (4.86mn bopd), India (3.74mn bopd),  South Korea  (3.27mn bopd) , out of a world total for imports of 68.02mn bopd.  That is 26% (plus, given I only list the top few) of world imports going to countries that surround Vietnam.

ee

In reply to emptyend, post #1081

with the benefit of hindsight, the soco bonds were better value than the soco equity, (and may well have been even if things had turned out better, no financial crisis etc), I suspect the same may be the case with the GKP bonds over the next few years.

K

In reply to kenobi, post #1083

with the benefit of hindsight, the soco bonds were better value than the soco equity

You can't make that call. They haven't matured yet...... ;-)

The GKP bonds are indeed quite attractive relative to the equity, given the potential for serious risk. Basically you get the 27.5% premium covered by the receipt of coupons over 5 years - but the downside is largely protected....so if you want to own GKP for 5 years then they look a better way to own it than the equity (though doubtless that will level out in coming days).

In SOCO's case I don't think the bonds would have looked as good if interest rates hadn't collapsed and if TGD (or the 2008 bid) had come in. As it is a 4.5% yield over 7 years looks OK - but there are plenty who held SOCO shares at £16ish (when the convert was launched) and sold at £20+....including me in relation to about 5% of my stake - and that would have beaten the bonds quite comfortably.

In reply to emptyend, post #1084

You can't make that call. They haven't matured yet...... ;-)

true of course, I was assuming holding until now, and now swopping into the equity, anything else is trading with hindsight, if only we could eh ?

I agree re the gkp bond from the little I know, is there a similar minimum or can you buy/apply for small quantities of the gkp bond ? I imagine there probably is, not really retail bond material is it ?

K

In reply to kenobi, post #1085

I agree re the gkp bond from the little I know, is there a similar minimum or can you buy/apply for small quantities of the gkp bond ? I imagine there probably is, not really retail bond material is it ?

I haven't looked but these things are market-standard...£100K minimum IIRC. Can't imagine that many PIs would want to buy it on the basis of holding to maturity (it will be illiquid). OT really here though..

I think we must be due for some news soon about the gas/liquids separator. Presume they will RNS results of testing?

Samurai

In reply to Samurai, post #1087

I'm not sure exactly at what point news will be RNS'd. They have already given an extimate that it will add around 2,000 bopd gross to the liquids stream, and I believe that the historical claims (since they have been supplying this mixed stream for the last 4 years, but only getting paid as if it was dry gas) are likely to take some while to settle.

I would have thought they would only be RNS'd if some definitive point in the process has been reached (eg agreed extra payments for future production) or if there was a material difference from expectations re volumes.

Accordingly, I'm not holding my breath on that.

ee

Well, Eni would appear to have the funds in place. Lets see if they use them.
Eric
https://trade.loginandtrade.com/flashASP/host/progs/news/DJNewsStory.asp?newsID=20121011T8628&

Eni SpA (E) said Thursday that it expects hydrocarbon output to grow by about 3% in the 2015-2022 period as the top Italian oil and natural gas company aims to drum up its credentials among leading upstream players after shedding its regulated gas assets and freeing up funds to spend on large projects. Eni said it also expects hydrocarbon production to rise by more than 3% adjusted for factors such as the disruptions in Libya following last year's civil war that toppled Moammar Gadhafi. Italy's biggest oil and gas company by volume said it expects more than 1.3 million barrels of oil equivalent in new daily production by 2022. Earlier this year, Italy's technocrat government of Prime Minister Mario Monti forced Eni to shed its controlling stake in Snam SpA (SRG.MI), the country's biggest gas grid and storage company by capacity, to open up the energy sector to competition. Eni has agreed to sell the majority of its stake to state-controlled Cassa Depositi e Prestiti SpA. Eni, which is one of Africa's biggest oil producers, is spearheading its exploration growth with large-scale projects as it faced disruptions from its large Libyan operation.

http://af.reuters.com/article/energyOilNews/idAFL3E8LG38820121016

TENDERS
- Vietnam's PV Oil issued a tender offering 10,000 barrels per day of TGT
for January-June loading. The tender closes October 22, with the validity
extending through to Nov. 1.

Whilst I would love the above number to be missing a zero, I have the feeling it isn't.What happens to the remainder? (Is there a remainder?)

I am presuming this is an additional contract to the Dated Brent + $6.60 for the 40k already agreed. So implies 50k to be contracted with rest sold at spot. Not sure really what else to deduce apart from increasing confidence in production?

I see that Shell are reorganising their VN operations to focus more on oil. That is the downstream bit of Shell by implication - but we know that Shell has also been a buyer of many of theTGT cargoes.....so further vertical integration can't be ruled out?

http://uk.finance.yahoo.com/news/asia-crude-vietnam-sells-tgt-094129781.html

SINGAPORE, Oct 22 (Reuters) - Vietnam's state oil marketer PV Oil has sold 300,000 barrels of Te Giac Trang (TGT) for December in a tender, trade sources said on Monday.
The cargo to load on Dec. 11-15 was sold to an oil major at about $5.40 a barrel above dated Brent,"

Nice to see the premium persisting

Is there a date set for the IMS?