Bass Strait set to cover gas shortages
THE AUSTRALIAN NOVEMBER 08, 2014 12:00AM
Matt Chambers
Resources Reporter
Melbourne
VETERAN petroleum geoscientist Noel Newell says looming east coast gas shortages and price rises have thrown up more opportunities for the oil and gas fields of Bass Strait to keep growing.
Newell, a former head of Bass Strait exploration for BHP-Billiton, reckons 3D Oil, the junior he now manages and owns 16 per cent of, is on to something the industry has overlooked in the offshore Otway Basin as the gas outlook has changed.
“The Otway Basin wasn’t very sexy at $3 gas, and consequently the industry largely forgot about it while east coast gas prices were rising,” Newell says on board the 92m-long Polarcus Asima, a specially designed Norwegian-owned vessel 3D and partner Beach Energy have contracted for three weeks to conduct pre-drill surveys of the Bass Strait sea floor.
“It is hard to know where else on the east coast you can put your hand on world-class-sized structures in a known gas province.”
The targets Polarcus Asima is investigating will be studied through what the industry calls “3D seismic”, which involves shooting blasts of compressed air underwater and measuring sounds that bounce back from the sea floor to determine where gas could be trapped. And they are big.
But illustrating why 3D’s market value sits at around $20 million in a nervous junior market, it is a high-risk venture in a frontier exploration area where globally only about one in 10 exploration wells yields a discovery.
It is not just Newell and 3D taking a punt on what the explorer calls the Flanagan project in the Otway Basin. Adelaide mid-tier Beach Energy has taken a 20 per cent stake in the project in return for putting up $3m of the $12m-$13m seismic boat costs 3D and Origin Energy (conducting a separate survey) will share.
Polarcus Asima was docked at Port Melbourne last week and has headed west to conduct a week-long seismic survey off the Victorian coast near the Twelve Apostles for Origin. Then it will undertake three weeks’ work on the 3D acreage west of King Island.
The looming gas price rises on the east coast — representing a crisis for some manufacturers and an opportunity for anyone with, or about to find, gas — has been well documented.
Three big Gladstone LNG export plants, being built at a cost of $70 billion, are expected to suck up all available gas in the pipeline-linked east coast states.
This will force domestic customers, used to cheap gas, to pay export prices and compete with Chinese and Japanese buyers.
Recent prices of less than $4 a gigajoule are expected to hit between $7 and $9.
Merger with rival may boost IHG share price: Marcato
13 Nov5:50 AM
Boston
ACTIVIST hedge fund Marcato Capital Management on Tuesday again urged InterContinental Hotels Group (IHG) to merge with a rival and said a tie-up could help the company's share price more than double.
The US$3.5 billion San Francisco-based hedge fund owns a 4 per cent stake in the hotel group, which also owns the Holiday Inn and Crowne Plaza brands. Marcato Capital Management publicly released its analysis because the hotel group's board has dismissed the fund's urging to combine with a larger operator.
An equity combination could deliver a premium upward of 100 per cent over IHG's current share price, the fund forecast. InterContinental's US share price jumped 3 per cent to US$40.36 in early afternoon trading after the analysis was made public. In London, the shares ended up 3.4 per cent.
A merger with a "Tier A" strategic partner such as Starwood, Marriott, Hilton, Wyndham, Hyatt or Accor would create a company with global scale, allow for cost and tax efficiencies and boost the share price and earnings, the Marcato analysis said.
"Our analysis demonstrates that a combination could result in immediate, significant and abiding shareholder value - much more than is likely to be created under IHG's current business plan," Richard McGuire, Marcato's founder, wrote in an open letter to IHG shareholders. Other investors include Fidelity Management and JP Morgan Asset Management.
In a response, IHG said that it had met Marcato twice in recent months and reviewed the hedge fund's analysis, but "concluded that it remains in the best interests of all its shareholders to continue to pursue its current strategy for high-quality growth and delivering strong operational and financial performance". After months of trying to persuade IHG to consider a tie-up, Marcato in August hired Houlihan Lokey as a financial adviser.
A US-based hotel operator had earlier approached InterContinental, a person familiar with the matter said.
In the letter, Mr McGuire wrote: "IHG has dismissed our suggestions and it appears they have neither solicited offers nor performed the rigorous analysis necessary to evaluate potential options to achieve this goal." Mr McGuire, a former partner at William Ackman's Pershing Square Capital Management, has returned an average 10 per cent per year since launching Marcato four years ago. REUTERS
Pound plunges as Britain joins 'lower-for-longer' club
Mark Mulligan
677 words
14 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Britain has become the latest of the big world economies to postpone monetary tightening, as cheaper energy and other imports, weak wage growth and chronic weakness in the euro zone looks set to drive inflation below 1 per cent.
Bank of England (BoE) governor Mark Carney warned on Wednesday night Australian time that the country's recovery could be undermined unless base lending rates were held at the current record low of 0.5 per cent for much longer than expected.
From expectations of a first-quarter 2015, or even late-2014, rate rise earlier this year to new guidance of well into 2015, the world's sixth-largest economy is the latest to succumb to the "lower-for-longer" mantra amid sluggish and patchy world growth, deflationary pressures, recession and declining commodity prices.
Of particular concern is near-stagnation in the euro zone, an important export market for Britain.
The BoE slashed its consumer price index forecast for the current quarter from 1.9 per cent to 1.2 per cent, a dramatic adjustment given that the original projection was made in August.
It now expects inflation to dip below 1 per cent in the next few months and to remain below 2 per cent until the end of 2017. Officials and private-sector economists have also been downgrading Britain's growth forecasts for the next two years.
"It is appropriate that, while a tightening in monetary policy remains in prospect, markets now expect somewhat easier monetary conditions over the forecast period than was the case three months ago," Mr Carney said.Immediate impact
When the BoE did raise rates, he added, "it is expected to do so only gradually and to remain below average historical levels for some time to come".
His comments had an immediate impact on the pound sterling, which lost some of its recent gains against a range of currencies, including the US and Australian dollars.
The Aussie on Thursday afternoon was buying about 55.18 pence, compared with 53.79 pence just over a week ago. Although still well short of a year-to-date high of 57.63 pence in early September, the local unit on Thursday looked set to consolidate its upward move against the pound.
"The pound is likely to underperform all crosses, including the Australian dollar, in the near term," ANZ said in a note on Thursday.
Bank of New Zealand currency strategist Raiko Shareef said the pound's rally in recent months had been overdone. "Sterling's rapid fall was more due to the fact that it has had a bit of an unjustified rise and it's now coming off a height where it shouldn't have been in the first place," he said.
The greenback, meanwhile, was buying 63.38 pence, its highest point for more than a year. At the end of June this year, it was fetching just 58.46 pence.Caught by surprise
"This has been a long time coming, and the market has been pushing out its expectations of when the Bank of England would raise interest rates," Mr Shareef said. "Earlier in the year it was caught by surprise when governor Carney said 'we might raise interest rates before the end of 2014' and it went and priced in a hike.
"But over the last three months [the BoE] has certainly softened its tone."
Perpetual Investments' head of investment market research, Matt Sherwood, said continued global weakness called for new fiscal stimulus despite the build-up of massive public debt. This was particularly true of the euro zone, where a planned expansion of central bank asset-buying, or quantitative easing, was unlikely to drag the trading bloc out of its current malaise, he said.
A concerted drive into infrastructure investment, led by Germany, was one possible response.
"It seems that disinflation and deflation is starting to grip some of the world's major economies, and central banks have exhausted all their policy tools," Mr Sherwood said.
Fairfax Media Management Pty Limited
Document AFNR000020141113eabe0000q
Oil workers’ strikes put skids on Bass Strait output
THE AUSTRALIAN APRIL 23, 2015 12:00AM
Matt Chambers
Resources Reporter
Melbourne
ImageVideo
Strikes put skids on Bass Strait oil The West Seahorse oilfield on the Bass Strait. Source: Supplied
No respite for Rio's competitors
Strikes at the Bass Strait oil and gas joint venture owned by Exxon Mobil and BHP Billiton have cost more than $US120 million ($154m) in lost revenue this year, forcing the lowest quarterly oil output in more than 15 years at the nation’s most prolific oilfields.
The effect of the strikes, which have been at offshore platforms, the Longford gas plant, marine terminals and Exxon’s Melbourne office, was laid bare in BHP’s March quarter production report, released yesterday, while operator Exxon said there was no resolution in sight.
It is understood about 45 days of production were lost.
Exxon’s Esso Australia unit operates the pair’s 50-50 Gippsland Basin joint venture that has produced oil and gas from Bass Strait for more than 40 years.
BHP said its share of crude oil and condensate production from the fields slumped from 2.28 million barrels of oil in the December quarter to 1.16 million barrels in the three months to March 31.
Quarterly Bass Strait oil production has not been so low this century and possibly not since the big oilfields, which peaked in the 1980s, started flowing in the late 1960s, though BHP could not confirm this.
Doubling the 1.12 million barrel slump to account for Exxon’s share gives 2.24 million barrels. At average $US55 oil prices for the quarter, this represents $US123m of lost revenue.
Gas production for the quarter was fairly steady, having already been cut in the December quarter by low seasonal demand.
An Esso spokeswoman said the company was conducting enterprise agreement negotiations “co-operatively with our workforce and their representative unions in good faith, with the aim of reaching a timely and mutually beneficial agreement”.
“The unions opted to undertake protected industrial action.”
Last month, the Federal Court issued a temporary injunction against the Australian Workers Union and its members not to undertake industrial action at the Longford gas plant.
But the AWU has told the Gippsland Times newspaper that it is still taking action at the Barry Beach and Long Island Point marine terminals.
The union has said the action is costing Esso $2.2m a day.
Bass Strait 0il strikes cost BHP, Exxon another month
THE AUSTRALIAN MAY 18, 2015 12:00AM
Matt Chambers
Resources Reporter
Melbourne
A BHP oil platform in Bass Strait. Picture: BHP Billiton. Source: Supplied
BHP Billiton and ExxonMobil have lost another month of oil production at their Bass Strait oil and gas fields as strike action estimated to have cut more than $US120 million off March quarter revenue continued into April.
The Australian understands the pair’s Longford crude oil plant, closed for 45 days in the March quarter, was unable to open until April 29, indicating BHP will take another hit to quarterly production when it releases its next production report in July.
The strikes, which prevented the crude plant and a gas plant reopening last quarter after planned maintenance shutdowns, concern enterprise agreements for onshore and offshore workers.
The Bass Strait fields have been the nation’s biggest oil-producing fields over the past 40 years, hitting their heyday in the 1980s. While crude production has fallen substantially since then, the fields are still producing and are set to expand gas production.
BHP referred questions on the matter to Exxon’s local unit, Esso Australia, which operates the pair’s 50-50 Gippsland Basin Joint Venture.
“We are committed to enabling change in order to enhance productivity and ensure a safe and sustainable future for our employees and the business,” an Esso spokesman said.
“While disappointed with the industrial action, we will continue in our attempts to reach a resolution.”
The unions that have taken protected industrial action are the Australian Workers’ Union, the Australian Manufacturing Workers’ Union and the Electrical Trade Union.
The strikes ended after court action by Esso and Qenos, a major Bass Strait customer, banned some actions. These bans have now ended.
“The unions are considering their options in terms of further industrial action,” the AWU’s Victorian vice-president Ben Davis said.
“Bartering is going nowhere fast — we’ve been negotiating for nine months but Esso needs to compromise if we are going to resolve the disputes.”
Mr Davis said any future action would not have the same impact as the previous strikes, now that the plants had restarted, but that it would still affect output.
The pair are due back in front of the Fair Work Commission tomorrow for conciliation, Mr Davis said.
The continued industrial action comes as the nation’s oil and gas heavyweights meet this week for the annual Australian Petroleum Production and Exploration Association conference, which is being held in Melbourne this year.
BHP’s Houston-based head of oil and gas, Tim Cutt, will speak in the opening session of the conference this morning.
The disputes with the union are over Esso trying to change offshore oil platform workers’ longstanding one-week-on, one-week-off shifts to two-weeks-on, two-weeks-off, and over staffing numbers at the onshore Longford gas and crude oil plants near Sale.
The strikes were first revealed by BHP last month in its March quarter production report, which showed production slumped by 50 per cent because of 45 days of lost production.
BHP said its share of crude oil and condensate production from the fields slumped from 2.28 million barrels of oil in the December quarter to 1.16 million barrels in the three months to March 31. Gas production was not noticeably affected because it happened in the lower-demand summer months.
Quarterly Bass Strait oil production has not been so low this century and probably not since the big oilfields started flowing in the late 60s. Doubling the 1.12 million barrel slump to account for Exxon’s share gives lost production of 2.24 million barrels. At average $US55 oil prices for the March quarter, this represents $US123m of lost revenue.
At that rate of production, the 29 days of lost production in April represents another 720,000 barrels of lost crude oil, worth $US44m of lost revenue.
GuocoLeisure spiking up to 1.04 from 1.00 with heavy volume. Must be renewed interest or some news.
AWE to book $110m writedown
BUSINESS SPECTATOR JULY 20, 2015 4:44PM
Michael Roddan
Reporter
AWE will book an impairment of up to $110 million after a writedown of its BassGas project reserves.
The offshore project in Bass Strait is connected by pipeline to the gas processing facility at Lang Lang, Victoria and is operated by Origin Energy.
AWE (AWE) said today that estimates for how much gas was in the project’s Yolla field had been trimmed, based on results from two recently drilled development wells.
The company said it was reducing its share of reported remaining 2P reserves for the Yolla field by 5.5 million barrels of oil equivalent, down to 13 mmboe, representing a 5 per cent reduction in the firm’s total remaining 2P reserves of around 100 mmboe.
“The updated reserves at Yolla will result in less gas production late in the field life, but overall it is not expected to have a material impact on production or cash flow during the next three to four years,” AWE managing director Bruce Clement said.
The non-cash impairment of $100m to $110m will be logged in AWE’s 2015 accounts.
Business Spectator
Any chance of GL selling their Fijian assets?
Starwood Resorts sold in Fiji’s biggest deal
[Image: 135849-245974fe-7b98-11e5-9d9b-7b73a423a28f.jpg]
The beachfront Sheraton Fiji Resort on man-made Denarau Island has 297 rooms. Source: Supplied
[b]Starwood Hotels and Resorts has offloaded two of its opulent Fijian resorts in the Pacific Island nation’s largest real estate deal.[/b]
Two Fiji-based entrepreneurs have paid about $F300 million ($193m) for the Sheraton Fiji Resort on Denarau Island, The Westin Denarau Island Resort and Spa plus the championship Denarau Golf and Racquet Club.
The sale comes as Starwood Hotels and Resorts continues to offload its global assets. Earlier this year it sold the Sheraton on the Park in Sydney to China’s Sunshine Insurance Group for a record $463m, in a deal foreshadowed by The Australian.
Meanwhile, it is understood Starwood has negotiated long-term management agreements on its Denarau Island resort complexes with the two buyers — developer Ananth Reddy and Suresh Bhai of Fiji’s Challenge Engineering, which has extensive property interests and owns Automart, Fiji’s largest second-hand motor vehicle dealer.
For their money, Mr Reddy and Mr Bhai have acquired the 297-room beachfront Sheraton Fiji Resort, the 246-room Westin Hotel, which sports six swimming pools, and the 72 par Denarau Golf and Racquet Club.
Popular with Australian holiday-makers, the resorts are located near Nadi’s international airport.
Other operators on the man-made Denarau island, which is billed as the South Pacific’s largest integrated resort complex, include Accor’s Sofitel Fiji Resort and Spa and the Radisson Blu Resort.
It is understood the sale of the Sheraton and Westin resorts on Denarau Island was brokered by CBRE Hotels directors Wayne Bunz and Rob Cross. The agents did not return calls yesterday.
Separately, Mr Reddy, a lawyer and engineer educated in Australia, announced in April he would develop a $F70m Holiday Inn on Fiji’s Denarau Island through his development company, Avoser.
Mr Reddy could not be reached yesterday.
Apart from the Fiji and Sydney hotels, Starwood has also sold the St Regis Bal Harbour and the Westin San Francisco Airport.
Will GL benefit from this development?
Bass Strait Oil seeks third parties for Gippsland Basin permits
Matt Chambers
[Image: matthew_chambers.png]
Resources Reporter
Melbourne
[Image: 102936-13411152-806d-11e5-970a-9231c6de7a20.jpg]
Bass Strait Oil has identified targets with the potential to yield 1.75 trillion cubic feet of gas and 8 million barrels of oil. Source: Getty Images
[b]Gippsland Basin minnow Bass Strait Oil has identified targets with prospective resources of 1.75 trillion cubic feet of gas and 8 million barrels of oil after a technical review of seismic studies on its two permits off Victoria.[/b]
After securing extensions to lease requirements of further seismic studies and drilling to minimise cash requirements, new management of the company now wants to farm out interests in the permits, VIC/P68 and VIC/P41.
“We believe the size of the targets identified results in the permits having the potential to host economic oil and gas discoveries,” said executive director Tino Guglielmo, a former managing director of now taken-over Cooper Basin players Stuart Petroleum and Ambassador Oil & Gas.
“The company’s view of the assets has materially changed ... and we will immediately commence discussions with third parties who are able to invest in the assets via farm-in.”
Bass, whose market value is just $3 million, has its unrisked 1.75 tcf of gas across five leads in what is known as the Emperor Formation, which the company says has similar characteristics to and is on trend with the nearby Longtom gas field. The gas targets came from analysis of two relatively recent 3D seismic studies.
The company also announced an 8-million-barrel contingent resource at the Leatherjacket oil discovery following a review of 2D seismic data, but this will need further 3D seismic tests before drilling.
There has been growing activity among Bass Strait juniors, who are operating in a cash-constrained and low-oil-price environment but where interest in their gas potential is growing as Gladstone’s LNG plants are set to cause east coast market tightness.
Last week, Noel Newell’s 3D Oil started drilling the Seal Lion-1 exploration well, funded by Malaysia’s Hibiscus Petroleum and targeting 11 million barrels.
Its shares are up 50 per cent in the past couple of weeks, giving it a market value of $18m, partly on the potential of its Flanagan prospect, where seismic studies showed a prospective resource of 1.38 tcf, and five other leads that bring the total prospective resource to 6.82 tcf.