ROGTEC Magazine - Russian Oil & Gas Technologies - News, Reviews & Articles

ROGTEC Magazine - Russian Oil & Gas Technologies - News, Reviews & Articles

Integra Group Reports Interim 1H 2011 Financial Results and Order Book Update

Wednesday, August 31st, 2011

Integra Group (LSE: INTE), a leading independent provider of diversified oilfield services, released today its unaudited Interim Condensed Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2011.

Stronger volume of services across all of our segments was the primary revenue growth factor in the first half of 2011. Increased energy, fuel and social costs, late contracting and weather related disruptions of seismic services and increased outflow to working capital have led to a reduction in Adjusted EBITDA and operating cash flow. Due to a significant deferred tax gain and positive net earnings in the second quarter, Integra Group recognized a net profit from continuing operations.

Following the divestments of rig manufacturing assets in August 2010 and cementing and road construction equipment manufacturing business in April 2011, the financial results of the divested businesses were excluded from the following financial highlights and a corresponding restatement of historical results was made for comparison purposes.

1H 2011 Financial Highlights

• Sales increased by 12.7% to US$ 457.3 million (vs. US$ 405.8 million in 1H 2010)
• Adjusted EBITDA decreased by 9.3% to US$ 56.4 million (vs. US$ 62.2 million in 1H 2010)
Adjusted EBITDA margin was 12.3% (vs. 15.3% in 1H 2010)
• Net profit for the period from continuing operations amounted to US$ 17.8 million (vs. net loss of US$ 20.7 million in 1H 2010)
• Net cash flow provided by operating activities was US$ 7.4 million (vs. US$ 34.9 million in 1H 2010)
• Capital expenditures were US$ 42.6 million (vs. US$ 27.1 million in 1H 2010)
• Net Debt as of June 30, 2011 amounted to US$ 148.1 million (vs. US$ 111.7 million as of December 31, 2010)

1H 2011 Operating Highlights

• 125,978 meters drilled (vs. 117,028 meters during 1H 2010)
• 1,739 workover operations conducted (vs. 1,585 workover operations during 1H 2010)
• 147 coil tubing operations (vs. 94 operations during 1H 2010)
• 502 cementing operations (vs. 495 operations during 1H 2010)
• 205 downhole motors and 42 turbodrills produced (vs. 164 downhole motors and 28 turbodrills produced in 1H 2010)
• 577,473 seismic shot points made (vs. 532,505 seismic shot points during 1H 2010)

2011 Order Book Update

• US$ 856.1 million (RR 25.7 billion) in tenders won and contracts signed for execution in 2011, excluding order book of divested businesses,
• of which US$ 796.8 million (RR 23.9 billion) is in signed contracts, calculated as of August 22, 2011;
• 2011 total order book (contracts signed and tenders won) is 14% higher in Ruble terms compared to 2010 order book calculated on August 23, 2010 (adjusted for historic order book of divested businesses) and already exceeds 2010 full year revenue by 8%.

Antonio Campo, Integra Group’s Chief Executive Officer, commented,

“Revenue for the first half of 2011 continues to grow compared to 2010, driven by stronger activity across our business segments. Service pricing has been slower to advance and together with cost increases, particularly related to fuel, transport, and statutory social taxes impacted EBITDA. An unusually early spring interrupted seismic surveying and the preparation for the summer projects also contributed to lower margins in this Division. Results from our Drilling, Workover and IPM business continue to benefit from internal optimization, and Technology Services delivered steady activity with strong margins.
The outlook for the rest of 2011 is positive. This view is based on stronger levels of activity that we already see in the third quarter. We currently are bringing more drilling rigs on line, our pilot summer seismic projects are progressing well, our contracted seismic volumes for the next winter season are the highest in the last three years and we have just further enhanced our high margin technology services offering with the acquisition of SIAM.
In the first half of 2011 our company reached an encouraging milestone by becoming a profitable business. Net income was boosted by a significant deferred tax gain, but without this we generated net income from ongoing operations in the second quarter for the first time in Integra’s history. Improved financing, rigorous cost control and ongoing optimization of our asset portfolio each contributed to these results.”

The unaudited Interim Condensed Consolidated Financial Statements, prepared in accordance with IFRS, for the six months ended June 30, 2011 can be found under the following link:
http://www.integra.ru/eng/investors/results/

For additional discussion and analysis of our financial results for the six months ended June 30, 2011, please see our Management’s Discussion and Analysis of Financial Conditions and Results of Operations, which can be found under the following link:
http://www.integra.ru/eng/investors/results/



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Integra Group announces acquisition of SIAM Company

Wednesday, August 31st, 2011

Integra Group announces that it has executed a purchase and sale agreement to acquire SIAM Company (SIAM), a leading Russian oilfield services company specializing in wireline and slickline services, production logging and testing. The transaction amount is RR2.2 bln (US$76 mln). Integra Group anticipates that closing of the transaction will occur within the next two months. The transaction will be financed by a combination of internal cash resources and external borrowings.

“Acquisition of SIAM provides new opportunities for further expansion of our portfolio of technology services in line with the strategy to enhance Integra’s high-margin product offering. Increasing our footprint in the oil and gas production market, SIAM reinforces Integra’s position as the leading Russian provider of complex OFS solutions at all stages of oilfield development. SIAM’s success is built on innovation by an outstanding team of people, world-class products and a great relationship with its customers, which is reflected in their solid financial results. The SIAM brand is recognized across Russia and increasingly beyond, based on extensive operational experience and international partnerships,” said Integra Group CEO, Antonio Campo.

Integra Group will retain the SIAM brand for its commercial purposes.

Source



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Integra Group divests assets of OOO TSZ

Wednesday, August 31st, 2011

Integra Group announces the sale of OOO TSZ which owns the assets of former Tyumen Shipbuilding Plant for RR773 million (US$26.7 million) to OOO Monolit held by DOM Group, one of the largest real-estate developers in Tyumen. The proceeds from the sale will be used for general corporate purposes of Integra Group.

Tyumen Shipbuilding Plant was put into conservation and became a non-core, non-producing asset for Integra. The sale of the plant’s assets is another step in implementation of Integra Group’s long-term strategy to focus on the development of its oilfield services business.

Source



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BREAKING NEWS – ROSNEFT AND EXXONMOBIL TO JOIN FORCES IN THE ARCTIC AND BLACK SEA OFFSHORE, ENHANCE CO-OPERATION THROUGH TECHNOLOGY SHARING AND JOINT INTERNATIONAL PROJECTS

Tuesday, August 30th, 2011

Rosneft and ExxonMobil have executed a Strategic Cooperation Agreement under which the companies plan to undertake joint exploration and development of hydrocarbon resources in Russia, USA and other countries throughout the world, and to commence technology and expertise sharing activities.

- $3.2 billion exploration program planned for Kara Sea and Black Sea
- Establishment of a joint Arctic Research and Design Center for Offshore Development (ARC) in St. Petersburg
- Rosneft participation in ExxonMobil projects in the US and other countries with a focus on building offshore and tight oil expertise
- Joint study of possibilities to develop Western Siberia tight oil resources
- The companies form a strategic partnership to undertake agreed joint projects in Russia and internationally.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration and development of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse Trough License Block in the Black Sea, some of the most promising and least explored offshore areas globally.

In the course of these projects the companies will focus on the environment and creation of the most modern safety systems with consideration to the risks of offshore operations, and global best practices.

Additionally, the Agreement provides Rosneft with an opportunity to gain equity interest in a number of exploration and operating ExxonMobil assets in North America, including offshore fields in the Gulf of Mexico, tight oil fields in Texas (USA), Canada and projects in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.

Moreover Rosneft and ExxonMobil will implement a program of personnel exchange for technical and management employees which will help strengthen the relationships between the companies and provide valuable career development opportunities for personnel of both companies.

The partners will create an Arctic Research and Design Center for Offshore Developments (ARC) in St. Petersburg which will be staffed by Rosneft and ExxonMobil employees. The center will use proprietary ExxonMobil and Rosneft technology, and will develop new technology to support the joint Arctic projects, including ice-class drilling and production ships and platforms, as well as other Rosneft projects.

“We have a clear vision of Rosneft’s strategic direction – building world-class expertise in offshore operations and enhancing oil recovery. The partnership between Rosneft with its unique resource base, and the largest and most highly capitalized company in the world reflects our commitment to increasing capitalization of our business through application of best-in-class technology, innovative approach to business management, and enhancement of our human resource potential.” said Rosneft President Eduard Khudainatov, following the signing ceremony. “This venture comes as a result of many years of cooperation with ExxonMobil and brings Rosneft into large scale world-class projects, turning the Company into a global energy leader.”

“Today’s agreement with Rosneft builds on our 15-year successful relationship in the Sakhalin-1 project,” said ExxonMobil Development Company President Neil Duffin. “Our technology, innovation and project execution capabilities will complement Rosneft’s strengths and experience, especially in the area of understanding the future of Russian shelf development.”

Rex Tillerson, Chairman and CEO of ExxonMobil Corporation, who attended the ceremony, said ExxonMobil will benefit Russian energy development by working closely with Rosneft. “This large-scale partnership represents a significant strategic step by both companies”, added Mr. Tillerson. “This agreement takes our relationship to a new level and will create substantial value for both companies. The agreement will be a basis for constructive dialog with the Government of the Russian Federation on establishment of a fiscal regime for offshore operation consistent with best global practices”.

This transaction has been approved by Rosneft’s Board of Directors on August 30, 2011.

Source



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Max Petroleum Third Successful Well Drilled in Uytas Field

Tuesday, August 30th, 2011

Max Petroleum Plc, an oil and gas exploration and development company focused on Kazakhstan, is pleased to announce today that the UTS-3 confirmation well in the Uytas Field has reached a total depth of 825 metres, with electric logs indicating a total of 31 metres of net oil pay in Cretaceous and Jurassic formations. This includes 17 metres of net oil pay in Cretaceous sandstone reservoirs at depths ranging from 120 to 150 metres, with porosities ranging from 25% to 34%. In addition, 14 metres of pay are indicated in Jurassic reservoirs at depths ranging from 422 to 509 metres. The Company will complete and test the well using a workover rig after obtaining the requisite governmental approvals. The Company plans to drill one additional appraisal well in the field during September 2011 and acquire a high-fold 3D seismic survey over the Uytas structure in October 2011, in order to facilitate preparation of a long-term appraisal and development programme for the field.

James A. Jeffs, Executive Co-Chairman, commented:

“The UTS-3 well was drilled approximately 50 metres lower structurally than the first two wells to help define regional oil water contacts in the field. Besides drilling a third successful well in Uytas with excellent reservoir quality, we are very encouraged to see that the Jurassic pay intervals in this down-dip well appear to be thicker than on the crest, indicating additional Jurassic potential in the field.”

Source



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Shtokman income tax rate in the Murmansk Region will be set at 13.5%

Monday, August 29th, 2011

in the course of the teleconference Mr. Dmitry Dmitrienko, Governor of the Murmansk Region and Mr. Alexei Zagorovskiy, Chief Executive Officer of the Shtokman Development AG (SDAG) discussed current issues of cooperation between SDAG and the Government of the Murmansk Region.

The parties have underlined the importance of state support of investment activities and modification of regional income tax and property tax laws. In compliance with adopted amendments, strategic projects the be realized in the region may be exempt from property tax, with regional income tax rate being 13.5%.

The decision of the Government of the Region to transfer land lots in Teriberka from reserve into industrial and other special purpose categories was also discussed during the teleconference. This decision will enable SDAG accelerating registration of its right to land lots to be allocated for construction of phase 1facilities and required infrastructure.

“Regional income tax reduction and transfer of land lots allocated for the Shtokman Project into industrial category will help SDAG further progress in assessing the Project economics and preparing onshore Design Engineering Documentation of the Shtokman Project. We highly appreciate support the Government of the Region has been rendering to SDAG, and we are confident that we will carry on such cooperation”, said Mr. Alexei Zagorovskiy, SDAG Chief Executive Officer.

“Establishment of favorable investment climate in the region is one of the principal aims of the activities of the Government of the Murmansk Region. Herewith, we give special attention to maintaining balance between economic attractiveness and social liabilities undertaken by the investor. We are encouraged that our negotiations with the Shtokman Development AG have contributed in developing unified position on the subject, which guarantees safeguarding interests of the Company, as well as of the residents of the Murmansk Region”, underlined Mr. Dmitry Dmitrienko

Source www.shtokman.ru/en/



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Exillon Energy Interim Results for the First Six Months of 2011 and Recent Drilling Update

Monday, August 29th, 2011

Exillon Energy plc, a British listed independent oil producer with assets in two oil-rich regions of northern Russia, Timan-Pechora and West Siberia, today issues its interim results for the first six months to 30 June 2011, and an update on recent drilling results. The financial and production data are for the period from 1 January 2011 to 30 June 2011 and all other information, including details on operations covers the period to 25 August 2011.

Group highlights

Financial – profitable and well-funded

· Net profit of $11.2 million for the first six months of 2011 compared to net loss of $8.7 million for the same period of 2010

· Strong balance sheet with $152.7 million of cash and cash equivalents as at 30 June 2011 with $48.5 million of debt

· New share issuance in April 2011 resulted in net cash proceeds of $146.1 million

· Total crude oil revenues amounted to $88.4 million, a y-o-y increase of 222%

Production – new record levels

· In June 2011, the Company reached a new record average monthly production level of 9,161 bbl/day, an increase of 37% over December 2010 level (6,686 bbl/day)

· In the first half of 2011, average production reached c. 7,860 bbl/day, an increase of 146% over the same period in 2010 (3,195 bbl/day)

Regional highlights

Exillon WS

· Successful drilling program continued; 15 wells drilled in 2011 (one exploration, three appraisal and eleven development wells)

· Acquired 250 sq.km of 3D seismic and 440 sq. km of gravimetric and magnetic data. Interpretation is underway

· Successfully completed the first stage of oil processing facility on the EWS II field

· Obtained regulatory approvals for construction of entry point to Transneft pipeline system; subcontractors have been appointed and construction has begun

· Average monthly oilproduction in June 2011 reached 5,880 bbl/day

Exillon TP

· Started construction of oil treatment unit. This will permit on-site preparation of 100% of produced volumes to commercial quality

· Infrastructure completed for water injection system: water well drilled and connected by 3.6 km high-pressure pipeline to an injection well (Well #1VV); water injection has started

· Average monthly oil production in June 2011 reached 3,281 bbl/day

Dear Shareholders,

The first six months of 2011 witnessed rapid growth at Exillon, with production increasing 146% compared to the equivalent period in 2010, and a net profit for the period of $11.2 million (in accordance with IFRS, this includes an element of foreign exchange translation gain). This growth was a result of continuing investment in our surface infrastructure and the ongoing success of our drilling programme. 15 wells have been drilled to date since January 2011 and extensive drilling program is underway for 2011 and 2012.

The company is well funded thanks to the support of its shareholders in the April 2011 placing, and we intend to continue our expansion in a rapid but prudent manner. We will continue to adapt carefully our drilling and other investment plans, as we develop our understanding of the characteristics of our oil fields. As production and revenue increase, our growing output will increasingly fund the cost of exploration.

The construction of our direct entry point to the Transneft pipeline at Exillon WS has been delayed from the second quarter to the fourth quarter of 2011. This was caused by the longer than expected time taken to obtain regulatory approvals for construction of the facility. All necessary approvals have now been obtained, and construction is underway. When completed, the entry point will significantly reduce our transportation costs at Exillon WS.

As a result of well completion issues, initial production from three wells on the EWS I field (#8, #38 and #371) did not meet our expectations because of problems with water intrusion. Remedial steps have been taken to repair these wells, and to minimise the chances of a recurrence. It is likely that our overall production by the end of 2011 will reach approximately 11,000 barrels per day, compared to 14,000 barrels per day as we had previously expected.

A review of our reserves and resources will be carried out later this year, overseen by our new Chief Geoscientist, John Krupa. This review will make use of the data collected by our 2011 drilling programme, as well as our newly acquired 3D seismic, gravimetic and magnetic data.

We have entered the second half of 2011 in a strong financial position and we see considerable potential for further profitable growth by continuing to increase production and enhancing our operational efficiency. We continue to make additional hires in Moscow, Urai and Usinsk to support the growth of our business, including significant appointments to our senior management and Board of Directors.

Mark Martin

Chief Executive Officer

MATERIAL EVENTS AND TRANSACTIONS

Drilling Update

Note: the following drilling update includes drilling results for one appraisal and four production wells that have been completed recently and haven’t been previously announced.

Exploration Drilling Programme

· Exploration well 4 (EWS-10274) was spudded on 8 May 2011 and was designed to test an area between the EWS I and EWS II fields. Preliminary results of wire logging confirmed the presence of 6.7 meters of effective net oil pay in the Jurassic formation and expanded the management’s understanding of the outline of the EWS fields in a manner which may support further reserve growth. The Group also studied the well deeper to a level of 2,620 meters but did not encounter hydrocarbons below the Jurassic formation. Analysis of the core results is continuing to assess the characteristics of the deeper horizons. The well is currently being prepared for production.

Appraisal Drilling Programme

· Appraisal well EWS II – 111, which was spudded on 2 July 2011, was drilled on the southern margin of the EWS II field as an off-structure flank position. The well was designed to test the presence of hydrocarbons on the southern margin of the EWS II field, and also to test a stratigraphic development concept. The well encountered Jurassic J2-4 formation with an effective net oil pay of 16.4 meters, which both increases the EWS II field area and suggests that further stratigraphic plays should be pursued in order to develop the field most efficiently.

The following appraisal results have been previously announced during the course of 2011:

· Appraisal Well 5 (Well 50P) – the well encountered 12.4 meters on net oil pay of the Jurassic P reservoir on a northern extension to the East EWS I field which contained pre-drill estimates of 13.3 million barrels of possible reserves.

· Appraisal Well 3 (Well 139) – successfully tested a western extension to the EWS II field by confirming the presence of 28.1 meters of effective net oil pay in an area that is currently mapped as a zero net pay zone.

Development Drilling Programme

Exillon WS drilled eleven wells in the period, extending a perfect drilling success rate to 29 wells since 2006. The development wells were drilled on a turnkey basis with an average drilling cost of $ 1.1 million.

The Group is pleased to announce successful completion of the following wells:

· The EWS I – 19 well, which was spudded on 8 May 2011, was drilled on the southern part of the EWS I field. The well encountered the Jurassic P reservoir at 1,938 meters, confirming the presence of 13.6 meters of effective net oil pay within the Jurassic. The well was drilled directionally 0.5 km north-west from the existing well-pad 4.The well will be used in a pilot water-injection program that will begin in Q3 2011.

· The EWS II – 142 well, which was spudded on 18 May 2011, was drilled on north-central part of EWS II field. The well encountered Jurassic J2-4 interval at 1,955 meters, confirming the presence of effective net oil pay of 10.9 meters within the Jurassic. The well was drilled directionally 0.85 km south-west from the existing well pad 2.

· The EWS I – 14 well, which was spudded on 27 May 2011, was drilled on the southern margin of the EWS I field. The well flowed water-free oil with a flow rate of 280 bbl/day. The well encountered Jurassic P formation at 1,821 meters, confirming effective net oil pay of 10.7 meters. The well was drilled directionally 1.4 km west from the existing well pad 4.

· The EWS I – 45 well, which was spudded on 8 June 2011, was drilled on the southern part of the East EWS I field. The well flowed oil at a rate of 550 bbl/day. The well encountered Jurassic P formation at 1,833 meters, confirming the presence of effective net oil pay of 16.2 meters within the Jurassic. The well was drilled directionally 0.8 km west of the existing well pad 32.

The following drilling results were previously announced during the course of 2011:

· The EWS I -16 well, which was spudded on 25 December 2010, was drilled on the northern extension of the EWS I field. The well flowed water-free oil with a flow rate of 370 bbl/day and was drilled in 19 days on a turn-key contract. The well reached target depth within the Jurassic P reservoir at 1,824 meters, confirming the presence of 16.6 meters of effective net oil pay within the Jurassic. In addition the well encountered 6.5 meters of effective net oil pay within the Pre-Jurassic at a depth of 1,869 meters, making the total effective net oil pay encountered by the well of 23.1 meters. The well was drilled directionally 1.0 km to the north from the existing well pad.

· The EWS I – 391 well, which was spudded on 25 December 2010, was drilled in 19 days on the north-western part of the East EWS I field. The well encountered the producing Jurassic P reservoir at 1,862 meters, confirming the presence of 4 meters of effective net oil pay. The well was drilled directionally 1.0 km to the north-west from the existing well pad 30, and will be connected to existing production facilities upon completion of testing.

· The EWS I – 38 well, which was spudded on 2 March 2011, was drilled in 17 days on the eastern part of the East EWS I field. The well encountered the producing Jurassic P reservoir at 1,858 meters, confirming the presence of at least 9.0 meters of effective net oil pay within the Jurassic. The well was drilled directionally 1.1 km to the north-east from the existing well pad. On completion of testing the well will be connected up to existing production facilities.

· The EWS I – 20 well, which was spudded on 13 April 2011, was drilled in 24 days on the eastern part of the East EWS I field. The well flowed water-free oil naturally to the surface with a flow rate of 625 bbl/day on an 8 mm choke. The well encountered the Jurassic P reservoir at 1,809 meters, confirming 14.6 meters of effective net oil pay within the Jurassic. The well was drilled directionally 0.9 km to the north-west from the existing well pad.

· The EWS I – 33 well, which was spudded on 20 March 2011, was drilled in 15 days on the eastern part of the East EWS I field. The well encountered the Jurassic P reservoir at 1,845 meters, confirming the presence of 7.5 meters of effective net oil pay within the Jurassic. The well was drilled directionally 0.5 km to the east from the existing well pad.

· The EWS I – 371 well, which was spudded on 5 April 2011, was drilled in 19 days on the eastern part of the East EWS I field. The well encountered the Jurassic P reservoir at 1,864 meters, confirming the presence of 13.8 meters of effective net oil pay within the Jurassic. The well was drilled directionally 1.5 km to the east from the existing well pad. On completion of testing the well will be connected up to existing production facilities.

· The EWS I – 36 well, which was spudded on 26 April 2011, was drilled in 21 days on the eastern part of the East EWS I field. The well encountered the Jurassic P reservoir at 1,849 meters, confirming the presence of 5.4 meters of net oil pay within the Jurassic. The well was drilled directionally 1.2 km to the south-east from the existing well pad. On completion of testing the well will be connected up to existing production facilities.

Production

· In June 2011, the Group reached a record monthly average production rate of 9,161 bbl/day, of which 3,281 bbl/day and 5,880 bbl/day were contributed by Exillon TP and Exillon WS, respectively.

· For the six months ending 30 June 2011, the Group achieved an average gross production rate of 7,860 bbl/day representing a 146% increase over production levels of 3,195 bbl/day for the comparable period in 2010.

· Total crude oil revenues amounted to $88.4 million, an increase of 222% over the comparable period in 2010 ($27.5 million). Exillon TP and Exillon WS generated crude oil revenues of $34.0 million and $54.4 million, respectively.

Placement of Shares

· The Group placed 23,438,000 new ordinary shares to institutional investors. The price per share was 400 pence, resulting in net proceeds to the Company of $ 146.1 million.

Prospecting Programme

The Group successfully completed its 2011 prospecting programme, which included:

· Acquisition of 250 square km of 3D seismic – results of seismic interpretation will be ready in Q4 2011

· Acquisition of 440 square km of gravimetric and magnetic survey – preliminary results of magnetic survey support the Group’s hypothesis that EWS II and EWS III fields are in communication

· Acquisition of 840 geochemical samples – results detected hydrocarbon shows in areas targeted by the Group

Board and senior management structure

In April 2011, Exillon appointed David Herbert as a Non-Executive Chairman of the Board. David has more than 20 years experience in investment banking, including most recently as Managing Director and Head of International Corporate Finance at ING Bank N.V. David also has considerable experience in the oil and gas industry, having worked for more than 10 years at BP, where he served in a variety of senior management positions.

In June 2011, Exillon appointed Mark Martin as Chief Executive Officer and Member of the Board of Directors. Mark has more than 20 years experience in investment banking. He has significant oil and gas experience, including in Central and Eastern Europe and the FSU, and has advised on numerous high-profile and successful M&A and capital raising initiatives on behalf of oil and gas clients in the region. Mark will be permanently based in Moscow.

Field infrastructure development

The Group has completed the following infrastructure projects during the reporting period:

· Construction of the first stage of oil processing facility on the EWS II field
· 18.7 km of electricity lines that will allow the Group to save on diesel costs upon installation of gas power generating units in Q3 2011
· 10.8 km of infield pipelines enabling production from isolated well pads

· 17.5 km of all season roads allowing for year-round access to major fields in Exillon WS

· Construction of well pads 2, 4, 32 and enlargement of well pads 1, 3 and 30 for further development drilling in Exillon WS

· Infrastructurefor a water injection system at Exillon TP: water well drilled and connected by a 3.6 km high-pressure pipeline to an injection well (Well #1VV)

In addition, the Group has obtained regulatory approvals for construction of entry point to the Transneft pipeline system; subcontractors have been appointed and construction has begun. The Group has also begun the construction of an oil treatment unit at Exillon TP, and is completing installation of gas power generators with 3MW capacity in Exillon WS.

FINANCIAL REVIEW

The interim condensed consolidated financial information of Exillon Energy plc for the six month period ended 30 June 2011 has been prepared in accordance with IAS 34 “Interim Financial Statements”. The condensed consolidated financial information and notes on pages 10 through to 27 should be read in conjunction with this review which has been included to assist in the understanding of the Group’s financial position at 30 June 2011.

Summary

The Group maintained a healthy financial position due to its issuance of new shares in 2011 and its increasing production volumes. In April 2011, the Group issued 23,438,000 of new shares with total gross proceeds of $153.4 million. Costs related to the issuance of new shares amounting to $7.3 million were recorded in the share premium account as directly attributable to the equity cost.

Income statement

The Group’s revenue for the six months ended 30 June 2011 comprised revenue from the sale of crude oil and amounted to $88.4 million (2010: $27.5 million), of which $52.5 million or 59% came from export sales and $35.9 million or 41% came from domestic sales. The increase in revenue was driven by the acceleration of production: a 7.7% increase to 563,104 bbl (2010: 522,660 bbl) in Exillon TP production following our well optimisation programme in the six months ended 30 June 2011 and a 1,317% increase to 860,172 bbl (2010: 60,712 bbl) in production of Exillon WS. The Group achieved an average oil price of $107/bbl (2010: $71/bbl) for export sales and $42/bbl (2010: $28/bbl) for domestic sales, reflecting the general increase in crude oil prices during the period.

Cost of sales, net of depreciation, depletion and amortisation increased to $35.5 million or 40% of the Group’s revenue (2010: $12.2 million or 44% of the Group’s revenue) due to an increase in production of 144% to 1,423,276 bbl (2010: 583,372 bbl).

The Group’s depreciation, depletion and amortisation costs primarily relate to the depreciation of proven and probable reserves and other production and non-production assets. These costs totalled $5.8 million (2010: $3.3 million) or 6.6% of the Group’s revenue (2010: 12%). The increase in DD&A costs is driven by higher production volumes.

Selling expenses for the six months ended 30 June 2011 were $36.5 million (2010: $13.1 million) or 41% of the Group’s revenue (2010: 48%), comprised of export duties of $27.5 million (2010: $10.3 million), which represented 52% of the Group’s export sales (2010: 53%); transportation services of $8.1 million (2010: $1.7 million); and other selling expenses of $0.9 million (2010: $1.1 million). Export duty rates increased from the beginning of the period by 40%, from $317.5 per tonne to $445.1 per tonne reflecting the increase in crude oil prices.

Administrative expenses totalled $8.7 million (2010: $7.0 million) amounting to 10% of the Group’s revenues (2010: 26%). The change is primarily attributable to an increase in salaries and consulting costs.

As a result of the above, the Group reported a profit after tax of $11.2 million compared to a loss of $8.7 million for the six months ended 30 June 2010.

It should be noted that – in accordance with IFRS – an element of foreign exchange gain has been included in the net income of the company resulting from the translation of foreign currency monetary items using the closing rate at the reporting date. A larger foreign exchange gain has been applied directly to the consolidated statement of financial position as the part of translation reserve being the result of the translation of a reporting entity’s net investment in the foreign operations.

Financial position

In April 2011, the Group issued 23,438,000 ordinary shares at a value of $146.1 million net of transaction fees to fund exploration and development activity. The cash proceeds will be used to finance drilling and infrastructure related projects in Exillon WS and Exillon TP. With the Group’s profit for the six months period of $11.2 million, the Group equity attributable to shareholders increased by $182.7 million (45%) to $590.7 million.

The Group ended the period in a strong financial position with $152.7 million of cash and cash equivalents (2010: $56.3 million) with outstanding borrowings of $48.5 million, equivalent to a net cash position of $104.2 million.

In May 2011, as part of its ongoing treasury and cash management operations, the Group purchased AAA-rated (S&P) Eurobonds issued by EBRD for a total consideration of $15.4 million. These bonds have a nominal value of RUR 410 million, annual coupon rate of 6.00%, and maturity date in February 2012.

The increase in the cost of property, plant and equipment has been driven by the drilling of wells and extensive field developments in Exillon WS, and by the strengthening of the Russian Rouble against the US Dollar.

Principal risks and uncertainties

The principal risks and uncertainties affecting the business activities of the Group are set out on pages 24 to 25 of the Directors’ Report section of the Annual Report for the year ended 31 December 2010, a copy of which is available on the Company’s website at www.exillonenergy.com. The Board continually assesses and monitors the key risks of the business. The principal risks and uncertainties that could have a material impact on the Group’s performance over the remainder of the financial year have not changed from those which are set out in the Group’s 2010 Annual Report.

In accordance with DRT 4.2.7, we summarise below the principal risks that could have a material impact on our business for the remaining six months of the year:

· The Group may be adversely affected by a substantial or extended decline in the prices for crude oil.

· The Group’s business depends on exploration and production licences issued by the Russian authorities, which could be suspended, restricted, terminated or not extended.

· Leases relating to some of the Group’s oil wells have expired, which may result in a potential inability to operate these wells.

· Fluctuations in currency exchange rates may materially and adversely affect the Group’s financial results and condition.

· The Group relies on the services of third party providers.

· Most of the crude oil produced by the Group is transported via a single pipeline system operated by an external provider.

· The Group could be subject to claims and liabilities under environmental, health, safety and other laws and regulations.

· The Group faces drilling, exploration and production risks,which may prevent it from realising profits and may result in substantial losses.

· The Group does not carry the types of insurance normally carried by a business of its size and nature.

· The Company will be subject to restrictions on foreign ownership in future.

· There are high levels of inflation in Russia.

· Russian tax law and practice are not fully developed and are subject to frequent changes.

Source www.exillonenergy.com



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Baker Hughes Consolidates Consulting Services under Gaffney, Cline & Associates

Monday, August 29th, 2011

Baker Hughes announced today the consolidation of its consulting services into Gaffney, Cline & Associates.

Baker Hughes acquired several consulting companies – including Gaffney, Cline & Associates, EPIC and the consulting division of Helix RDS – in 2008 and 2009. The new organization brings together approximately 300 consultants, working in all oil and gas industry sectors. GeoMechanics International, also acquired in 2008, is now part of the newly organized Baker Hughes subsurface integrity and evaluation group and the former GeoMechanics International consulting operations will remain under that umbrella.

With nearly 50 years of experience, Gaffney, Cline & Associates provides impartial technical, commercial and strategic solutions across the entire upstream, midstream and downstream sectors. The expanded group brings additional technical skills for the complete field lifecycle from exploration to abandonment, along with expertise from Canada’s heavy oil sector and in enhanced oil recovery. The consolidated Gaffney, Cline & Associates works for clients ranging from national and international oil companies, governments, financial institutions and petroleum services and support companies from offices in North America, Latin America, the UK, Asia Pacific, Russia, Kazakhstan and the Middle East.

“The combined expertise of what is now a very substantial global consultancy allows us to offer a broad portfolio of services to our clients,” says John Harris, president of Reservoir Development Services for Baker Hughes. “Plus, our consulting group’s relationship with Baker Hughes means we can offer, when appropriate, a complete service package ranging from field development planning, execution and operational management with the full breadth of Baker Hughes products and services.”

Source www.bakerhughes.com



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West Mailisu 2 Swabbing Equipment Delay

Monday, August 29th, 2011

Caspian Oil & Gas Limited reports that after perforating Bed III with a shot over the interval 1785-1795.5m progress on its West Mailisu #2 well has been slowed by the unavailability of equipment.

The West Mailisu #2 well is on Caspian’s 100%-owned West Mailisu licence in the Kyrgyz Republic, Central Asia.

The perforating was completed with a water cushion of approximately 1450m as a safety measure. A small
amount of movement in the fluid height in the well bore was observed on perforation and some oil was
recovered on the drill pipe which had been run into the hole as a kill string.

Originally, it was planned to blow the fluid from the hole using compressed air but the service provider’s
compressor experienced mechanical problems. Pending resolution of the compressor issues it will be
necessary to remove the fluid from the hole by swabbing. While delays occurred in obtaining suitable
swabbing equipment, it is hoped this activity can be completed in the next few days

source www.caspianogl.com



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Eurasia Drilling Financial Results

Thursday, August 25th, 2011

Eurasia Drilling Company Limited, the leading onshore and offshore drilling service provider in the CIS, today released its Interim Consolidated Financial Results, prepared in accordance with US GAAP, for the six month period ended June 30, 2011.

The reviewed 2011 Interim Consolidated Financial Statements for the six months ended June 30, 2011, and the Management Report on 2011 Interim Period Results, can be found under the following link:

http://www.eurasiadrilling.com/financial_information.html

1H 2011 FINANCIAL HIGHLIGHTS:

  • Top line revenue was US$ 1,265 million for the 2011 Interim period, up 47% compared to US$ 862 million earned during the corresponding period of 2010;
  • EBITDA was US$ 267 million for the 2011 Interim period, up 29% compared to US$ 206 million earned during the corresponding period of 2010;
  • EBITDA margin was 21.1% for the 2011 Interim period, which is below the EBITDA margin for the same period in 2010, which was 23.9%;
  • Net Income was US$ 151 million for the 2011 Interim period, up 44% compared to US$ 105 million earned during the 2010 Interim Period;
  • We paid dividends for the year ended December 31, 2010 in the amount of $ 0.31 per share;
  • Capital expenditures for property, plant and equipment for the six months ended June 30, 2011 were US$ 215 million compared to US$ 119 million for the corresponding period of 2010;

Mr. W. Richard Anderson, EDC’s Chief Financial Officer, commented,
“We are delighted to have delivered such strong results with significant increases in revenues, EBITDA, net income and EPS. This reflects our leading position in the high growth Russian market where we deliver enhanced service and production efficiency.  Although it involves higher levels of joint development with external partners, which affects EBITDA margins, the successful development of our horizontal drilling business provides an important strategic growth opportunity. We are delivering an excellent level of growth across our operations and we are, therefore, optimistic for the rest of the year and committed to delivering strong results in line with our expectations. “

1H 2011 OPERATIONAL HIGHLIGHTS:

  • • Drilling output for the 2011 Interim Period was 2.325 million meters, 18% above the output achieved in the same period of 2010, which was 1.975 million meters;
  • In April 2011 we completed the transaction with Schlumberger to exchange assets and to enter into a Strategic Alliance in the CIS;
  • Drilling assets acquired from Schlumberger contributed 8 percentage points to the growth of our drilling volumes during the 2011 Interim period;
  • Horizontal meters drilled during the first six months of 2011 more than doubled compared to the corresponding period of 2010 and amounted to 365 thousand meters;
  • Exploration drilling volumes were up 9% during the Interim period of 2011 compared to the corresponding period of 2010;
  • Reduced our reliance on our largest customer during the first six months of 2011 with its share comprising 54% of our total drilling volumes compared to 60% in the corresponding period of 2010;
  • Construction of new jack-up drilling rig by Lamprell to be used in our Caspian Sea operations continues on schedule;
  • Our ASTRA jack-up rig was fully employed in Kazakh and Russian waters of the Caspian Sea; two wells were drilled;
  • Our Trident 20 jack-up rig drilled one exploration well and performed one sidetrack operation for our client, Petronas Carigali, in Turkmen waters of the Caspian Sea;
  • Continued operations on LUKOIL’s Yu. Korchagin field platform in the Caspian Sea, drilling three horizontal development wells;

Dr. Alexander Djaparidze, EDC’s Chief Executive Officer, added,
“The Russian onshore drilling market continues its rapid growth with 11% higher drilling volumes in the first half of 2011 compared to the same period in 2010. EDC is outpacing the market, showing 18% growth. In the offshore business the addition of the Trident 20 jack-up rig and a good performance from our existing operations combined to double revenue in the segment during the period. EDC is uniquely positioned through its size, its cooperation with Schlumberger and financial strength, to support our customers in achieving their goals. This will become especially important as we enter the new tendering season for 2012. We will continue to follow our strategy of international expansion, pursuing value adding acquisitions where appropriate.”



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