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June 2014
Greetings from StratoChem!

With June's arrival, the summer is finally here, and it's looking to be a busy one.  Drilling is picking up here in Egypt and abroad, and there's more demand than ever for our geochemical analyses.  Representatives of StratoChem will be at the Rocky Mountain Association of Geologists sectional meeting in Denver from July 20-22, and we'll be exhibiting at the Unconventional Resources & Technologies Conference from August 25th-27th, 2014 (also in Denver).  And of course, wherever you happen to be working, we're here to support your upstream endeavors.

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Industry News
Egypt Flag FlatApache Corporation Makes Discoveries in Egypt Again
May 9th, 2014

Apache Corporation has made yet two other hydrocarbon discoveries - Herunefer-1X and BAT-1X - in Egypt's Western Desert.


The Herunefer-1X discovery, located in the Matruh Basin in the eastern portion of Khalda Offset Concession, encountered pay in the Alamein, Alam El Buieb-6 (AEB), Masajid, Upper Safa and Lower Safa formations. Tests from the Lower Safa and Upper Safa intervals flowed at a combined rate of 1.38mn cubic metres of gas and 7,700 barrels of condensate per day. The estimated cost to drill and complete the well was US$6mn, the company said.


The BAT-1X discovery, located in the northern Shushan Basin in the Khepri-Sethos Development Lease, tested at a rate of 877,822 cubic metres of gas and 390 barrels of condensate per day from a thick Paleozoic Shiffah sandstone interval. The well, which was drilled to a total depth of 4,741 metres, also encountered pay in the Cretaceous Upper Bahariya, Lower Bahariya, Alamein, AEB-3C and AEB-3D formations. The estimated cost to drill and complete the well was US$5.25mn.

Both discoveries were drilled by Khalda Petroleum Company, an Apache Corporation-operated joint venture with the Egyptian General Petroleum Company.


The company operates in Egypt in partnership with Sinopec International Petroleum Exploration and Production Corporation, which owns a one-third minority interest in Apache's Egypt oil and gas business.


Thomas M. Maher, Apache Corporation's region vice-president and general manager in Egypt, said, "Herunefer-1X is the first of a series of exploration wells planned for the Matruh Basin area this year.


"The basin remains an attractive focus area for exploration and development and has been relatively under-explored. We have identified a number of untested structural features, and trends have been mapped and identified, with the potential for stacked targets and high-condensate-yield gas objectives."


Apache Corporation said that it plans to construct a new 14km pipeline that will connect to the existing transportation grid at the Jade area manifold. From Jade, the production can be delivered to either the Salam or Tarek gas plants, it added.


Maher added that BAT-1X is a potentially large discovery and the latest in Apache Corporation's pursuit of stratigraphic traps and Paleozoic subcrop plays. "Our understanding of this play concept has evolved since the 2007 Hydra Field discovery. We now recognize that these traps and subcrop plays were key geologic elements in more than 20 previous Western Desert field discoveries."


According to company sources, it plans to drill several trend exploration wells in 2014 to evaluate and appraise the BAT discovery.


Meanwhile, additional production facilities were installed at the Hydra Field during Q1 2014. The field is currently producing 5mn cubic metres of gas and 8,600 barrels of condensate per day from six wells.

Egypt Flag Flat Egypt: Nile Delta Natural Gas Well Starts Production
May 9th, 2014

Germany's oil and gas exploration and production firm RWE Dea Egypt has launched production at a fourth natural gas North West Khilala well (NWK1-4), located in the Nile Delta region, the Ministry of Petroleum said Friday.


"We are pleased that the NWK field has now reached its production target of 60 million standard cubic feet of gas per day, in line with our initial expectations," General Manager of RWE Dea Egypt Maximilian Fellner said in the statement.

Drilling of the well, which is part of the larger NWK field, was successfully concluded in March, the company said, and it is set to produce about 450,000 standard cubic metres of gas per day.


Through the new well, RWE Dea Egypt has reached its production target from the Disouq natural gas project in northern Egypt, the statement from the ministry added.


The Disouq natural gas project, which is operated by the German firm, had planned to include the development of seven gas fields. Currently, there are already three other wells on stream in the Nile Delta.


In the first phase of the project, the expected production is approximately 430bn standard cubic feet of gas from the seven gas fields, along with the Egyptian Natural Gas Holding Company (EGAS) and the Suez Oil Company (SUCO).

RWE Dea Egypt has been operating successfully in Egypt since 1974. The company has a total of 10 onshore and offshore concessions in Egypt over an area of about 3,700 square kilometres.


Egypt's natural gas production in December 2013 slumped by 11.86%, recording 3,353 tonnes, the Information and Decision Support Centre (IDSC) said in a recent report.


About 24.1% of total investments in Egypt were directed towards the oil and gas sector in fiscal year 2012/2013, according to the Ministry of Planning.


In an effort to increase the country's oil and gas production, Minister of Petroleum Sherif Ismail signed in March three separate $717m agreements with British and Canadian firms for oil and natural gas exploration in the Mediterranean and Nile Delta regions.

Egypt Flag Flat Egypt: BG to Pump $1.5bn in Second Half of 2014
May 12th, 2014

The UK's third largest oil and gas producer British Gas Group (BG) plans to invest $1.5bn in Egypt in the second half of 2014 (2H 2014) in order to increase its natural gas production, a Sunday statement from the cabinet said.


The announcement was made during a Sunday meeting between interim Prime Minister Ibrahim Mehleb and representatives of BG, and was attended by Minister of Petroleum Sherif Ismail.


BG's natural gas production is expected to "gradually" increase to record 500m cubic feet of gas per day, which the company said will have a positive effect in meeting the domestic demands of the Egyptian market.


BG said in January that its 2014 and 2015 production would be negatively affected by the turmoil in Egypt. Blaming a disruption in Egypt's exports, the British firm reported its first quarterly loss since 2000.


During the meeting, Mehleb called for paying BG the debt owed by Egypt, which recorded three years in arrears.

Egypt's debt to foreign oil companies increased to approximately $6bn, from $5.7bn in March, said Khaled Abdel Badie, president of the Egyptian Natural Gas Holding Company (EGAS) in May, promising the payment of approximately $1bn over the next two months.


After the January 2011 revolution, Egypt has been delaying payments to foreign oil and gas firms due to a decline in international foreign reserves. By the end of 2012, BG was owed $1.3bn from Egypt, according to Reuters.


Some foreign oil companies have reduced their investments in Egypt, causing the average production to record 5.1bn cubic feet per day, and the crude oil average to register 690,000 barrels per day, down from 5.7bn cubic feet of gas per day and 695,000 barrels of crude oil as of 2010, Abdel Badie added.

The country's natural gas production had slumped in December by 11.86%, recording 3,353 tonnes, according to the state-owned Information and Decision Support Centre (IDSC).


With the aim of boosting Egypt's oil and gas production, Minister of Petroleum Sherif Ismail signed in March three separate $717m agreements with British and Canadian firms for oil and natural gas exploration in the Mediterranean and Nile Delta regions.

US: Encana to Double Oil Output with $3.1bn U.S. Shale Deal
May 7th, 2014


TORONTO, May 7 (Reuters) - Encana Corp, Canada's largest natural gas company, said on Wednesday it is buying producing assets in the Eagle Ford shale field in Texas from Freeport-McMoRan Copper & Gold for $3.1 billion, nearly doubling its oil output and boosting its shares by as much as 6.2 percent.


The purchase adds another core region to the five shale fields Encana is concentrating spending on as it restructures its operations away from low-value natural gas to concentrate on valuable crude and natural gas liquids.


"Gaining a position in a world class, oil-rich resource play like the Eagle Ford accelerates the transition of our portfolio and underscores our investment focus on high margin assets" Encana Chief Executive Doug Suttles, said in a statement.


Encana shares were up C$1.14 to C$25.70 by early afternoon on the Toronto Stock Exchange after earlier touching C$26.08.

The acquisition is Suttles' first major purchase since the former BP Plc executive arrived at the Calgary-based Encana last June with a mandate to reshape a company that had endured a series of strategic missteps that had it relying on natural gas from wide flung operations throughout North America.


Suttles has begun selling off surplus properties, shedding its stake in Wyoming's Jonah gas field in March for $1.8 billion and late last month selling east Texas gas lands for $530 million.

Encana said the Eagle Ford assets offer a large contiguous land position in the core of the play, fitting well with Encana's technical expertise in developing resource plays.


Canaccord Genuity analyst Phil Skolnick said he views the transaction as positive for Encana, as the deal will boost cash flows for the company.


The deal will give Encana 45,500 net acres in Karnes, Wilson and Atascosa counties in south Texas. The properties produced the equivalent of about 53,000 barrels of oil per day in the first quarter, the company said.


The acquisition is expected to close by the end of the second quarter.

China Oil Rig Finishes First Phase of Drilling in Waters Claimed by Vietnam
May 27th, 2014

A giant Chinese oil rig has finished its first round of drilling in South China Sea waters also claimed by Vietnam and moved to another site in the area, the rig's operator, China Oilfield Services Ltd (COSL), said on Tuesday.

In a statement, COSL said exploration would still take place off the Xisha islands, China's name for the disputed Paracel chain, suggesting the rig was not moving far.


In early May, the rig was deployed between the Paracel islands and the Vietnamese coast, sparking deadly anti-China riots in Vietnam and protests from the government in Hanoi.


The rig had "smoothly" completed the first phase of its work said COSL, the oil service arm of state-run China National Offshore Oil Company (CNOOC) Group, which owns the $1 billion platform.


COSL said it had obtained relevant geological data from the drilling, but did not give details or specify the current location of the rig.


Neither officials from COSL nor CNOOC Group could be reached for comment.


In line with previous statements, COSL said drilling was on track to be completed by mid-August.


Vietnam has said the rig is in its 200-nautical mile exclusive economic zone and on its continental shelf. China - which claims almost the entire South China Sea - says the rig is operating within its waters.


(Reporting by Charlie Zhu in HONG KONG, Fiona Li in BEIJING and Nguyen Phuong Linh in HANOI; Editing by Dean Yates)

In This Issue
Upcoming Events

6/2 - Annual Unconventional Gas & Oil - London, UK

6/10 - SPE Exploration & Development in Unconventional Reservoirs Symposium - Neuquen, Argentina

6/11 - Tight & Shale Gas Summit - Edinburgh, UK

6/16 - Annual Oil & Gas Summit - Beirut, Lebanon
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