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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (879)	12/10/1998 10:53:00 AM
From: Tomas	Respond to of 2742

Falkland Islands News Network: The Time For Assessment Begins Borgny Dolphin Moves Off To Tierra Del Fuego By J. Brock, December 8 Now that Shell have completed their exploratory drilling in the North Falklands Basin and Borgny Dolphin has moved to Tierra Del Fuego to drill a shallow well for the French Oil Company, Total, it is time for the data from all six of the Basin's exploratory to be analysed. The information came fast and furious and there was time only to do a rough analysis which gave investors a basic idea of what could be in the Basin, however, it will take several years to work with the data that has been gathered and the true results won't be known until after the turn of the century. But, why give up after only six exploratory wells? On Monday, 07 December the reason became all too clear when the price of Brent Crude went below $10.00 per barrel. During the decline of the price per barrel for crude Shell closed its London Offices and now Lasmo has laid off 600 workers. Both oil companies have done exploratory drilling in the North Falklands Basin. Smaller oil companies have stopped exploratory drilling as there is not enough in the budget to use in a high risk area. If they do any exploratory drilling at all, the expense of logistics will have to fall and the price per barrel must rise. Add to this, decreasing the risk of finding anything. In the North Falklands Basin the price per barrel needs to be at least $15.00 to attract the larger oil companies back again. For the smaller companies that price needs to be from $18.00 to $20.00 to offset the risks. Given the thus-far warmer conditions in the Northern Hemisphere this Winter, it looks as if the demand for oil is not going to exhaust supplies. This is one factor that keeps the price of oil at historic lows. On the brighter side, Borgny Dolphin is still in the South-West Atlantic and should Desire wish to do any exploratory drilling, they will not have the expense of bringing a rig from the Northern Hemisphere. Hopefully the rig can be kept busy here so that the data collected can be taken advantage of. Who knows, Desire might, should they decide to do an exploratory well, strike something in commercial quantities. There have only been six exploratory wells drilled in the North Falklands Basin and the fact that hydrocarbons are indicated in those exploratory drills is a very encouraging sign for the future. After all, there were more wells drilled in the North Sea before any hydrocarbons at all were found and it was dozens of further drills to find anything in commercial quantities. We should not throw in the towel after only six exploratory wells. Smaller companies are urged to have patience and not to get any money together until economic conditions, including the price of oil per barrel improve. What is the sense of extracting the oil if you lose money on each barrel. If there is data showing oil in commercial quantities that at the time is not profitable to extract then the larger operators will come back to it when financial indications are right. Those smaller companies, if they have spent their exploratory money, run the risk of great losses. Again, it is not the consortia of smaller companies that will make it big given those circumstances. It is paramount about the correct analysis of the data from the exploratory wells already drilled. If anything, during this downwardly fluctuating financial climate, invest in more seismic work and/or improvements on technology that already exists. This will benefit the industry as a whole and in future make exploration a more financially viable prospect. It takes a while to work on the data anyway, so there is time to do necessary thinking about the way forward. Pounce, yes, but at the proper time and with the implements that you need. The North Falklands Basin has the potential for oil in commercial quantities. It is the investors that are needed to keep the faith alive and, naturally the money, flowing in the right directions. Now is the time for waiting and analysing and planning for the next exploratory session. sartma.com

To: Tommaso who wrote (879)	12/15/1998 11:08:00 PM
From: Tomas	Respond to of 2742

The Falklands: All Important Price Per Barrel Of Crude Will Determine The Future of Oil Exploration By J. Brock, Falkland Islands News Network December 15 With the announcement that Royal Dutch Shell and its British subsidiary lost £ 2.5 Billion in the last three months as a result of falling oil prices and the domino effect those prices have had on other major and minor players in the Oil Biz, it is no wonder that the hydrocarbons industry is treading on thin financial ice. Survival plans for the industry include lay-offs and selling of assets. Shell announced 4,000 redundancies on Monday afternoon and by next Monday there may be more. Lasmo, two weeks ago, announced 600 lay-offs. Oil companies are merging together. EXXON and Mobil are the latest to announce their marriages of convenience. But what of the price of crude? Before the first noticeable oil crisis in the early '70s the price of crude was around $4.00 per barrel. That crisis shoved the price per barrel up to the prices that we are used to today. During the past ten years the price peaked at $35.00 during the Gulf War and now it is below $10.00 per barrel. When interviewed by the BBC Derek Marnoch, MBE, President of the Aberdeen Chamber of Commerce said, "The indications are not so much for the on-going activity because the existing fields are producing enough to be serviced and maintained. But, more importantly, for the next generation of fields, with the price this low, it makes it more attractive for operators to go elsewhere in the world." One third of Aberdeen's work force are employed in the oil industry and with the current trends it may take a few years before things get back to normal. What Derek Marnoch said can be echoed around the world and in all probability the words "will look elsewhere" should be interpreted as "we are considering freezing our exploration budget." To be viable, any exploration budget must be supported by a correspondingly high price per barrel of crude. When the prices are at historic lows, there is a correspondingly quick exit from exploring altogether. Experts say that fourteen dollars a barrel is the cut-off price for economically viable oil exploration in the North Falklands Basin. Preferably the price should be eighteen to twenty dollars per barrel to make exploration budgets comfortable and to encourage companies to complete the search for the oil many experts predict is in the North Falklands Basin. At any rate, the volumes of data that have been collected from the area thus far must be analysed and worked. This could take up the slack of those few years while the price of oil per barrel stabilises and rises to an appropriate level. At the appropriate time, with the correct data, Geologists will better be able to say where any exploratory rig can be placed for the best results. So far, our timing has been spot on and, with any luck at all, the next exploration phase will have the added incentive of a rising oil price per barrel to go ahead. Note: Derek Marnoch visited the Falklands in 1996 with the Aberdeen Chamber of Commerce. sartma.com