Cairn India Ltd. makes a new find
The oil and gas major announced it made a new oil and gas discovery near the Raageshwari oil field in its Rajasthan block.
This is the latest of several oil and gas discoveries Cairn has made in its Rajasthan block, The Times of India reported. The successful testing of the well follows the Mangala, Bhagyam and Aishwariya wells, which are all in the first phase of development and on track to produce 175,000 barrels per day of crude oil later next year.
"The discovery is located approximately 1.5 kilometers east of the Raageshwari 1 well in the southern part of the Mangala, Aishwariya, Raageshwari and Saraswati development areas," Cairn said in a statement. "The adjacent Raageshwari field is commercial and has an approved field development plan."
The well was first dug on Nov. 21 and reached its current depth on Nov. 24. Cairn Chief Executive Officer Rahul Dhir said the wells in Cairn's block have been dug successfully using a new trapping style that produces a reservoir and a deeper oil column.
Cairn will go on to study more specifically the reserves its new well might hold and do cost-evaluation and feasibility studies to see if it will be worth developing.
BHP Billiton Petroleum moves into the Philippines
The Australian oil giant announced it has agreed to take a 60 percent stake in Otto Energy's deepwater ground.
Otto said in a statement that if BHP agreed to complete a seismic study and the work on two exploration wells off the island of Palawan, then it could have a majority stake and management of the exploration block, The Australian reported.
BHP agreed and is likely to spend more than $100 million completing the necessary work. The seismic study is estimated at $20 million, and the deepwater drilling is estimated at between $50 million and $100 million.
"BHP Billiton's interest is a strong endorsement of our belief in the petroleum potential of the Philippines," said Alex Parks, Otto's chief executive.
Otto's shares rebounded on the news but are still down from this year's high in May.
BHP Billiton confirmed the agreement but declined to give any more information.
The seismic surveys are expected to be done by next year, and drilling will be done in 2010.
Oil rises on OPEC promises
After last week's meeting of the Organization of Petroleum Exporting Countries, at which members agreed to cut their oil production by 2 million barrels per day, investors were not impressed, the Financial Times reported.
The cuts were announced in an effort to drive oil prices up, but analysts weary of OPEC's ability to deliver kept prices falling.
But OPEC President and Algerian Oil Minister Chakib Khelil has said he does not expect oil prices to fall further and already has made mention of additional cuts, possibly in March.
Khelil and Abdalla El-Badri, OPEC secretary-general, said all of their members will implement the current cuts.
"Everybody will comply," El-Badri said.
Compliance with the 1.5 million barrels a day cut announced in November was about 60 percent, but El-Badri said he was expecting between 85 percent and 90 percent compliance this time.
"If it does not manage to get output down to at least 30 million barrels per day in January, the dire downside predictions (of oil falling to $25 a barrel) could be realized," said Lawrence Eagles, head of commodities research at JPMorgan.
Closing oil prices, Dec. 22, 3 p.m., London
Brent Crude oil: $40.42
West Texas Intermediate crude oil: $34.26