Category Archives: Offshore

What happened

Shares of independent oil and gas producer W&T Offshore (NYSE:WTI) jumped by as much as 16.8% in trading Thursday after the company reported fourth-quarter 2016 earnings after the close Wednesday. As of 1:56 p.m. EST, shares were up 14.9% on the day.

Revenue rose 10.7% to $115.2 million and the company swung from a net loss of $51.6 million to net income of $16.5 million, or $0.12 per share. On an adjusted basis, which pulls out one-time items, that was much better than the $0.13 loss analysts were expecting.

Costs were down as lease operating expenses fell from $49.3 million a year ago to $33.8 million. Overall, expenses dropped 43.1% to $93.9 million, leading to the much better financial results.

W&T Offshore's focus on cutting costs is starting to pay off, and rising oil prices are starting to help it as well.

Image source: Getty Images.

Fourth-quarter oil prices released were up 21.9% from a year ago to $45.10, much higher than the $37.35 realized for the full year. Given its lower cost structure and the support crude oil prices have in the market right now, I think the future looks bright for W&T Offshore.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Why Shares of W&T Offshore Inc. Popped Almost 17% Today - Motley Fool

South Africas land is known for its resources such as platinum, gold, diamonds, copper and coal. But its waters may be hiding future giant oil and gas discoveries potentially capable of changing the countrys power generation mix by reducing its use of coal.

Dr. Anongporn Intawong, Team Leader Geoscientist at seismic surveys provider Spectrum, believes there could be a giant future discovery off South Africas coast. Intawong delivered a presentation Future giant discovery in the Outeniqua Basin, offshore South Africa at Finding Petroleums event Finding East & Southern African Oil & Gas in London last week.

What we are seeing is that [there] might be a future giant discovery in this basin, Intawong said at the event, reports Rigzone, whose assistant European editor Andreas Exarheas tweeted a photo from the presentation.

Spectrums Intawong did not quantify the size of possible future discoveries, but reminded the audience that previous discoveries in Outeniqua Basin have yielded recoverable reserves of up to 314 million barrels of oil equivalent.

The potential giant discoveries could help South Africa boost its gas-to-power program to reduce reliance on coal-fired power generation.

Although many companies, including majors ExxonMobil and Total SA, have acquired rights to explore offshore South Africa, uncertainties over pending legislation remain. These uncertainties are a major deterrent to active exploration drilling, which is already struggling from the oil price crash and the difficult conditions for drilling in the area. Related:Geopolitical Time Bomb: Chaos In Somaliland Could Trigger Regional Conflict

According to Spectrums Intawong at last weeks event Rigzone reports - South Africas new laws on regulating the petroleum industry are expected to be passed in the middle of this year.

South Africa has been planning to separate the oil and gas regulations from the current Mineral and Petroleum Resources Development Act, with an upstream gas bill that would govern exploration and gas concessions, and a gas amendment bill that would regulate the midstream part of the gas value chain.

The bill is still being debated at various legislation levels, and international companies are probably waiting to see a final adopted law before committing more investments into exploration.

Theres a lot of prospective offshore acreage in South Africa, Alasdair Reid, research analyst, S&E Africa Research, Upstream Oil & Gas, at Wood Mackenzie, told Offshore Engineer at the end of last year. Most of the big players are in there. But, until the regulatory environment is resolved, were not going to see much exploration activity, Reid noted.

But in the longer term, South Africas offshore would be interesting, he said, adding that the country has a strong supply base because it often serves as a rigs base.

Until exploration activity picks up, South Africa is investing in LNG infrastructure at ports to produce electricity and help reduce coal dependence. Related:Panic In Vienna: OPEC Needs To Bring Down Costs To Compete With U.S. Shale

According to the U.S. Energy Information Administration, more than 85 percent of South Africas installed electric generating capacity is powered by coal. Despite the fact that South Africas government seeks to diversify the power-generation mix with more renewables, chronic power shortages, coupled with the economic advantage of coal-fired generation, suggest that coal will continue growing as a primary source of energy supply, the EIA reckons.

Apart from potential giant offshore discoveries, South Africa has shale gas resources. EIA has estimated that the country holds 390 trillion cubic feet (Tcf) of technically recoverable shale gas resources, located in the Karoo basin in the Whitehill (211 Tcf), Prince Albert (96 Tcf), and Collingham (82 Tcf) formations.

But South Africa has yet to award licenses for shale gas exploration, and considering how controversial shale exploration usually is, the potential giant offshore discoveries could be a more certain bet for international companies once the legislation picture becomes clear.

By Tsvetana Paraskova for Oilprice.com

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South Africa: The Next Hot Spot For Offshore Oil Exploration - OilPrice.com

When it comes to renewable energy, theres a new kid on the block and hes making lots of new friends quickly. Were talking of course, aboutoffshore wind. While once resisted as too expensive and too unsightly, the technology finally has found its sea legs and is really making a splash.

Europe is where most of the activity has been. It started withVindeby, the worlds first offshore wind farm, off the Danish coast. Vindeby, commissioned in 1991, has 11 turbines, with a combined capacity of 4.95 MW.

Thats significantly less than the output of just one of 32 8 MW turbines that Danish-based Dong Energy is installing at theBurbo Bank Extension (PDF)wind farm off the English west coast near Liverpool. Dong, which also operates Vindeby, has 3,000 MW of offshore wind online, and plans to grow that to 6,500 MW by 2020. Their 21 existing facilities are off the coasts of Denmark, the Netherlands and the U.K. Dong, which both builds and operates these wind farms, is one of a growing number of players in this market.

Better known perhaps, are the turbine manufacturers.Vestas, the Danish turbine maker, has formed a joint venture withMitsubishi Heavy Industriesof Japan, to compete withSiemens, the longstanding frontrunner.General Electricis getting into the game as well, along with a number of Chinese manufacturers.

Here are some reasons why offshore wind makes sense. First, it overcomes most of the not-in-my-back-yard (NIMBY) concerns about visual pollution and noise, although there has been resistance from certain upscale seaside communities, notably theCape Windproject in Nantucket Sound, and Donald Trumps lawsuit attempting to block a wind farm off the coast of Scotland, near a golf course he owns. (AlthoughTrump lost, Cape Wind is apparently "dead in the water.")

Winds at sea blow more consistently and with less obstruction than winds traveling across the land.

Second, wind speeds increase the higher you get off the ground. For that reason, larger turbines, with blades that reach hundreds of feet into the air, capture more energy than smaller turbines. This factor also combines with the previous one, as the larger the turbines, the more objectionable they tend to be. This is not an issue when they are far out at sea. (Of course, they generally arent that far out because its easier to plant them in shallow waters, not to mention the length of undersea cable required.) Also, a substantial portion of most countries' population lives near the sea.

Finally,winds at seablow more consistently and with less obstruction than winds traveling across the land. Thats why hurricanes lose strength when they make landfall.

Still, until recently, costs were too high, and there was plenty of low-hanging fruit with less costly land-based turbines.

But as builders have come up the learning curve on how to anchor the turbines to the seabed more cost-effectively, and manufacturers have come out with new turbines that are both larger and more efficient, that equation is changing. Just since 2014, the cost of offshore wind has dropped from $166 per megawatt-hour to $82.

According to a recent piece inthe Guardian, electricity from offshore wind will be less expensive than that produced by a new wave of nuclear plants currently being built. According to Hugh McNeal, a career civil servant who last year joined RenewableUK from the former Department of Energy and Climate Change, "I dont think theres any doubt about the political commitment of any party, apart from perhaps UKIP, to offshore wind. I think its got an incredibly healthy future."

At present, there is only one wind farm, the Block Island Wind Farm, off the coast of Rhode Island, that just came online last year.

The future beyond that is clearly an unknown given President Trumps infatuation with fossil fuels.

However, a group of20 governorsfrom both red and blue states recently sent aletterto the president asking him to support wind and solar. On the question of offshore wind, the letter stated:

The Department of Energys 2015 Wind Vision Report predicted that our countrys offshore wind resources could support the installation of 22 GW of new wind by 2030 and 86 GW by 2050. If we capitalized on that potential, a new American offshore wind industry could create thousands of jobs in research and development, engineering, manufacturing, marine construction and other sectors.

Given its location, offshore wind presents greater development challenges than onshore wind, resulting in longer construction times and higher initial costs. In addition, most of the nations best offshore wind resources are found in federal waters requiring federal permits and other logistic efforts that can add years to the construction timeline.

Because of these offshore development challenges, different tax incentives, infrastructure investments, and research are needed for offshore wind projects to be successful. Understanding this, the governors recently informed Congressional leadership that the nations offshore wind industry cannot grow without specific federal policy foundations that will encourage offshore wind development in shallow and deep water. The governors have urged Congress to approve comprehensive offshore development legislation as soon as possible.

According to theNational Renewable Energy Laboratory(NREL), the gross wind resource along the two coasts of the U.S. amounts to 4,223 GW. Thats an amount roughly four times the entire generating capacity of the current U.S. electric grid.

So, the stage has been set for a massive increase in renewable power, courtesy of offshore wind technology. Governments around the world already are jumping in to take advantage of this opportunity. Hopefully, the U.S. wont be left too far behind.

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The trials and triumphs of offshore wind - GreenBiz

Forbes

You Can't Have Offshore Wind Power Without Petroleum Forbes The Block Island Wind farm's launch late last year signified the United States' official entry into the offshore wind industry. And while European countries have been generating electricity by spinning turbines offshore since 1991, the US is eager to ... Regulators Updated on 1st US Offshore Wind Farm OperationsU.S. News & World Report OC offshore meteorological tower step toward wind farmDelmarva Daily Times Offshore Wind Talk at Clinton AcademyEast Hampton Star environmentalresearchweb all 9 news articles »

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You Can't Have Offshore Wind Power Without Petroleum - Forbes

3/1/2017

ABERDEEN -- Following two years of successful operations, iSURVEY Pte Ltd, Singapore, has again been awarded a marine construction survey support contract with Solstad Offshore Asia-Pacific for works onboard the DLB Norce Endeavour.

DLB Norce Endeavour. Photo: iSURVEY Pte Ltd.

Due to commence in March 2017, with options for extension in 2018 and 2019, the four month contract will see iSURVEY provide positioning and survey support to Solstad Offshore Asia Pacifics 2017 pipeline and platform installation program in Thailand.

The scope of work includes monitoring during jacket setting, together with final positioning, levelling and survey assistance during pile cut-off. Subsea positioning will also integrate with IKM Subseas Merlin work-class ROV during installation operations.

Bill Petrie, iSURVEY Singapores managing director, said: We are delighted to have been selected once again to support these works with Solstad Offshore Asia-Pacific. This agreement is a strong endorsement of the quality of our solutions and experience of our team over the two previous years, and being awarded this contract for the third time marks a significant milestone in the continued development of iSURVEYs operations in South East Asia. We look forward to the continuation of this excellent working relationship.

iSURVEY Group is a leading provider of survey and positioning services to the global oil and gas, telecommunications and offshore renewable energy sectors. The Group operates from its bases in Aberdeen, Oslo and Singapore.

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iSURVEY Singapore awarded contract with Solstad Offshore - WorldOil (subscription)

Ren Kofod-Olsen: "We are investing a lot in IT and rolling this out to the vessels over the next six months"

Topaz Energy and Marine is investing in onboard information technology and seafarer training to improve competencies on its offshore support vessels. According to Topaz chief executive Ren Kofod-Olsen, all of the senior officers on its fleet of more than 100 vessels are being given tablet computers to improve communications. The vessel owner has also invested in seafarer training to prepare crews for taking on more responsibility for onboard operations.

Topaz is also investing in the remote monitoring of vessels operating in the Middle East, the Caspian Sea and West Africa for fuel efficiency, planned maintenance and security reasons. We are investing a lot in IT and rolling this out to the vessels over the next six months, Mr Kofod-Olsen told delegates at Rivieras Annual Offshore Support Journal Conference in London, in February.

Our captains and officers will be getting iPads on ships for company communications. Our engineers, captains and senior officers are asked to be IT experts, as they operate on technically-advanced ships. So we need to provide them with the right equipment, so they can communicate with the shore.

Topaz has also invested in vessel tracking technology, so it can monitor the fleet. This is for monitoring fuel efficiency, planning maintenance and spending less on drydocking. Mr Kofod-Olsen explained why these are important reasons to invest: We need to plan six to eight months before a drydocking to reduce the downtime of the vessel, as this affects us in terms of yard costs and loss of revenues. He added: We monitor the fuel in remote regions because we have seen fuel and lubricant theft on our vessels.

Topaz is also using a Microsoft-based IT platform to analyse and manage its commercial operations. "This helps the company see the benefits in operations, understand why we have not won certain business, and see what is working well, said Mr Kofod-Olsen.

But Topazs biggest operational investment is in the seafarers working on its vessels. We are empowering the crew by giving them more responsibility, he said. Otherwise, they feel disfranchised if shore managers take away more of the decisions. We are giving our crew the resources to make more decisions on board. We are taking expertise back to the ships and asking more from the captains. So, we need more crew training to improve competence on the ships. He commented: There is no replacement for exertise, not even with artificial intelligence.

Also at the conference, OSM Maritime Group chief operating officer Oddvar Solemsli said seafarers need to be retrained with more IT knowledge. Smart shipping will have a huge impact on offshore support vessels, he said. More automation and IT on the vessels will have an important impact going forward. So, we may see a change in the type of crew, with more enabled, technology-aware seafarers. The human element is still important, he said.

Mr Solemsli added that more simulator training facilities were needed in areas where crew wanted to be trained. He commented: Training needs to be stronger in the offshore support vessel sector as it is the most important investment. We have our own simulators in Manila in the Philippines.

Caterpillar Marine, which was the platinum sponsor for the conference, has developed asset intelligence together with multi-engine load management to improve performance and reduce costs on offshore support vessels. Caterpillar offshore segment manager Bart Long explained how vessel operators can predict faults before they happen using the analytics in the Cat Asset Intelligence service. He said: In a recent test, we had a digital system on board a vessel for a few months, and within a few weeks we identified that the number two diesel generator was burning 5 per cent more fuel than others that were on similar modes. This suggested that something was wrong and that perhaps the generator was due an overhaul.

Royston, which won the Offshore Support Journal Environmental award, is developing algorithms for monitoring total energy consumption on vessels, including engines, generators, accommodation lighting, ventilation and air conditioning. Damian McCann, manager of engine products, said Royston will also be developing methods for measuring vessel trim and gaseous emissions.

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Topaz invests in offshore vessel IT and vessel monitoring - OSJ Magazine

Given all the recent talk about a Revenue clampdown on offshore assets could you please clarify what should be declared and how to do so?

I am a PAYE taxpayer. I have two modest offshore accounts, one in euro and one in a foreign currency. They are deposit accounts which earn no interest. There also hasnt been any trading in the foreign currency which might give rise to capital gains.

Until these deposits (or indeed any other offshore assets) generate income, can I assume there is no need to declare them? I note that Form 12 caters for foreign income but otherwise does not invite a declaration of non-earning deposits.

Mr JF, email

As you are a PAYE employee, you probably will not have received any letter recently from the Revenue Commissioners about this. The tax authorities did send out nearly 500,000 letters warning people about impending changes to the regime on failure to disclose offshore income but they only went to people who filed returns last year and that means largely self-assessed taxpayers.

Youre right to be concerned but, as it happens, I think you will be fine and will not be facing any liability.

Right to be concerned? Well, the thing with offshore tax evasion is that everyone assumes, when they hear about it, that the tax authorities are talking about the big players looking to hide ill-gotten millions. And its certainly true that Revenues investigations and large-case unit does actively pursue such players.

However, the bulk of those people likely to be caught under the new rules are small scale taxpayers who will never to this point have had cause to deal personally with Revenue beyond a Med 1 health claim or the comfortable anonymity of a Form 12 annual return.

These are the people who may have spent some time abroad and set up accounts there, or bought shares or even a small house or apartment. Maybe, if they are older, they will be in receipt of a pension either from a foreign state or a private employer in another country.

For Irish taxpayers, all of this counts as income and/or assets and so it is of relevance to the Irish tax authorities as Irish tax residents pay tax here on their worldwide income.

Another thing people also tend to forget is that Northern Ireland is just as offshore as Australia, the United States or anywhere else in the world.

For all these reasons, people should be concerned and should do an audit of their assets to see if they might have any tax liability which they may have forgotten to mention to the Revenue up to now.

Well, from May 1st, anyone approaching Revenue with details of tax liability on offshore assets or anyone approached by Revenue on the same issue will not be able to avail of what is called voluntary disclosure. Voluntary disclosure is a regime where Revenue cuts the taxpayer a bit of slack as an incentive to fess up rather than waiting for Revenue to invest the time, energy and money pursuing them.

While taxpayers using voluntary disclosure still have to pay the tax owing, and interest due on it dating back to when it should have been paid, they pay just a fraction of the penalties that would apply if Revenue has to come chasing after them. Penalties are about 10 per cent of the tax due rather than up to 100 per cent for those caught.

Anyway, in relation to foreign tax liabilities, Revenue has persuaded Government that these things cannot simply be hidden from Revenue accidentally and that forgetting to let Revenue know of such liabilities is actually a deliberate act and so such people should not be able to avail of the relief of voluntary disclosure.

And tax authorities in different countries are now working much more closely with each other. So the Irish Revenue either has already (depending on the jurisdiction), or will later this year, received any details about you, and all other Irish taxpayers, that is held by tax authorities in most other countries. That will certainly include details of foreign bank accounts among other things.

That is why Revenue is so sure of its ground and its ability to track down people with offshore tax liabilities, no matter how large or small.

Minister for Finance Michael Noonan announced in his budget last October that there would be a clampdown and the necessary amendments have been made to the Taxes Consolidation Act 1997. This new regime kicks in on May 1st, so the message Revenue is giving people out there is that the clock is ticking and they need to act fast to minimise any tax bill.

Apart from lower penalties, errant taxpayers getting their affairs in order before May 1st will avoid the possibility of having their names published in the quarterly list of tax defaulters that appears in Iris Oifigiil and most national newspapers, and will also avoid the, albeit for most remote, possibility of criminal prosecution.

So where does that leave you? You tell me that you have these two offshore accounts. There are two ways in which you could be liable. First, where did the money come from that is sitting in the accounts? Does it date back to a time when you were not a tax resident here? If so, you should be fine. But if the money was put into the accounts since you became liable to Irish tax, it might be liable to Irish tax.

If it was an inheritance, it depends on whether the bequest would bring you over tax-free inheritance tax thresholds; if it was a capital gain on the sale of some asset held abroad, it would be liable to tax here if it exceeded 1,270. And, of course, if it came from income maybe from a pension or from some foreign project you undertook it should certainly have been declared to Revenue at that time.

If not, you could be in trouble and may need to approach Revenue ahead of the May 1st deadline.

The second issue is any income that these accounts may be giving you. You state that neither is delivering any interest but was that always the case? If there is no interest income now or in the past, there is no liability on that front. If there was, the rules above apply.

And, if you do have something to approach the Revenue about, how do you go about it?

Revenue is hoping people will file any details of the tax and penalties owing through the online MyEnquiries facility available to those filing by ROS (Revenue Online Service) or, for individuals, more likely MyAccount.

You will need to file a Disclosure Form, including a computation of tax, interest and penalties owed. To help on this, Revenue is providing an estimator essentially a special calculator allowing you to work out your liability. You dont have to use its estimator but it may well be easier than you trying to work out any liability especially interest due, which is worked out at a daily rate.

The disclosure forms and estimator are at revenue.ie/ en/business/disclosure.html. That same page also includes a fairly comprehensive file of frequently asked questions (FAQs).

To sum up, if the money in these accounts came from after-tax income and you have earned no interest on them, youre fine and do not need to do anything.

One last thing. For those who do have liabilities but only of a minor nature, they should note that, where the full historical liability on offshore assets and income is less than 6,000, no penalty will be applied either before or after the May 1st deadline but you will still have to pay the tax due.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

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Worried about Revenue clampdown on offshore assets - Irish Times

Wall Street Journal (subscription)

IRS Audits to Go After Offshore Earnings and Transfer Pricing Wall Street Journal (subscription) The Internal Revenue Service has put companies on notice: It is targeting offshore earnings and transfer pricing as part of a new audit push. The federal tax collector highlighted the two issues last month in connection with a new series of 13 audit ... and more »

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IRS Audits to Go After Offshore Earnings and Transfer Pricing - Wall Street Journal (subscription)

By Annie Blanks | 315-4450 | @DestinLogAnnie | ablanks@thedestinlog.com

The Destin Chamber drafted a resolution earlier this year to reinforce its stance opposing offshore drilling in the eastern Gulf of Mexico.

The resolution states that the Destin Chamber Board of Directors opposes the drilling so that we may preserve and protect our tourism industry and the (Military Mission Line) for military training purposes that protect the United States of America.

Chamber CEO Shane Moody said the board has opposed offshore drilling for the past several years, and the most recent resolution only solidifies the organizations stance.

This is not a new issue, just reinforcement of our position over the years, Moody said. Its out boards decision to help maintain and protect the economy that we have.

The two main reasons the chamber cited for opposing drilling were tourism and the military. Moody said he does not want to see oil spills impact the areas beaches and waters, and oil wells in the Gulf would be unsightly to visitors.

People dont want to sit on the beach and see an oil well 10 or 12 miles out, Moody said. We dont want to see the big tankers out there if theres pollution. (Not having any drilling) maintains the beauty of our beaches we have now, and we dont want anything to destroy that.

The Military Mission Line prohibits offshore drilling in the eastern Gulf of Mexico so that military units can train without interference. The Air Force and Navy, including forces from Eglin Air Force Base, frequently use the waters for training purposes.

The protection of the (Military Mission Line) expires in a few years, and we want to make sure that thats maintained, Moody said.

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Chamber continues to oppose offshore drilling - Destin Log

Investopedia

Algeria Talking With Exxon on Joint Offshore Ops (XOM) Investopedia Algerian state energy company Sonatrach has begun discussions with ExxonMobil Corp (XOM) and others in order to begin offshore oil drilling. While the Algerian company has experience drilling land-based wells, it needs to partner with an experienced ... Reuters: Algeria's Sonatrach in talks to begin offshore drillingSeeking Alpha Algeria's Sonatrach in talks to begin offshore drilling sourceHellenic Shipping News Worldwide all 3 news articles »

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Algeria Talking With Exxon on Joint Offshore Ops (XOM) - Investopedia