Energy Sector Roundup: Oil rises after Saudi boost

Tag : iran bitumen
NEW YORK -
Following is a summary of top stories in the energy sector Mondayafternoon.
Saudi Production Rise Fails to Bring Down Oil
Oil prices rose after Saudi Arabia's modest production increasefailed to push traders to sell.
Light, sweet crude for August delivery rose $1.38 to settle at$136.74 a barrel on the New York Mercantile Exchange.
Retail gas prices inched lower overnight but appear unlikely tochange much as long as oil prices remain stuck in their recenttrading range.
In Nymex trading Monday, July gasoline futures gained 1.59 cents tosettle at $3.4551 a gallon, and July heating oil futures added 2.58cents to settle at $3.7975. July natural gas futures rose 20.9cents to settle at $13.203 per 1,000 cubic feet.
Congress Seeks Remedies to Rein In Speculators
Some lawmakers on Capitol Hill say investors have a role in risingoil prices, pointing out that speculation in crude futures hasnearly doubled since 2000.
Pension funds, Wall Street banks and other large investors thathave no intention of taking delivery of fuel have increasinglypumped money into contracts for oil and other commodities as ahedge against inflation when the dollar falls.
After more than a half dozen hearings in Congress on the issue,Democratic House lawmakers said they intend to tighten restrictionson pension funds, investment banks and other large investors whichthey blame for driving up fuel prices.
But many Republicans, analysts and regulators say soaring oilprices are a reflection of macroeconomic factors, including thefalling dollar, unrest in the Middle East and increased demand fromcountries like China and India.
Halliburton (nyse: HAL - news - people ) Shares Jump After Expro Deal Ends
Halliburton Co. shares raced to a new record high as oil pricesclimbed and the oilfield service provider walked away from an offerto buy Expro International Group PLC.
The stock rose more than 5 percent at one point in the session,touching a high of $52.84, before moving back to $52.50, up $2.45in afternoon trading.
The gains came amid a broad-based rally among energy stocks, whichdrove higher as oil prices continued their advance. Energy tradersbought up crude after a weekend oil summit in Saudi Arabia failedto produce any surprise production increases and concerns mountedthat output from Nigeria will decline.
Halliburton had raised its all-cash offer to $3.6 billion onFriday, topping a $3.5 billion bid from a private equity consortiumled by Candover Group. Its offer was contingent, however, onExpro's delaying meetings to approve the Candover bid - somethingthat Expro did not do, saying that the Halliburton bid was not inthe best interest of shareholders.
Wachovia (nyse: WB - news - people ): Petrobras in Rig Contract with Transocean (nyse: RIG - news - people )
Wachovia Capital Markets analyst Tim Curran says in a note toinvestors that Transocean will lease-purchase and manage a newbuilddrillship that Brazil's Petrobras is building to use for projectsoffshore the West African nations of Angola and Nigeria.
Curran says Transocean will run the drillship under a 10-yearcontract, with an option for a 10-year extension. Transocean willbuy the unit for $1 after the lease expires in 20 years.
Curran says a lot of people are surprised Petrobras gave thecontract to Transocean instead of a Brazilian company.
"At face value, it seems like a net positive," the analyst wrote."As it (1) enables Transocean to add yet another ultra-deepwaternewbuild to its fleet, bringing the total to 28 including 10 underconstruction, with a meaningful earnings impact as early as 2009;and (2) reinforces that, despite recent, aggressive local contentrhetoric, Petrobras will continue to look to the establisheddrillers to play a key role in equipping its upstream expansionplans, be it in Brazil or anywhere else.
Occidental in Oil Sands Deal with Enerplus
Occidental Petroleum Corp. (nyse: OXY - news - people ) signed an agreement with Enerplus Resources Fund (nyse: ERF - news - people ) to buy a 15 percent interest in Alberta's Joslyn Oil SandsProject for $492.1 million.
Operated by Total, the oil sands project holds over 8 billionbarrels of bitumen or heavy crude. Occidental's net recoverablereserves are estimated at 370 million barrels.
While the project is still in the early stages, it currently hasmore than 1,800 wells drilled, Occidental said.
Occidental expects to spend about $2 billion over a number of yearsto develop the reserves. Production should start in 2014 at about11,000 barrels of oil per day, eventually growing to about 31,000barrels of oil per day.
The deal is expected to close in the third quarter.
Talisman Buys Iraq Stakes
Canadian oil and gas producer Talisman Energy Inc. (nyse: TLM - news - people ) will buy stakes in two oil-drilling regions in Iraq's Kurdistanregion for more than $300 million.
The Calgary-based company will take a 40 percent stake in one ofthe production blocks, which it will share with WesternZagros Ltd.and the Kurdistan Regional Government. Costs for that block,including past expenses and a commitment to operate three wells atthe site, are expected to total $80 million.
Talisman's interest in the second block covers a two-year seismicservices agreement, followed by the option to take a 60 percentproduction stake for at least a year. Initial work is expected tocost $10 million to $15 million.
The company also will pay at least $220 million to improve theinfrastructure in the region.
McCain Suggests Award for Advanced Battery Technology
Sen. John McCain, the presumed Republican nominee, wants to award a$300 million government prize to whoever can develop an automobilebattery that far surpasses existing technology. That's about $1 forevery man, woman and child in the country, "a small price to payfor helping to break the back of our oil dependency," McCain saidat Fresno State University.
McCain said that device should deliver power at 30 percent ofcurrent costs and have "the size, capacity, cost and power toleapfrog the commercially available plug-in hybrids or electriccars."
The Arizona senator also proposed stiffer fines for automakers whoskirt existing fuel-efficiency standards, as well as incentives toincrease use of domestic and foreign alcohol-based fuels such asethanol.
--Compiled by AP Business Writer Greg Stec. Questions or commentscan be directed to gstec@ap.org.

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