As part of its third quarter earnings results, Schlumberger has issued the following statements on its operations in Iraq:

• In Iraq, Wireline MSCT* mechanical sidewall coring technology has been deployed on two exploration wells. Core recovery in the tight and fractured carbonate reservoirs was 100% for each job and the cores will yield the petrophysical properties needed to evaluate these difficult reservoirs accurately. The information will be integrated with other log data for better reservoir characterization and to subsequently design optimal testing and completion programs.
• Also in Iraq, Techlog* petrophysical analysis software has been introduced on a project on the Siba field to provide an independent evaluation on three wells as a first step to evaluate future exploration wells and build the reservoir simulation model. The workscope includes recommendations for further data acquisition and technical work, which will help reduce uncertainties in future field development plans. The project was conducted jointly by Data & Consulting Services and Schlumberger Information Solutions.
• Elsewhere in Iraq, Schlumberger has been awarded a new contract by PETRONAS Carigali. The PETRONAS contract covers well testing services for the Garraf field appraisal and development program that includes two exploration and nine development wells.
• In Iraq, Gazprom Neft Badra, B.V. has awarded Schlumberger a 3-year contract for well construction services covering 11 wells and requiring 3 drilling rigs. The contract includes technologies from IPM, Bits & Advanced Technologies, Drilling & Measurements, Geoservices, M-I SWACO, Wireline and Well Services, as well as the supply of third-party drilling rigs, coring, casing and well heads.
• In Iraq, as part of IPM operations on the Rumaila field for the Rumaila Operating Organization, Drilling & Measurements PowerPak* ERT high-performance steerable motors have been deployed in combination with Smith ONYX* PDC drill bits and M-I SWACO drilling fluids to drill the geologically challenging 8 1/2-in hole section. This was drilled in one run, with no service quality incidents, at a rate of penetration that reached section total depth three days ahead of plan.

(Source: Schlumberger)

Shares in DNO were up as much as 9.3% on Monday, their highest level since July, before closing up 2.6% at 6.57.

Bloomberg says the rise is due to a group of minority shareholders reversing opposition to the planned merger with units of RAK, in exchange for meeting certain demands.

The DNO Initiative, representing about 600 shareholders with 5 percent of voting rights, backed the deal in exchange for RAK’s agreement to cut its stake to 30 percent by the end of 2012, Torstein Oeygarden, a spokesman for the group, and RAK Chief Executive Officer Bijan Mossavar-Rahmani, said in Oslo today.

RAK would get 40 percent control through the deal.

“Mossavar-Rahmani is definitely the right man to lead DNO going forward,” Oeygarden said. “Eighty percent of our members voted in favour of the agreement.”

While Petrolia ASA, owned by former DNO Chairman Gerdt Larsen, hasn’t decided if it will vote in favor of the merger, the deal thought likely to go through with the accord approved by DNO Initiative shareholders.

(Sources: Bloomberg, Reuters)

The following article was published by Reidar Visser, an historian of Iraq educated at the University of Oxford and currently based at the Norwegian Institute of International Affairs. It is reproduced here with the author’s permission. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

In a recent opinion piece for CNN, Christopher Hill, the former US ambassador to Iraq who served there from April 2009 to August 2010, discusses the legacy of the Iraq War in light of the recent US decision to not seek a continued military presence beyond 2011. Among his key points is that it would be wrong to plunge into a discussion about “who lost Iraq”.

In defence of his position, Hill makes several arguments.

At times, Hill is telling us that the Iraq War was not truly winnable – in the sense that establishing a stable democracy there could be inherently problematic. The reason, according to Hill, is Iraq’s deep-rooted sectarian conflict. In Hill’s words, “the Shiite-Sunni divide in Iraq has been a fact in Iraq that has never gone away. Facts, so the expression goes, are stubborn things. Thirteen-hundred-year-old facts are especially stubborn things.”

At other times, Hill tells us that nonetheless, the United States did in fact win the war, since they installed Nuri al-Maliki as prime minister. In Hill’s view, Maliki will form some kind of anti-Iranian bulwark based on widespread anti-Iranian sentiment among the masses of Iraq’s Arab Shiites. Again, according to Hill, “Maliki is, to be sure, tough-minded and not easy to convince of things. But the notion that he is an Iranian sympathizer – as opposed to a highly nationalistic Iraqi – is based on no evidence at all…”

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The U.S. and Iraq have failed to reach an agreement on a Status of Forces Agreement (see previous article) – So ………. this means that all American forces will leave Iraq by the end of the year and after 10 years or so of US military influence in Iraq what does this mean for investors committing big bucks to the oil industry.

The stumbling point was Iraqi insistence that US Forces have no immunity and any American Military who commit crimes in Iraq be tried under Iraqi law – not a good idea in a young and petty corrupt country. American diplomats in Iraq will continue to have the usual diplomatic immunity and about 200 U.S. military trainers that will remain behind will also be covered but they will be restricted to specific “training” activities.

Ironically, most Iraqis wanted some American troops to remain behind as many Iraqis see American soldiers as “protectors” – in general Iraqis avoid calling American forces “liberators” as this would be a step a bit too far – but there is general acceptance that the Americans changed Iraq for the better and do offer significant protection from the various pressures that surround Iraq.

U.S. troops may have gone; they have not gone far – which is just as well. American forces will remain just across the border in Kuwait, another Arab state also fearful of Iranian expansion but unlike the Iraqis, the Kuwaitis are happy to celebrate their liberation (from Iraqi invaders) and are happy to thank Americans for it and – also quite happy to provide a home for US forces in the region (further straining already tense Kuwaiti / Iraqi relationships).

For centuries, European nations, particularly Britain, were the most popular foreign allies. But since the 1950s, the U.S. has become the big buddy-of-choice for many Arab States.

Gulf Keystone has announced that the Shaikan-5 appraisal well has spudded on the Shaikan block in the Kurdistan Region of Iraq on 28th October 2011.

Shaikan-5 is the third deep appraisal well to be drilled on the Company’s major oil discovery with independently audited gross oil-in-place volumes of between 4.9 billion barrels and 10.8 billion barrels calculated on the P90 to P10 basis with a mean value of 7.5 billion barrels.

Shaikan-5 is being drilled 6 km to the north-east of the Shaikan-2 appraisal well. The well will target prospective intervals in the Jurassic and Triassic to reach the planned total depth of approximately 3,500 metres.

Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.

John Gerstenlauer, Gulf Keystone’s Chief Operating Officer commented:

“We are very pleased with the progress of our drilling operations in the Kurdistan Region of Iraq. Shaikan-5 is the ninth well to be drilled across the Company’s four adjacent blocks in the space of 30 months. Six out of these nine wells have been drilled on the Shaikan and Sheikh Adi blocks which Gulf Keystone operates. With two discoveries on the Shaikan and Akri-Bijeel blocks under our belt, we eagerly anticipate further results from the Sheikh Adi block with estimated resources of 1 (P90) to 3 (P10) billion barrels of gross oil-in-place. The second exploration well on the Sheikh Adi block will spud in early 2012, when results are also expected from the first exploration well recently spudded on the Ber Bahr block. The spudding of the Shaikan-5 well is in line with Gulf Keystone’s stated strategy to realise the full potential of the giant Shaikan field, to prove up our existing discoveries and to drill new ones in the Kurdistan Region of Iraq“.

WesternZagros Resources has received payment for its first sale of crude oil to the domestic market in the Kurdistan Region of Iraq. First oil production from the Sarqala-1 extended well test was achieved on October 18, 2011, and first lifting occurred by truck on 27th October.

“Production start-up marks a new chapter in the Company’s history, as WesternZagros takes its first steps to become an exploration and production company, rather than a pure exploration company,” said Simon Hatfield, Chief Executive Officer of WesternZagros.

“We are appreciative of the process established by the Kurdistan Regional Government’s Ministry of Natural Resources, which requires pre-payment directly to WesternZagros for the contracted volumes. We also appreciate the close coordination with the Ministry in starting the test. Thanks to the diligence of our in-country operations personnel, the start-up was conducted in a safe, responsible manner and ahead of schedule.”

Production started at approximately 2,000 barrels of oil per day (“BOPD”) and is anticipated to increase towards 5,000 BOPD in the near future. WesternZagros has signed an initial sales contract for delivery of approximately 33,500 barrels of oil priced in the range of US$50 to US$60 per barrel. WesternZagros plans to use the information gathered from the extended well test in determining future appraisal and development activities, including the potential for increasing production beyond 5,000 BOPD. Horizontal completions may be considered to take advantage of the demonstrated high deliverability of the Jeribe reservoir.

Mil Qasim-1 Exploration Well Update

WesternZagros has successfully set 13-5/8″casing at 1,615 metres at Mil Qasim-1, the Company’s third exploration well. The rig is currently drilling ahead at 1,800 metres in the targeted Upper Fars Reservoir. Following a delayed spud date, drilling is now proceeding on time and on budget. The mean estimate of the gross unrisked prospective resources for this reservoir is 106 million barrels of oil. Further updates will be provided as operations progress. WesternZagros is the operator of the Mil Qasim-1 well.

Kurdamir-2 Exploration Well Update

WesternZagros reports that the Kurdamir-2 exploration well has spudded on October 25, and is anticipated to be completed by June 2012. The well is being drilled on the flank of the Kurdamir structure approximately two kilometres from the Kurdamir-1 discovery well. The combined mean estimate of the gross unrisked prospective resources for the Oligocene, Eocene and Cretaceous reservoirs being targeted by the Kurdamir-2 well is over 585 million barrels of oil. Talisman (Block K44) B.V. (“Talisman”)is the operator of the Kurdamir-2 well.

HSE Milestone

On today’s date, WesternZagros’s operations celebrate having worked one full year without a lost time incident. The dedication to safety demonstrated by all of the Company’s employees and contractors has produced a work safety culture ranked as world class.

(Source: WesternZagros)

Anglo-Arab Insurance Brokers (AAIB), the leading specialist insurer for Iraq Insurance, emerging and high risk countries across the Middle East and Africa, has announced the appointment of Mr Mekki R. Mustafa as its Senior Consultant in Iraq.

The appointment will consolidate AAIB’s position in Iraq, where it is already the largest international insurance broker licensed to operate.

Mr William Wakeham, founder and CEO of AAIB, said:

“We are delighted to have Mr Mekki Mustafa onboard. Mekki is one of the most senior insurance experts in Iraq and brings with him a wealth of knowledge, experience and expertise which will be invaluable to AAIB as we continue our aggressive growth strategy.”

In his new role, Mr Mustafa will be responsible for leading the placement of Iraqi ceded risks and for developing AAIB’s already established relations within the Iraq insurance market.

Mr Mekki Mustafa added:

“One of the main reasons for wishing to join AAIB is its people. AAIB has an extremely strong team, they are well placed and committed to Iraq. These are important points for me.

“AAIB is also at the cutting edge of product design, particularly its new online travel insurance which has opened up countries like Iraq and Afghanistan to the global business community. Being part of such an innovative, dynamic company I am relishing the opportunity to play a key role in driving forward its even greater success in the future.”

Prior to joining AAIB, Mr Mustafa was Reinsurance Manager of The National Insurance Company of Iraq.

DNO International has announced on Monday the resumption of its share buyback program, originally announced on 10 August 2011.

Between 18 August and 7 October, the Company acquired a total of 25,500,000 shares, which are currently held in treasury, pursuant to a shareholder approval to acquire up to 80,000,000 shares.

“We believe that in current market conditions, the DNO share price remains attractive. Acquisition of the balance of the authorized buy back volumes will afford the Company flexibility to utilize these shares in future transactions“, says Bijan Mossavar-Rahmani, the DNO Chairman.

Shares in DNO were up 6.8% on Monday morning.