WTI OIL: US$101.14+$0.15 per barrelJanuary delivery

NYMEX: N Gas: US$3.496+$0.035per MMBTUDecember delivery

Published By NEWS COMMUNICATIONS since 1977 Canadian Edition Wednesday December 7, 2011

NORTH AMERICAN RIG COUNTSThe U.S. rotary rig count was down 7 rigs at 1,993 for the week of December 2, 2011. It is 280 rigs (18.6%) higher than last year. The number of rotary rigs drilling for oil increased 2 to 1,132. There are 390 more rigs targeting oil than last year. Rigs drilling for oil represent 56.8% percent of all drilling activity. Rigs directed toward natural gas were down 9 at 856. The number of rigs currently drilling for gas is 105 lower than last year's level of 961. Year-over-year oil exploration in the U.S. is up 52.6 percent. Gas exploration is down 10.9 percent. The weekly average of crude oil spot prices is 15.7 percent higher than last year and natural gas spot prices are 19.6 percent lower. Canadian rig activity is unchanged at 484 for the week of December 2, 2011 and is 35 (7.8%) higher than last year's rig count.

OPEC HEADING FOR30 MLN BPD OIL TARGET

Delegates say OPEC's Vienna-based secretariat will recommend to a meeting of OPEC national experts, its Economic Commission Board, ahead of the December 14 ministerial meeting that 30 million barrels daily is required from the group in the first half of 2012. The secretariat is forecasting demand for OPEC crude at 29.9 million bpd in the first quarter and 28.7 million bpd in the second quarter, the annual period of slowest global fuel demand. While the second quarter figure is well short of OPEC's current output, the secretariat will argue that inventories, having fallen sharply this year, will need replenishing in the second quarter. Gulf producers, including Saudi Arabia, are also expected to line up behind the secretariat's forecasts.

ENERGY E&P SPENDING TO REACH RECORD HIGH IN 2012

High oil prices will help push 2012 global energy exploration and production (E&P) spending to a record high of $598 billion, but the rate of growth will slow from a year ago in part due to wariness about continued economic uncertainty, Barclays Capital said on Monday. The $598 million is up 10 percent from $544 billion this year, analysts at Barclays found after surveying 350 oil and gas companies. International spending is forecast to rise 11 percent year-on-year, while in North America spending is expected to rise 8 percent. That compares with international spending growth of 20 percent in 2011, and spending increases in North America of 31 percent then, the survey found. The year-over-year slowdown in growth can be attributed very conservative forecasts from the companies and other factors, James West, oil services analyst at Barclays told reporters on a conference call. "I think that the budgets that look like they've slowed are somewhat misleading because companies are being very conservative," West said. "In 2011 we were coming out of a downturn and companies were really anxious to get back

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"significant step up in activity" by state-run oil firm PEMEX in Mexico, an aggressive capital program for Ecopetrol in Colombia, and Brazilian Petrobras' continued deployment of capital in support of its pre-salt development plan. Spending in Africa is projected to rise next year as civil unrest and political disruptions in North Africa and other areas abate, and as the supermajors begin work on large projects and new discoveries in East and West Africa, BarCap said. Higher oil prices are driving this spending, but companies' conservative estimates leave the door open for more. BarCap said oil and gas companies were basing their 2012 capex budgets on an average oil price of $87 a barrel for U.S. crude and $98 a barrel for Brent. As a result of this pick up in spending, BarCap sees oil service, equipment and dri l l ing companies

to work." Barclays said that if oil prices were sustained at the current level, there could be "considerable upside" to their forecast. On Monday, North Sea Brent crude futures were trading at $109 a barrel and U.S. light crude futures were around $100 a barrel. The largest oil companies are expected to spend the most with Exxon Mobil Corp seen pouring more than $30 billion into exploration and production. PetroChina Co Ltd is expected to be the second largest spender with expenditures approaching $30 billion, the survey found. E&P spending should rise most meaningfully in Latin America, Africa, Europe, the Middle East and Russia, Barclays said. Capex on E&P is seen rising 21 percent in Latin America, 14 percent in Africa and 42 percent in the former Soviet Union and CIS countries. In Latin America, BarCap highlighted a

significantly outperforming the broader equity market over the next few years. It favors the large-cap diversified companies such as Schlumberger Ltd , Baker Hughes Inc , Halliburton Co and Weatherford International Ltd , as well as capital e q u i p m e n t c o m p a n i e s C a m e r o n International Corp and National Oilwell Varco Inc .

US NATURAL GAS BOOM PROJECTED TO FUEL JOB GROWTH

A nationwide boom in natural gas production is set to fuel nearly 900,000 jobs and add roughly $1,000 to annual household budgets by 2015, according to a new industry study released Tuesday. The boom in shale gas production nationwide - exemplified by modern-day drilling boom towns that have sprung up in Pennsylvania,

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North Texas and western states - is a bright spot in the U.S. economy, said the study's lead author, John Larson, vice president of IHS Global Insight, an energy research firm based in suburban Denver. Shale is really proving to be a very big job creator. It really stands in sharp contrast to many sectors of the economy," Larson said. "During a significant economic downturn - the most significant since World War II - that's pretty remarkable." IHS predicts that shale gas will make up 60 percent of domestic production by 2035, with much of it extracted using horizontal drilling and hydraulic fracturing techniques that involve blasting water, sand and chemicals deep underground to break up rock and release the fossil fuels trapped inside it. According to the IHS report, capital expenditures tied to shale gas production amounted to $33 billion in 2010 and will total $1.9??trillion over the next 25 years. The firm also concluded that shale gas production supported 600,000 jobs in 2010, including oil field workers directly employed by the industry, as well as indirect pipe fitting, steel manufacturing and other jobs. Shale gas production contributed $76 billion to the U.S. gross domestic product in 2010, but IHS predicts that will jump to $118 billion by 2015 and $231 billion in 2035. Tax revenue from shale gas production, which accounted for $18.6 billion to federal, state and local governments last year, is projected to hit $57 billion annually by 2035 - or $933 billion total over the next 25 years.

BP ACCUSES HALLIBURTON OVERGULF OF MEXICO OIL SPILL

BP has accused Halliburton of destroying damaging evidence relating to last year's Gulf of Mexico oil spill. In a court filing, BP has alleged that the US oil services firm of intentionally destroying evidence about possible problems with its cement slurry poured into the deep-sea Macondo well about 100 miles (160 km) off the Louisiana coast. An oil well must be cemented properly to avoid blowouts. Also in the documents filed in a New Orleans federal court, BP accuses Halliburton of failing to produce incriminating computer modelling evidence. BP asked a US judge to penalise Halliburton and order a court-sponsored computer forensic team to recover the modelling results. The allegations in the 310-page motion add to a showdown among BP and the contractors Halliburton and Transocean over blame in the Deepwater Horizon blast in April 2010, which killed 11 workers and led to 206m US gallons (780m litres) of crude oil escaping into the Gulf of Mexico. So far, BP, the majority owner of the Macondo well, has footed the bill for the emergency response and cleanup. Also involved are Anadarko Petroleum and Cameron International. The first trial over the disaster is scheduled to start 27 February in New Orleans. It is expected to last three months and determine the liability of each company involved in drilling the Macondo well. There will be other phases over cleanup costs, punitive damages and other claims. US federal and independent investigations into the disaster have found fault in Halliburton's cementing because it failed to properly plug the well. The firm used a foamy cement slurry. In Monday's court filing, BP alleges that Halliburton employees discarded and destroyed early test results they performed on the same batch of cement slurry used in the Macondo well during an internal

investigation into the disaster. BP said Halliburton's chief cement mixer for Gulf projects testified in depositions that the cement slurry seemed "thin" to him but that he chose not to write about his findings to his bosses out of fear he would be misinterpreted.

CHESAPEAKE CLOSEPREFERRED SHARE DEAL

Chesapeake Energy Corp says it raised $750 million through the sale of preferred shares in its newly formed CHK Utica LLC unit, funds needed to help the oil and gas company c lose a spending gap. Chesapeake, which also has a heavy debt load, previously said it would cover the funding shortage with a number of transactions, including Monday's preferred stock sale and two deals announced last month related to its Utica Shale oil and gas acreage in Ohio. Analysts at Bernstein

Research estimate the company's cash-to-capital expenditure deficit at $5 billion for next year. The analysts said on Monday in a note to clients that Chesapeake will likely have to issue stock if it plans to reduce debt by 25 percent, as it has pledged to investors. One of the previously announced Utica deals was a $2.14 billion joint venture with an unnamed partner. The other was the sale of $500 million of preferred shares of CHK Utica to energy investment firm EIG Global Energy Partners. When those deals were announced, Chesapeake said it expected to sell an additional $750 million of CHK Utica preferred shares to other investors by Nov. 30. In the latest sale of preferred shares, the buyers were Blackstone Group affiliate GSO Capital Partners LP; alternative asset management firm Magnetar Capital; and a co-investment vehicle managed by EIG consisting of limited partners and qualified EIG

employees. The CHK Utica preferred shares include annual payout of 7 percent, payable quarterly. Investors in the combined $1.25 billion of CHK Utica preferred shares will also proportionately receive a 3 percent overriding royalty interest in the first 1,500 net wells drilled on CHK Utica's acreage.

CONOCO 2012 SPENDING TO RISE ConocoPhillips said on Friday its capital spending would rise 15 percent in 2012 to $15.5 billion as it invests in higher-margin projects and buys back $10 billion of its shares as part of a three-year plan to boost investor returns. Conoco said 90 percent of the capital spending would go on exploration and production as that business prepares to split from the Phillips 66 refinery operations in the second quarter of next year. The exploration and production spending will go toward Canadian oil sands extraction, a liquefied natural gas project in Australia and

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liquids-rich areas of the United States including the Eagle Ford formation and the Permian Basin in Texas. "As our production profile adjusts over time to reflect our increased levels of investment in liquids plays and lower levels in North American conventional natural gas, we expect to continue increasing margins in the upstream business," Chief Executive Jim Mulva said in a statement. Mulva is retiring next year and will be replaced by Ryan Lance, head of the company's international exploration and production business. About 60 percent of the exploration and production budget will be spent in North America, Conoco said. The new $10 billion buyback program will follow the $15 billion share repurchase program started in 2010. The company's refining unit capital expenditures for next year are forecast to be $1.2 billion, with $1 billion earmarked for the company's U.S. businesses. In September, Conoco estimated that the standalone exploration company would have an annual

budget of about $15 billion, while Phillips 66 would have annual expenditures of about $2.5 billion.

CRESCENT POINT 2012CAPITAL EXPENDITURE PROGRAM

Crescent Point Energy Corp.has announced a $1.1 bi l l ion capital development budget for 2012. In 2012, we will build on the momentum generated in 2011," said Saxberg. "The 2012 capital program focuses on several long-term organic growth projects and advances our emerging resource plays. We are also applying new techniques and concepts across several of our resource plays, which will provide us with a competitive advantage in developing new prospects." Crescent Point's 2012 capital expenditures budget has been set at $1.1 billion. Execution of the budget is expected to increase average daily production by approximately 10 percent to 80,000 boe/d, with a 2012 exit rate of greater than 85,000

boe/d. Crescent Point expects to spend approximately $385 million of its 2012 budget in the Viewfield Bakken and Flat Lake areas of southeast Saskatchewan, including drilling approximately 120 net wells in the Viewfield area and 12 net wells at Flat Lake. To accommodate continued growth of the Company's Bakken production, Crescent Point expects to invest up to $55 million on infrastructure projects, land and seismic in these two areas. As part of its ongoing water flood implementation project at Viewfield, the Company expects to convert up to 30 net horizontal wells into water injection wells, increasing the total number of Bakken water injection wells to more than 50 by year-end 2012. In the Shaunavon area of southwest Saskatchewan, Crescent Point plans to spend approximately $220 million of the 2 0 1 2 b u d g e t , i n c l u d i n g d r i l l i n g approximately 72 net wells, which will target both the Lower Shaunavon and the Upper Shaunavon resource plays. As part of its

ongoing water flood pilot in the Shaunavon area, the Company plans to convert up to 4 horizontal Lower Shaunavon wells into water injection wells, for a total of 10 injection wells in the Lower Shaunavon. Crescent Point plans to invest up to $52 million in infrastructure projects and land in the Shaunavon area to accommodate production growth in this play. Due to the Company's positive results to date in the Swan Hills Beaverhill Lake light oil resource play in Alberta, Crescent Point plans to spend approximately $165 million in the area in 2012. The Company expects to drill up to 26 net wells and invest up to $22 million in infrastructure projects, land and seismic in this play in 2012. The Company is also increasing its capital expenditures in North Dakota, where it has amassed more than 165 net sections of land. Crescent Point expects to allocate approximately $130 million of the 2012 budget in the state, including drilling up to 14 net wells. Crescent Point will continue to pursue its exploration

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and development projects in southern Alberta in 2012, with plans to spend approximately $50 million drilling up to 19 net wells into both conventional and unconventional zones. The remaining $150 million will be allocated to Crescent Point's other properties in Saskatchewan, Man i toba and A lber ta , i nc lud ing convent ional assets in southeast Saskatchewan, Battrum / Cantuar and the Viking play at Dodsland. In total, approximately 85 percent of the budget is expected to be allocated to drilling and completions, with a total of 347 net wells planned. The remainder of the budget is expected to be allocated to infrastructure investments, undeveloped land acquisitions and seismic. Execution of the 2012 capital expenditures budget is expected to increase Crescent Point's average daily production to 80,000 boe/d, representing approximately 10 percent growth over 2011 guidance. Exit 2012 production is forecast to be greater than 85,000 boe/d, representing more than six percent growth over 2011 exit production. The 2012 capital program is consistent with the Company's five-year growth models.

DEVON WINS APPROVAL FOR OILSANDS EXPANSION

Alberta regulators have approved the $1.3 billion third phase of Devon Energy Corp’s Jackfish oilsands project, one of several such developments in the northern part of the province at which the company plans to quadruple output over the next eight years. Devon said on Monday it aims to start construction next month at Jackfish, located south of the oilsands hub of Fort McMurray, Alberta, with third-phase production of 35,000 barrels per day targeted for 2014. The company said it is also working to push the second phase of the development to its full production rate of 35,000 bpd by late next year. Phase 2 is currently operating at 13,000 bpd. Devon is developing Jackfish using steam-assisted gravity drainage, where the company injects deep steam into the ground to loosen up the tar-like bitumen in the oilsands so it can be pumped to the

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a 50-50 partner with BP PLC in nearby oilsands leases called Pike. It said it plans on overall output of 150,000 to 175,000 bpd

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