Newsletter   -   March 2007

In conjunction with RP, Sentinel Financial Group are please to present this monthly newsletter on the Australian oil and gas industry...

Re-Badging of Resource Personnel

We are in the midst of a corporate identity change from Resource Personnel to RP. This will take into account the planned growth of the consultancy and training segment within the company. The official launch of RP will take place sometime in late March/early April but in the mean time you will notice gradual changes in the web site and other communication media (see the new logo above!). The new "RP" encompasses the recruitment side of the business which will still be known as "Resource Personnel" while the consultancy and training arm will be known as "RP Integrated". The current web site address and all current staff e-mail addresses will still function as normal after the change.

RP Integrated - The Value Proposition

Apart from providing focused in-house training for various clients, RP Integrated provides a range of integrated consultancy services from audits and peer reviews to field development studies. Unlike the normal upstream consultancy practice, we prefer to work with our consultants on a project basis i.e. we do not have consultants working on a permanent basis in our offices. This working arrangement suits the skilled professional who prefers not to get involved in the day to day issues of a normal business and who can thus be purely focused on delivering value to the client on a project basis. It keeps our overheads down resulting in more return to the consultant and the company. Managing such teams requires good systems and processes to ensure the right focus and sufficient degree of integration between the different discipline professionals. We achieve this by taking time at the start of each project to develop a roadmap. This involves framing the objectives, work scope and methodology and agreeing intermediate milestones and the final deliverable.

If you are an experienced subsurface professional seeking a new challenge in your career, RP Integrated want to talk to you!

General Market Review

February's stock market activity can best be described as a story of two halves:

For the majority of the month, the positive interim profit reporting season helped propel the S&P/ASX 200 ahead strongly, breaking through the 6000 mark for the first time. Resources companies including BHP-Billiton, Rio Tinto, Oxiana and Woodside were major beneficiaries from the commodities boom, all reporting strong results. BHP in particular impressed with the announcement of a US$10bn addition to its existing capital management program. Industrial winners included CSL, Computershare, QBE Insurance and Telstra.

Then, on the last day of the month, the index effectively reversed the entire month's gains, as a major sell down in the Chinese stock market and bearish comments from former Fed president Alan Greenspan suggesting the US economy could in fact slide into recession in 2007 combined to send the US market tumbling by over 3% overnight. Our own market suffered its largest single day fall since September 2001, at one point sitting on a daily loss of over 200 points, before staging a modest recovery to finish down 160 points or 2.7% below the previous day's close.

In stock specific news, Coles Group has effectively put up the "for sale" sign after admitting it will not meet its ambitious FY08 profit target. The admission comes after it rebuffed a proposed $15.25/sh offer from buyout group KKR in October 2006. A data room has been established for potential buyers and the "sale" is expected to take place over the coming months.

Commodity prices have generally improved over recent weeks, with copper and zinc recovering from near 12 month lows and nickel continuing its recent strength, surging to fresh highs on continuing market tightness. Oil has also rebounded back above US$60/bbl.

Global Indicies

Source: IRESS. Data as of 28/02/07

Commodities

Source: IRESS. Data as of 28/02/07

Crude Oil Prices - Short and Medium Term Trends

Crude oil prices ended the month with a gain of some 5% strengthened by declines in U.S. gasoline and distillate supplies and fresh concern over possible hurricane activity in the Atlantic later this year.

Energy Focus

Movers and Shakers

A summary of the major Oil & Gas share price movers on the Australian Stock Exchange.

Source: Sentinel Financial Group & IRESS. Last prices and returns as at 27 February 2007.

Who's Making News

A selection of significant recent oil and gas headlines:

Source: Sentinel Financial Group & ASX

Tin Rattlers

Recent ASX Capital Raisings

Source: Sentinel Financial Group & ASX

Float Hopefuls

Source: Sentinel Financial Group & ASX

Recruitment Activity

The demand for qualified experienced personnel has continued to grow since the middle of 2006 with a surge being observed of late. The reasons for this increase in demand would appear to be that pent up momentum has now surfaced at the development and drilling end of the E&P life cycle.

The initial surge of interest brought about by the increase in the price of crude oil during 2004 was followed by an unprecedented and urgent desire for increased activity. For many organisations, it came down to a total re-evaluation of their assets, some of which had been put on hold during the earlier period of low oil prices.

Following this increased activity, severe pressure was placed on the upstream industry causing serious shortages in every conceivable area. Even if drilling could commence immediately there was a severe shortage of materials and equipment resulting in delays. This slowed down project implementation by months and years in many areas. Now in 2007, some three to four years following the initial surge of interest, the log jam has started to move and projects are rapidly reaching an implementation stage. In addition, the relative stability of oil and gas prices give the confidence for many projects to proceed with execution.

If you are a talented professional looking for a change please contact us to discuss prospects (see below for the right contact).

Subsurface Disciplines - (contact: Julie Arslanoski)

Petrophysicists and Production Technologists seem to be "high in demand - short in supply" of late - where are you all? Challenging, rewarding positions are available in SE Asia, Australia and the Middle East, for example:

Petrophysicist permanent position will have horizontal well geosteering experience and be current with the major LWD and wireline providers' equipment and services.

Senior Production Technologist with an independent oil and gas exploration and production company. The operational focus for the group of companies is on the re-development of two producing fields in Turkmenistan.

Well Engineering - (contact: Ray Robertson)

There has been a notable increase in companies seeking experienced Drilling and Completions Engineers throughout the Australasian, Asia Pacific and Middle Eastern Regions, with RP Recruitment experiencing unprecedented requests for suitably experienced personnel.

Looking back on the week...

A selection of significant company news