ExxonMobil Corp. is working closely with Russia’s state-owned oil company OAO Rosneft to complete some joint partnership agreements worldwide, including plans to develop projects in the deepwater GOM and in the U.S. onshore, the investor relations chief said Thursday.

David Rosenthal spoke with investors and analysts during a conference call to discuss the supermajor’s quarterly earnings performance. ExxonMobil credited higher crude oil and natural gas realizations, as well as improved refinery margins, for double-digit profit gains in the third quarter, which topped $10.3 billion ($2.13/share), a 41% jump from year-ago earnings of $7.35 billion ($1.44).

Rosenthal, who spent nearly an hour answering questions about the company’s worldwide operations, was asked about ExxonMobil’s strategic alliance with Rosneft, which was announced in late August (see Daily GPI, Aug. 31). The companies agreed to share technology, as well as jointly explore and develop projects in the United States and the GOM, as well as in Russia and other countries around the world.

The investor relations chief was asked if “asset swaps” in North America had been finalized.

“We are working very closely with Rosneft” and “work is progressing on schedule,” Rosenfeld said. “I can say, in particular on physical terms, that the Russian government recognizes the need for improvement in the offshore. We are working with them to define how that might end up at the end of the day. I can’t give a specific timeframe other than to say that work is progressing.

“Second, I wouldn’t refer to it as ‘asset swaps,'” he said. “A better way to portray it is that Rosneft will be given the opportunity to participate in various properties in the United States. For example, in the deepwater Gulf of Mexico, they will have the opportunity to farm-in in 100%-owned blocks. We are looking at those opportunities.”

Rosneft “also may take an interest in unconventional resources in the United States and we’re looking at that as well and what those opportunities might be…There’s also the potential for cooperation and joint partnerships overseas but those have yet to be finalized.”

ExxonMobil is “looking forward to multiple joint ventures,” which Rosenthal said would “strengthen the relationship between the two companies and provide valuable opportunities for staff…A number of things are going on…It’s early days but things are on schedule.”

In the deepwater Gulf of Mexico ExxonMobil also has completed a well at the Hadrian discovery in Keathley Canyon (KC). ExxonMobil has three new discoveries in KC blocks, including the Hadrian North prospect, which builds on its Hadrian South discovery (see Daily GPI, June 9). The company and its partners in July finalized a unitization agreement to jointly develop separate discoveries in several KC blocks (see Daily GPI, July 19).

ExxonMobil now has drilled its first Hadrian well “to depth,” said Rosenthal. “The pay we have logged is now 1,000 feet. If you look at how we’ve gone, intially it was 500 feet, then 750 feet last quarter and I now can confirm that we have 1,000 feet of net oil and gas pay. Initially we will do more drilling but it indicates very high quality, prospective wells.” Although early, “the news is good and we’re very pleased with the quality of this discovery in the Gulf of Mexico.”

Given a flurry of recent announcements on planned liquefied natural gas (LNG) exports from North America, Rosenthal was asked about ExxonMobil’s LNG import terminal in Sabine Pass, TX. Golden Pass LNG Terminal LLC has been the only U.S. LNG export terminal given the green light by the Federal Energy Regulatory Commission to ramp up this year (see Daily GPI, Sept. 21).

“If you step back and look at the viability of LNG exports out of the U.S., that’s a topical discussion today and a lot are looking into it,” he said. “I don’t think it would be any surprise that if there’s any marketing opportunity or development opportunity out there, it’s certainly one we’re looking at across the board both in the United States and Canada. I will tell you, though, that Golden Pass LNG receiving terminal has no current plans to change in any form to an export terminal.

“We haven’t brought any cargoes recently into the terminal. But it remains a very valuable asset for us…Other than that, I have no other comments. It will be interesting to see, as time goes on, if the viability to export materializes, but that’s just one idea out there.”

In its U.S. unconventional portfolio, ExxonMobil was averaging 64-65 rigs during the latest quarter, Rosenthal said. Most of the rigs have been optimized in liquids-rich plays and the company is “totally flat on dry gas areas. In some new plays we’re in, we’re anxious to ramp-up drilling activity and in doing so, as expected, we’ll be optimizing the rig count toward liquids-rich plays and other things we are working on.”

The secretive ExxonMobil also increased its stake in the promising Utica Shale during the quarter, Rosenthal disclosed. The company first gained entry to the play through its acquisition in early June of two related producers that were operating in the southwestern corner of Pennsylvania (see Daily GPI, June 10). The purchase of Phillips Resources Inc. and TWP Inc., both based in Warrendale, PA, added about 317,000 net acres to ExxonMobil’s Marcellus portfolio, which at the time gave the supermajor an estimated 700,000 net acres in the play.

ExxonMobil is “actively exploring early-stage, liquids-rich” leaseholds, including the Utica Shale in Ohio, he said.

“Utica stems from our recently completed acquisition of Phillips, which provided incremental upside from the Marcellus,” Rosenthal explained. The Phillips transactions gave the company around 45,000 net acres in the Utica Shale. Since June, the company has increased its leasehold there to “over 75,000 net acres. We anticipate first Utica wells in early 2012.”

Production continues to progress at the Bakken Shale as well, he said. The company to date this year has drilled 38 wells in the Bakken with 18 completed in the latest quarter. In addition the company is securing a diverse portfolio of unconventional plays outside the United States, including new plays with liquids potential in Germany and Argentina, he said. “We are in early stages on several new tight oil opportunities.”

ExxonMobil’s exploration and production earnings rose 54% in the latest period, partly offset by a production decline of 4%. Liquids production totaled 2.25 million b/d, down 172,000 b/d year/year (y/y). Increased production in Iraq, Qatar and Russia “was more than offset by field decline,” the producer said.

In the United States ExxonMobil produced 3.917 Bcf/d during the quarter, up from 3.726 Bcf/d in 3Q2010. Canadian and South American gas output dropped y/y to 381 MMcf/d from 550 MMcf/d. Global gas output was 12.2 Bcf/d, nearly flat from a year earlier. Domestic production of crude oil and natural gas liquids was 405,000 b/d net, down from 430,000 boe/d net in the year-ago period. Worldwide oil and gas production rose slightly y/y to 4.28 million boe/d from 4.45 million boe/d. Net production of crude oil and natural gas liquids worldwide totaled 2.25 million b/d.

U.S. upstream profits totaled $1.18 billion, $185 million higher y/y. Global upstream earnings rose to $8.4 billion, up $2.9 billion year/year (y/y). Higher liquids and gas realizations increased earnings by $3 billion.

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