A New Coupling in the DJ Basin

A New Coupling in the DJ Basin

If there were such a thing as soulmates between two E&Ps that share a common growth strategy in an area virtually next door to each other, it would have to be Denver-based PDC Energy and its acquisition this week of SRC Energy.

PDC Energy

PDC Energy, Inc. is an independent oil and gas company focused on maintaining a strong balance sheet and solid debt metrics while delivering value-added organic growth from a liquids-rich portfolio through horizontal drilling. Our mission is to efficiently and safely produce energy, while respecting the environment, in order to power and better peoples’ lives.

www.pdce.com

Reese Midstream Report today is studying the nuptials between the two oil and gas producers in an all-stock ceremony valued at $1.7 billion. The combination will create the second-largest producer in the DJ Basin with 182,000 net acres, right behind Occidental’s acquisition of Anadarko Petroleum earlier this year. PDC also holds 50,000 net acres in the Delaware sub-basin of the Permian, although the new union is expected to focus primarily in Weld County, Colo. The company estimates it will produce nearly 200,000 BOE per day from the Wattenberg Field. PDC says the merger will create about $800 million in cash flow through 2021.

A match made in heaven? Some analysts seem to think so as they look for more consolidation among small- and mid-cap E&Ps to strengthen their balance sheets, operate more efficiently, and rebuild shareholder confidence. What do you think?

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New LNG Export Facilities Set Sail

New LNG Export Facilities Set Sail

We have extraordinary activity in our LNG export industry today with not enough space to cover it all. But when news like this happens, RMR will be on top of the latest headline news in our weekly subscription blog, ReeseMidstreamReport.com, coming soon.

Until then, let’s talk Freeport LNG, which becomes the sixth major U.S. liquefaction terminal to start export operations from its Texas facility sometime next month. This marks the third train currently under construction for Freeport with the capacity to liquefy 0.7 BCFPD per train, per day.  Sempra’s Cameron LNG project, Train 1, commenced commercial operations yesterday with a projected export capacity of 12 million tons of LNG, or approximately 1.7 BCFPD. Cameron’s LNG Phase I will include five additional export projects. Virtually all U.S. LNG terminals are currently under construction or have plans underway to expand their number of trains to liquefy and export gas to countries outside of the U.S. What do you think?

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Time to Put It in Reverse?

Time to Put It in Reverse?

With three new crude oil pipelines coming online to transport supplies from the Permian to the Gulf Coast, Texas-based Lotus Midstream is considering a reverse flow of its Centurion Pipeline that will bring added capacity in the nation’s richest oil basin.

Lotus Midstream

Lotus Midstream is an independent energy company focused on the organic development of midstream infrastructure and services necessary to transport crude oil and condensate from the wellhead to market.

lotusmidstream.com

RMR today is following news from sources close to Lotus who say management is in talks to reverse flows on a portion of its 3,000-mile Centurion, which extends from southeast New Mexico across the Permian to the Cushing, Okla. hub.

Reversing flows from Cushing to the West Texas shale field, then interconnecting with the new pipelines to Gulf Coast export hubs, could mean higher prices for oil supplies and discounted transportation fees for shippers as pipeline operators woo new customers. The Centurion consists of a North line with a capacity of 110,000 BPD and a South line with a 60,000 BPD capacity. The EIA projects Permian production will average 4.4 MBPD in September. The bottleneck there soon will be easing but there’s room aplenty for Lotus should they decide to make the change.

What do you think?

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Ready, Willing and Enabled

Ready, Willing and Enabled

When Okla. City-based Enable Midstream rang the NYSE closing bell last Friday, company executives not only cheered the five years its stock has traded but its stock of achievements that have made Enable a Made-in-Oklahoma success story.

RMR is studying the agility of this midstream operator to balance new infrastructure builds and expansions with a financial discipline to grow its footprint in key areas without accruing mountains of debt. Enable’s natural gas, NGL and crude oil systems serve producers in the Anadarko Basin, the Ark-La-Tex region, and the Williston Basin. The company’s growing presence in the Anadarko alone is the result of several organic projects that include a 205,000 MMBTU per day natural gas pipeline, an NGL pipeline and two gas processing plants; and an acquired crude oil and condensate gathering and transportation system. Coming next is a 170-mile natural gas pipeline, which will extend from the Haynesville to the Gulf Coast, and is expected go online in 2021. What do you think?

 

www.enablemidstream.com.

 

Executive Spotlight:  Harold Hamm

Executive Spotlight: Harold Hamm

Harold Hamm may well be one the most colorful oil and gas CEOs in the country. His storied past includes a series of firsts that landed him on the cover of Forbes, helped pioneer the development of the Bakken, and is now one of the nation’s 10 largest producers.

After asking, “Fill ‘er up?” in his teens, Hamm went to work in the Oklahoma oil patch. At age 21, he founded Continental Resources. Later on he began using horizontal drilling and hydraulic fracturing in the Bakken, where he remains the largest leaseholder today.

But with the advent of the latest drilling and completion technologies and his proprietary ECO-Pad®, Hamm never lost sight of Oklahoma’s oil and gas riches where he bought a sizeable chunk in the SCOOP and STACK. Continental’s Q2 earnings and profit might’ve fallen short of estimates this year due to weaker oil and gas prices, but that hasn’t stopped Hamm from raising its full-year production outlook and lowering guidance for production cost.

And it won’t stop us from watching what’s next for Continental. What do you think?