Cue the (Consolidation) Queue

Cue the (Consolidation) Queue

With the ink barely dry on news that ConocoPhillips and Concho resources will marry in an all-stock deal valued at $9.7 billion, two more shale producers are in line to exchange vows. Reese Energy Consulting today is following reports that Texas-based Pioneer Natural Resources and Parsley Energy may soon tie the knot in another multi-billion-dollar transfer of ownership in the Permian. The coupling would create a $10 billion operator with combined production of more than 550,000 BPD. Dallas-based Pioneer is currently the largest acreage holder in the Cline Shale, part of the Permian’s Spraberry Trend in the Midland sub-basin, with more than 680,000 highly contiguous net acres. Following the sale last year of assets in the Eagle Ford and South Texas, Pioneer has put all its chips “on the best part” of the Midland. Permian-focused Parsley, whose CEO ranks as the youngest in the industry at age 36 and who previously worked for Pioneer, operates in both the Midland and Delaware. With a market value of about $4 billion, Parsley carries more than $3 billion in debt.

 

Pioneer Natural Resources

Pioneer Natural Resources Company is a company engaged in hydrocarbon exploration in the Cline Shale, which is part of the Spraberry Trend of the Permian Basin, where the company is the largest acreage holder. The company is organized in Delaware and headquartered in Irving, Texas.

www.pxd.com

​What do you think?

Learn more about REC and our range of upstream, midstream, and downstream services at www.ReeseEnergyConsulting.com.

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The Future’s Midstream Infrastructure Looks Decidedly Different by 2050. Or Does It?

The Future’s Midstream Infrastructure Looks Decidedly Different by 2050. Or Does It?

When Berkshire Hathaway in early July purchased 7,700 miles of natural gas pipelines owned by Va.-based Dominion Energy, the investment group handed the utility giant a new path forward to incorporate more renewable energy in its operations with a goal to generate 100% carbon-free electricity by 2045. The acquisition of Dominion’s pipe, which transports gas from the Marcellus and Utica basins, has added to Berkshire’s existing 16,000-mile pipeline network in a sure-fire bet that natural gas will be the primary bridge fuel for the next 50 years as coal takes its final bow.

The push to transform the fossil fuels industry is now a shove on steroids, no doubt accelerated by COVID-19.  As more regulators and the forces behind them halt new-build pipeline projects, and oil and gas majors reinvent themselves, midstream finds itself at a crossroads to get on board or get off the track. Shareholders and investors are demanding it. But what might the nation’s energy infrastructure look like in a future without crude oil, natural gas or NGLs coursing through its veins?

The majority of U.S. gathering, transportation and distribution pipelines is primarily used for fuels, which includes everything from onshore and offshore crude oil and natural gas, to water, hydrogen, coal slurry, biofuels, NGLs, and other fluids. For Smithfield Foods, the nation’s largest pork producer, sending renewable natural gas (RNG) flowing through pipelines has turned its industry upside down, and in a good way.

RNG comes from a variety of sources, including solid waste landfills, wastewater treatment plants, livestock farms, food production facilities, and organic waste management operations. It’s not a pleasant thought, but pigs produce more methane gas per pound of live weight than any other livestock. That’s a lot of greenhouse gases when you consider Smithfield manages millions of pigs every year. Smithfield in July partnered with Dominion to market that gas from the company’s capped lagoons that trap the methane. Dominion will siphon the methane from Smithfield’s anaerobic digesters and inject it into interstate pipelines to generate electricity. (You can read the tea leaves here.)

Tulsa-based Williams recently announced adding solar installations to power its natural gas assets, with sites under consideration in nine states. Will wind and solar farms soon become part of the midstream space? Whatever lies ahead, natural gas for the foreseeable future will enable the latest innovations that require electricity (a shout-out to Tesla), in addition to heating, cooking, vehicle fuels, manufacturing, industrial processes, and more. Transporting, processing and storing that gas will still require a midstream conduit. That is, until Elon Musk figures out how to SpaceX it right here at home.

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Executive Profile: George Kaiser, Kaiser-Francis Oil Co.

Executive Profile: George Kaiser, Kaiser-Francis Oil Co.

“In the charitable world as in the business world, opportunities should drive budgets, not the other way around.”

In one succinct quote, George Kaiser offers up every puzzle piece needed to understand the man and his philosophies on money, business, and philanthropy. All are inextricably linked. He’s an invisible billionaire of sorts, who swats away any ranking of himself as one of the wealthiest in the world like frivolous, disposable news. If you don’t live in his beloved birthplace of Tulsa, Okla., you may never have heard his name—and that suits Kaiser perfectly fine.

Kaiser Francis Oil Co.

Kaiser-Francis Oil Company is a Tulsa-based oil and gas exploration and production company.

www.kfoc.net

Fiercely private, Kaiser shuns publicity, never attends society functions, and hardly ever grants interviews. He doesn’t own big-bucks toys like vacation homes, exotic cars, airplanes or yachts. He wears a cheap watch and always flies coach. Kaiser’s passions instead lie equally in his businesses and charitable investments. He commits half his 70-hour work week to each, so the first can finance the other.

George Kaiser quietly owns empires in oil and gas, banking, and private equity. His father, an attorney, fled Nazi Germany in 1933 and ultimately landed in Tulsa where the family finally settled in 1940. George was born two years later. He went on to earn a Harvard MBA then joined his father and uncle at their small E&P known as Kaiser-Francis Oil Co. When his father passed in 1969, Kaiser bought out his uncle and over a short time grew Kaiser-Francis into one of the most successful upstream operators in the nation. The company currently operates in Okla., Texas, N.M., Wyo., N.D., and La.

Following the rapid growth of his oil and gas company, Kaiser in 1991 acquired Bank of Oklahoma for $60 million and a 60% ownership, launching his personal wealth into the stratosphere. He created Argonaut Private Equity in 2002, which today manages billion-dollar investments in 19 companies including those energy related. He’s also a tireless champion for education and recovery among the city’s impoverished and marginalized.

But Kaiser doesn’t believe in check-writing handouts. Through his George Kaiser Family Foundation, the now 78-year-old develops and finances ground-breaking programs and initiatives that merge every requirement to deliver meaningful results. He, along with other private investors, built the 100-acre Gathering Place in 2014—now a Tulsa icon intended to unite every socioeconomic group at a learning park uniquely created for everyone. Kaiser has invested more than $10 billion in Tulsa and its citizens, putting him third behind Warren Buffett and Bill and Melinda Gates as the largest American philanthropists. But there’s that annoying ranking again.

Several years ago Warren Buffett famously quipped to Forbes, “I’d fight for the opportunity to be president of the George Kaiser fan club.”  Somehow, we don’t think he’s alone.

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The Unsinkable, Undeterred, Uncompromising Harold Hamm

The Unsinkable, Undeterred, Uncompromising Harold Hamm

Continental Resources’ CEO Harold Hamm isn’t one to mince words or question his decisions, especially during unprecedented times for his industry. Back in 2016, the larger-than-life billionaire wildcatter was tapped by the current administration for a cabinet position to become the first U.S. energy secretary plucked directly from the oil and gas industry. Long story short, that never transpired, and Hamm returned to doing what we does best—finding oil.

Continental Resources

Continental Resources, Inc. is an American petroleum and natural gas exploration and production company based in the Continental Oil Center in Oklahoma City.

www.contres.com

 

Since his brush with political fame, Hamm has emerged as an oracle of sorts and certainly a voice to be heard for crude oil. He heavily advocated government intervention during the Saudi Arabia-Russia pissing contest. He stood along CEOs from ExxonMobil, Chevron, and Occidental Petroleum in April to meet with President Trump in an oil and gas quasi-summit to discuss the state of an industry in crisis. Later that month, after the price of crude oil nose-dived into a negative stratosphere, Hamm called for a government probe into what he believed to be market manipulation or system failure behind the price wreckage.

Most recently, and on top of calls to cut U.S. oil production as well as growing storage constraints, Continental shut-in a majority of its Bakken wells in North Dakota and Montana declaring force majeure. When you’re the largest operator in the second-largest producing basin, that’s serious news and a defiant action to adapt to an oil and gas industry such as it is. And it also adversely affects the midstream space.

Continental now has announced its 1Q earnings report that comes with a $186 million loss. A lot of money, yes, but nothing compared to the billions in losses we’re seeing from other E&Ps. The company also says it will curtail about 70% of its crude output in May—one of the most aggressive cuts in production from E&Ps right now as producers plan to halt more than 600,000 BPD this month and next. Word of the day is “patience” for midstreamers pained by curbed volumes in a tumultuous time. Let’s remember, we both need each other.

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