Shale Directories Conferences
Appalachian Storage Hub Conference
June 6, 2019
Hilton Garden Inn
Southpointe, Canonsburg, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
Electric fracking could take over the Permian. Shale production in West Texas continues to boom–so much so that shale oil and gas producers in the Permian Basin have more than they know what to do with. As production continues to outpace the expansion of sorely needed pipeline infrastructure, local operators in the Permian are letting approximately 104 billion cubic feet of natural gas go to waste each year by flaring, what is essentially just burning the gas away, instead of putting it on market. Baker Hughes CEO, Lorenzo Simonelli, told investors in a call on Tuesday that he sees all of the burned off natural gas wasted by his company and so many others as a byproduct of their oil drilling as a major business opportunity. The company is debuting a new, cutting-edge technology that will harness this otherwise wasted gas to power their hydraulic fracturing equipment in the Permian Basin in West Texas.
Some Good News on PA’s Nuclear Bailout. Citizens Against Nuclear Bailouts — a diverse coalition of Pennsylvania citizens’ groups, power generators, and energy, business and manufacturing associations — has issued the following statement in response to Exelon Generation’s announcement to end nuclear generation operations at its Three Mile Island nuclear facility.
Exelon Generation has made a business decision to begin the process of ending nuclear generation operations at Three Mile Island rather than invest the corporation’s billions of dollars in profits to support the plant, community and its employees.
This decision was made in their boardroom, where it belongs. Exelon should never have held their employees and the community hostage as it demanded a bailout from Pennsylvania ratepayers and lawmakers.
Moving forward, decommissioning will take place over the course of decades as Exelon works to secure the 650 metric tons of spent nuclear waste fuel on-site. This will require many employees, and we hope that Exelon holds true to their May 2018 statement that the majority of the remaining 400 employees at the site will continue to work at the plant during the decommissioning process.
We fully expect Exelon, FirstEnergy Solutions and Talen Energy will continue to push for an unwarranted nearly half-billion-dollar ratepayer-funded corporate handout from lawmakers in the Capitol.
Pennsylvania lawmakers should continue to reject this attempt at a corporate cash grab being led by three out-of-state corporations projected to make more than $1 billion in profits in Pennsylvania in 2018 and 2019.
U.S oil, gas industry sets production, export records. Texas has a reputation of being a leader in energy production from coast-to-coast. That reputation has grown internationally as Texas leads the nation with dramatic increases in oil and natural gas production and exports. The International Energy Agency (IEA) recently called the rise in production in Texas and the U.S. “the standout champion of global supply growth” and it expects the trend to continue. The U.S. Department of Energy’s Energy Information Administration (EIA) reports both oil and dry natural gas production set U.S. records in February. Oil production hit 12.1 billion barrels per day, Natural gas soared to 89.2 billion cubic feet per day, and the highest for any month since EIA began tracking monthly dry natural gas production in 1973. The volumes of petroleum increases have been created through technological developments in drilling, completion, and production techniques developed in Texas and throughout the U.S. that has been blessed with ultralow-permeability source rocks that has held massive amounts of hydrocarbons.
Marathon Buys Andeavor Logistics. Marathon Petroleum Corp. is merging two of its oil and gas pipeline, transportation and storage operations for $9 billion. MPLX and Andeavor Logistics are master limited partnerships majority owned by Marathon, which raised the possibility that it might combine the two late last year. Andeavor unitholders will receive 1.135 MPLX common units for each Andeavor common unit held. Marathon will receive 1.0328 MPLX common units for each Andeavor common unit held. The enterprise value of the deal is listed at $14 billion. “The combined entity will have an expanded geographic footprint which we believe enhances our long-term growth opportunities and the sustainable cash flow profile of the business. We are confident about the midstream growth and value-creation opportunities that exist across this combined platform in the best basins in the U.S.,” Marathon Chairman and CEO Gary Heminger said in a statement.
Saudi’s Could Be Buying into the Marcellus. Saudi Aramco, which has an ambitious plan to grow its natural gas business, is considering investing in the Marcellus shale gas assets of Norway’s Equinor in what would be the first-ever foray of Saudi Arabia’s oil giant into the natural gas business outside the Kingdom, Bloomberg reported on Wednesday, quoting people familiar with the plans. Aramco is mulling over investing in Equinor’s Marcellus position either via a joint venture or by acquiring a stake in the operations, according to Bloomberg’s sources, who noted that talks between Aramco and Equinor are still at an initial stage. The Saudi state oil company may also team up with other oil firms to get U.S. shale gas acreage, the sources told Bloomberg. Equinor, for its part, operates assets in the Marcellus, in the Eagle Ford, and in the Bakken in the U.S.
FERC Approves NESE. Williams said Friday the Federal Energy Regulatory Commission (Ferc) has authorized the Northeast Supply Enhancement (Nese) project — an expansion of the existing Transco pipeline system designed to serve New York City area markets.
The project is expected to be completed in time for the 2020-2021 winter heating season, Kallanish Energy understands.
The Northeast Supply Enhancement project will provide 400 million cubic feet per day (Mmcf/d) of additional natural gas supply to National Grid, which continues to convert roughly 8,000 customers annually from heating oil to natural gas in New York City and Long Island.
“Nese will provide access to critical supply to serve our customers in New York City and on Long Island, ensuring there is enough natural gas for them to heat their homes and run their businesses,” said National Grid New York president John Bruckner.
Nese will expand existing Transco pipeline infrastructure in Pennsylvania, New Jersey and New York, primarily by “looping,” placing new pipe alongside existing pipe parallel to the existing right-of-way.
The project consists of roughly 10 miles of 42-inch pipeline looping facilities, three miles of onshore 26-inch looping facilities, 23 miles of offshore 26-inch looping facilities, the addition of 21,902 horsepower at an existing compressor station, a new 32,000-Hp compressor station, and related facilities.
Following the receipt of all necessary regulatory approvals, Williams anticipates beginning construction on the Northeast Supply Enhancement project this fall.
EQT – Rice Brothers Saga Continues. EQT Corp. is not a Mom-and-Pop natural gas producer – and can’t be run like one – the board’s independent members said, in effect, to dissident shareholders looking to insert their board nominees into the operations of the U.S.’s largest gas producer.
“The Board should not be a friends-and-family club, and it is not in the best interests of all EQT shareholders for the company to become a family business,” the current independent directors said in a letter to dissident Toby Rice Wednesday.
“Particularly given your family’s 3.1% ownership interest in EQT, and your brother’s position as a director on the EQT board standing for reelection, we do not believe the addition of other Rice family members or their designees is appropriate or consistent with best-in-class governance practices.”
Stick & carrot
While using a big stick on Toby and Derek Rice et al., EQT also put forth a proverbial carrot, announcing three of its long-time directors, including board chairman and 23-year board member Jim Rohr, are not standing for re-election at the July 10 annual meeting. The other two directors stepping down are Lee Todd and Brad Carey, Kallanish Energy reports.
EQT nominees for the trio of board seats are: Valerie Mitchell, founding member and former CEO of Corterra Energy; James McManus, chairman, president and CEO of Energen Corp. from 2008 until its sale to Diamondback Energy in 2018; and Janet Carrig, senior vice president, general counsel and corporate secretary of ConocoPhillips from 2007 through 2018.
With this trio, EQT is attempting to counter the Rice team’s complaint the current board and management team are basically screwing up what had been a good thing at Rice before the bigger company took it over.
The dissidents, including the Rices, a number of former Rice Energy executives, and at least two hedge funds that support their efforts, allege EQT’s board doesn’t have enough directors with oil and gas industry experience and too many directors with long tenures.
“As we and other shareholders have been saying for many months, the problem at EQT is that the leadership team lacks the vision, ambition and execution capability to deliver on the promise of EQT’s outstanding assets,” the dissidents said in response to the EQT letter.
“Modest board changes without a leadership team change will not, in our view, put EQT on a path to unlock the true potential of its asset base. The reality is that even if EQT achieves management’s stated 2019 targets, it would remain the highest-cost operator in the Appalachian Basin.”
No additional Rices needed
With Danny Rice, former CEO of Rice Energy, already on the EQT board, the letter said, “We fail to see why the company needs two brothers with similar backgrounds and experience when we could benefit, by contrast, from directors with a variety of direct, large-company experience, as offered by the EQT nominees.”
The letter intimated the Rice team nominees as unqualified and conflicted. It also accused the Rice brothers, who own the Rice Investment Group, of trying to secure business contracts with EQT for their portfolio companies, which the current board said would complicate their independence.
The letter noted Toby Rice was not made CEO of Rice Energy before that company went public in 2014 — he became, instead, its president and chief operating officer.
“We are not aware of anything that would cause us to reach a different conclusion than your own family members,” the board members wrote.
While EQT welcomed “constructive disruption,” the plan outlined by the Rice team would instead slow the progress that the company has made over the past two quarters and destabilize the business, the letter said.
“In short, we believe that the skill set, experience and independence of the EQT nominees make them better suited to continue to implement EQT’s turnaround while avoiding the conflicts of friends-and-family relationships,” the letter states.
DTE Makes WV Acquisition. DTE Energy’s DTE Midstream unit is acquiring an additional 30% of the Stonewall Gas Gathering (Sgg) system in West Virginia for $275.3 million, Kallanish Energy reports.
The deal with Washington, D.C.-based natural gas transportation/storage business WGL Midstream adds to DTE Midstream’s 55% ownership interest in Stonewall, bringing DTE Midstream’s total ownership interest to 85%.
“SGG complements our existing midstream business and provides a platform for continued value creation supported by a solid underlying resource,” DTE Midstream president David Slater said.
The acquired assets will become part of DTE Midstream, formerly known as Gas Storage and Pipelines, Crain’s Detroit Business reported.
Stonewall Gas Gathering is a roughly 67-mile, 36-inch natural gas gathering system. DTE Midstream has been operating Stonewall for nearly three years.
The gathering system can transport up to 1.4 billion cubic feet per day (up to 2.0 Bcf/d with additional compression) of natural gas from various production points in northern West Virginia to the Columbia Gas Pipeline. The pipeline commenced service in November 2015.
“The area has great geology and provides a strategic connection to other assets,” DTE Energy spokeswoman Jill Wilmot told Crain’s.
The transaction will close by Oct. 1.
Gulfport 1st Qtr. Update. Gulfport Energy reported first-quarter 2019 net income of $62.2 million, or 38 cents per diluted share, down from $90.1 million or 50 cents a share one year ago, Kallanish Energy reports.
The company’s adjusted net income was $53.2 million, or 33 cents a share. Adjusted EBITDA was $206.8 million.
The Oklahoma-based company reported net production in Q1 2019 averaged 1.26 billion cubic feet-equivalent per day (Bcfe/d), down 1.9% from Q1 2018’s 1.29 Bcfe/d.
Production from Ohio’s Utica Shale and Oklahoma’s Scoop play was 90% natural gas, 7% natural gas liquids, and 3% oil.
‘Off to a strong start’
“Gulfport is off to a strong start in 2019, beginning the year active in our core asset areas and remaining on track to deliver on our previously announced 2019 capital budget, operational outlook and commitment to free cash flow generation,” said president and CEO David M. Wood, in a statement.
The company capitalized on its drilled but uncompleted (Duc) well inventory and expects to turn-inline more than 30 gross wells in Q2 2019, he said. That, he said, will result in solid production growth and position the company moving forward. It expects 2019 full-year free cash flow to top $100 million.
The company reaffirmed its 2019 capital budget will be between $565 million and $600 million, funded entirely within cash flow.
Completed 25 gross & net operated Utica wells
In Q1 2019, Gulfport drilled six gross (5.6 net) operated wells in the Utica and four gross (3.1 net) operated wells in the Scoop and had three gross wells in various stages of drilling at the end of the three-month period.
It also completed 25 gross and net operated wells in the Utica and seven gross (6.7 net) operated wells in the Scoop in the quarter. It had eight gross wells in various stages of completion at the end of the quarter.
It turned-to-sales six gross and net operated wells in the Utica and three gross (2.8 net) operated wells in the Scoop in Q1 2019.
Drilling 8-10 Scoop wells
In full-year 2019, the company plans to drill 12 to 14 Utica wells and eight to 10 Scoop wells. It will turn-to-sales 42 to 48 Utica wells and 15 to 17 Scoop wells.
Gulfport reported it has repurchased 3.8 million shares of stock through May 1, at a cost of roughly $30 million in 2019. Last January, the board authorized up to $400 million in stock repurchases over 24 months.
The company’s realized prices in Q1 2019 were $2.54 per thousand cubic feet of natural gas, $52.35 per barrel of oil and 52 cents per gallon of Ngls. The total equivalent price was $2.82/Mcfe.
Gulfport has maintained a large 2019 hedge position of roughly 1.25 trillion British thermal units per day of natural gas fixed price swaps, at an average fixed price of $2.83 per million Btu. It has also increased its oil hedge position at two different prices, it said.
Wood said the company recently monetized a small non-core asset of Marcellus formation rights overlying a portion of its acreage in the Utica Shale in eastern Ohio. No further details were released.
The company also expects to divest certain water infrastructure assets in the Scoop play in the coming weeks, he said.
EOG Resources 1st Qtr. Update. Eog Resources increased its crude oil production by 20% in what the company called an “outstanding” first-quarter 2019, Kallanish Energy reports.
Total company crude oil volumes grew to 435,900 barrels per day.
Natural gas liquids production increased 19% while natural gas volumes grew 11%. That resulted in total company production growth of 17%, the Texas-based company reported last week. Crude oil production in Q1 2019 exceeded the company’s target range.
Profit slips slightly
The Texas-based company reported Q1 2019 net income of $635 million, or $1.10 per share. That compares with Q1 2018 net income of $639 million, or $1.10 per share. Net cash from operating activities in the latest three months was $1.6 billion.
Discretionary cash flow for 1Q 2019 of $1.9 billion increased 3% over 1Q 2018, despite a 13% drop in the average WTI NYMEX price compared to a year earlier.
Adjusted non-GAAP net income for 1Q 2019 was $689 million, or $1.19 per share, compared with $689 million or $1.19 in Q1 2018.
Free cash flow at $55 million
Cash operating costs dropped 8% in the quarter, the company said. It generated free cash flow of $55 million, after designating dividend payments of $128 million. It also increased its dividend by 31%, to $1.15 per share.
Eog is “generating robust financial results” and the quarterly results were “tremendous,” said chairman and CEO William R. Thomas in a statement. “We are growing more efficiently than ever before.”
He added, “We are on track to reduce well costs 5% for the year. Combined with strong price realizations, Eog is positioned to further improve margins and returns.
Well brought online rises year-over-year
Eog reported in Q1 2019 it brought online 78 wells in the Delaware Basin of West Texas/southeast New Mexico. It used one less rig and completion crew than it did in one year ago to bring online 70 wells.
It also added 93 wells in the Eagle Ford Shale of South Texas, five wells in the Powder River Basin of Wyoming, 25 in the DJ Basin of Colorado, four in the Anadarko Basin of Oklahoma and two in the Williston Basin of North Dakota.
The Eagle Ford will remain a top company asset for the next 10 years, Eog said. It also reported it’s reached agreements to provide additional access to crude oil export capacity on the Gulf Coast. That export capacity will increase from 100,000 Bopd in 2020, to 250,000 Bopd in 2022.
Will export crude
The company said it expects to sell a portion of its crude oil from the Eagle Ford and Delaware Basin to export markets.
The new agreements complement the company’s existing pipeline and terminal tankage capacity.
“These agreements extend control of our crude oil production to the water’s edge and open significant new markets to Eog,” said D. Lamce Terveen, senior vice president, marketing, in a statement.
Chesapeake 1st Qtr. Update. Chesapeake Energy (Chk) reported a first-quarter 2019 net loss of $44 million, or 3 cents a share, much worse than a loss of $6 million, or 1 cent per share, in the year-earlier quarter, Kallanish Energy reports.
“We continue to execute on our strategic priorities and once again delivered strong financial and operational results,” said president and CEO Doug Lawler, in a statement.
Higher oil mix in production
Average daily production in Q1 2019 was 484,000 barrels of oil-equivalent (Boe/d) and consisted of 109,000 Bbl of oil, 2.03 billion cubic feet of natural gas and 39,000 Bbls of natural gas liquids. Average production in Q1 2018 was roughly 554,000 Boe/d.
The company’s production is growing with a higher oil mix and the company is producing its highest operating margin per Boe since 2014, it said.
Oil production jumped 18% from Q1 2018 to Q1 2019, or 13% adjusted for asset sales. Oil production represented 22% of the company’s Q1 2019 production, compared to 17% in the year-earlier quarter.
Texas tops Chk’s crude production areas
Chesapeake’s top crude production areas are the Eagle Ford and Brazos Valley, both in Texas. Its top natural gas areas are the Marcellus in the Appalachian Basin and the Haynesville in Texas and Louisiana.
The company is projecting full-year 2019 oil growth of 32%, with a year-end oil mix of roughly 26%.
That will be driven by continued improvements in the Powder River Basin in Wyoming and Montana, and smaller production declines in South Texas due to well spacing and base production improvements, it said.
Chesapeake in Q1 2019 operated 20 gross and 12 net rigs. It spud 79 gross (53 net) wells, completed 83 gross (60 net) wells and connected 83 gross (60 net) wells in the quarter.
It spent roughly $559 million in Q1 2019, on capital spending, compared to $543 million in the year-ago quarter.
Hailing Brazos Valley results
The company hailed its early success in the Brazos Valley in South Texas. The results are above expectations and Chesapeake has reduced costs by $500,000 per well by faster drilling and more fracture stimulation stages completed per day, it said.
Lawler said the Brazos Valley will be a cash-flow positive asset in 2019. Chesapeake acquired the Brazos Valley assets last February. The buy includes the northern Eagle Ford and the Austin Chalk formation, and lie primarily in Burleson, Lee and Washington counties. It is operating four rigs in the valley.
It placed 13 wells in the area to production in 1Q 2019 and expects to place 27 additional wells to production in Q2 2019. Chesapeake is planning to drill longer laterals, with average lengths of 9,000 feet per well, a 27% increase over 2018 levels.
Capital moved to Powder River
Chesapeake reported it had shifted capital dollars from the Marcellus and Oklahoma to the Powder River Basin, where a sixth rig has been added. All are drilling in the Turner formation, but one well be shifted to drill select Niobrara wells later this year.
In the Marcellus, the company achieved record daily gross production of 2.5 billion cubic feet per day (Bcf/d) in January 2019, resulting in record average net production of 948 Mcfd of gas in the latest quarter, Chesapeake said.
It has three rigs in the Marcellus but that will be reduced to two rigs by late June. Chesapeake placed nine Marcellus wells to sale in Q1, and expects to place 14 wells to sales in Q2.
Rig-cutting in Haynesville
It’s cutting its rigs from two to one in the Haynesville Shale. It placed 10 wells to sales in Q1 2019, and expects to place nine to sales in the current quarter.
Chesapeake dropped its one rig in Oklahoma in May 2019. It placed nine wells to production in Q1 2019, and expects to place five wells to production in Q2. It said activity in Oklahoma will increase in 2020 after newly acquired seismic has been evaluated and its drilling inventory has been high-graded.
The company reported roughly 70% of its 2019 production will be hedged to provide financial assurances.
Montage Resources 1st Qtr. Update. Montage Resources reported a first-quarter 2019 net loss of $14.1 million, or 55 cents a share, much higher than the $2.6 million, or 13 cents a share loss one year ago, Kallanish Energy reports.
The company generated revenue of $141.5 million, a 28% increase over Q1 2018, while also realizing a 10% increase in adjusted Ebitdax, to $68.9 million and adjusted net income of $18.0 million, the company said.
The company was renamed after the merger of Eclipse Resources and Blue Ridge Mountain Resources. That deal closed last February. It’s drilling in the Appalachian Basin in Pennsylvania. West Virginia and Ohio, in the Marcellus and Utica shales.
“Our first quarter financials, which include only one full month of consolidated results, highlight the power of the combined entity and the harnessing of operational synergies to drive improved cycle times, translating into higher reported volumes,” said president and CEO John Reinhart, in a statement.
The company’s emphasis is on driving down well costs and improving cycle times, he said. The company, he said, is increasing its 2019 full-year production guidance by 3% over previous estimates, to 520 to 540 million cubic feet-equivalent per day (Mmcfe/d).
The company reported Q1 2019 production of 407.5 Mmcfe/d, above the high end of the company’s guidance, and up 29.2% from a year ago. The company’s average realized natural gas price before derivatives and transportation expenses was $3.01 per thousand cubic feet.
The company spent $103.9 million in Q1 2019 on capital expenses including $99 million on drilling and completions.
In the quarter, the company drilled 10 gross (8.0 net) wells, commenced completions of 9 gross (6.3 net) operated wells, and turned to sales 3 gross (2.1 net) operated wells.
The company has offices in State College, Pennsylvania, and Irving, Texas.
Chevron walks away from Anadarko Petroleum deal, will collect $1 billion breakup fee. Chevron will not submit a new offer to acquire Anadarko Petroleum, walking away from the deal after Occidental Petroleum pulled ahead in a battle to take control of the driller with prized assets in the top U.S. shale oil field. The decision means Chevron will collect a $1 billion breakup fee, a windfall that it could use to purchase another driller in the Permian Basin, the engine of an American oil drilling boom. Shares of the San Ramon, California-based oil major jumped more than 3% following the announcement. “Winning in any environment doesn’t mean winning at any cost. Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal,” Chevron Chairman and CEO Michael Wirth said in a statement. Chevron surprised the market on Thursday by announcing that it still intends to raise its share buyback program to $5 billion per year. Two weeks ago, Chevron executives told analysts the increase was contingent on the deal closing.
U.S. Energy Consumption Up in 2018. U.S. energy consumption, production, and exports reach record highs in 2018. The United States produced a record amount of energy from various sources in 2018, reaching 96 quadrillion British thermal units (quads), an 8% increase from 2017. This increase in production outpaced the 4% increase in U.S. energy consumption, which also reached a record high of 101 quads. At the same time, U.S. energy exports increased 18% to a record high of 21 quads in 2018, reducing net energy imports into the United States to a 54-year low of 4 quads, or less than 4% of U.S. energy consumption. In 2018, crude oil and natural gas accounted for 57% of all U.S. energy production, with crude oil production seeing an increase of 17% and natural gas an increase of 12% from 2017. Natural gas plant liquids production also increased by 14%. The 17% increase in crude oil production outpaced a modest 2% increase in total domestic petroleum consumption, resulting in a 73% increase in exports of crude oil and a 6% increase in exports of petroleum products in 2018 compared with 2017. Exports of crude oil and petroleum products made up 68% of all U.S. energy exports in 2018.
Mountain Valley Pipeline Expanding. Mountain Valley Pipeline “Southgate” expansion to run adjacent to Haw River. MVP proposed its “Southgate” project in May 2018, an extension of the preexisting MVP pipeline that currently spans 73 miles from southern Virginia to central North Carolina. The 73-mile extension would expand into southern Virginia and cross into central North Carolina in Rockingham County and end in Alamance County. The pipeline will transport vast amounts of natural gas supply from the Marcellus and Utica shale production (located in New York, Pennsylvania, Ohio and West Virginia) to markets in the mid- and south-Atlantic regions of the United States, according to MVP. Much of community concern derives from the notion that the pipeline extension would be a gas-fracking system.
SWN Restores WV Stream. Southwestern Energy and the West Virginia Department of Environmental Protection are celebrating the completion of a stream restoration project in the Cheat River watershed, in northern West Virginia, Kallanish Energy reports.
The lower 3.4 miles of Muddy Creek, a tributary to the Cheat River, had been devastated by acid mine drainage due to blowouts from the T&T Mine Complex in 1994 and 1995, along with impacts from other mining sites especially along Martin Creek.
West Virginia adopted special permitting procedures and built a treatment facility that went into operation in March 2018. It can handle up to 6 million gallons per day of acid mine drainage.
Southwestern Energy contributed to the construction of a pipeline that transports the mine acid runoff directly to the treatment plant from Martin Creek and keeps the runoff out of the streams.
The E&P oil-and-gas company was not connected in any way to the pollution, officials said.
The successful partnership is having a big impact on the streams that are returning to a more natural state with improved water quality and increasing aquatic life, WV DEP said, in a statement.
Ensign Makes Eagle Ford Purchase. Independent producer Ensign Natural Resources Tuesday announced the purchase of Eagle Ford acreage in South Texas from Pioneer Natural Resources USA, Kallanish Energy reports.
Pioneer said under the Ensign pact, Pioneer will receive up to $475 million in total proceeds, of which $25 million was received at closing and $450 million is contingent on future commodity prices.
With this divestment, Pioneer becomes a Permian pure play. The sale of the Eagle Ford assets is expected to result in a pretax noncash loss of $400 million to $550 million during the second quarter of 2019.
The estimated proceeds, for purposes of determining the divestiture loss, were valued based on the cash received at closing and the probability-weighted estimate of the contingent proceeds that will be recognized over the earn-out period using forecasted commodity prices, offset by (i) the recognition of a liability for roughly 80% of the forecasted remaining minimum volume commitments the company will retain and (ii) the Company’s net book value of the Eagle Ford Shale and South Texas assets.
The contingent proceeds of up to $450 million will be earned annually over the 2020 through 2024 time period based on actual commodity prices for each year. The contingent proceeds will be paid, to the extent earned, between 2023 and 2025.
The deal includes roughly 59,000 net acres in Bee, DeWitt, Karnes, Lavaca and Live Oak counties and current net production of approximately 14,400 barrels of oil-equivalent per day.
“We are excited to announce our first acquisition. These assets include both meaningful existing production and years of attractive drilling inventory,” said Brett Pennington, president and CEO of Ensign, and former senior vice president of Onshore at Murphy Oil.
Houston-based Ensign was formed in late 2017 in partnership with private equity firm Warburg Pincus. As part of this deal, the company has also secured an equity commitment from the Kayne Private Energy Income Funds.
BMO Capital Markets acted as financial advisor and Kirkland & Ellis served as legal counsel to Ensign.
In addition, BMO and Citigroup Global Markets provided an underwritten commitment for debt financing as part of the acquisition.
PA Permits May 2, to May 9, 2019
County Township E&P Companies
- Armstrong West Franklin PennEnergy
- Bradford Springfield Repsol
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Cameron Shippen Seneca
- Wyoming Windham Chesapeake
OH Permits for week of May 4, 2019
County Township E&P Companies
- Belmont Pease Gulfport
- Carroll Union Chesapeake
- Carroll Union Chesapeake
- Carroll Union Chesapeake