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$690 Million Deal Moves Ahead: Crescent Energy to Complete Purchase of EP Energy's Uinta Assets

On March 30, Crescent Energy closed the acquisition of Uinta Basin assets in Utah that were previously owned by EP Energy for $690 million, a few hundred million dollars below the original price. While a total cash consideration of about $815 million was announced at the time of the transaction's announcement back in February.

At least according to Crescent CEO David Rockecharlie, the accretive deal increases Crescent's Rockies position and adds significant cash flow and a portfolio of high-quality oil-weighted undeveloped sites.

Crescent's acquisition of Uinta indicates its competitive strength and ability to simultaneously deliver shareholder value through accretive acquisitions and to create long-term value for its shareholders through the consolidation of its businesses in today's market.

Upon closing of the Uinta transaction, Crescent's lenders increased the borrowing base under the revolving credit facility to $1.8 billion and the committed amount to $1.3 billion, an increase of $600 million from its previous level.

EP Energy had owned these assets earlier, according to a news release from Crescent Energy on Feb. 16 that was dedicated to the Uinta acquisition. The Uinta comprises about 145,000 contiguous net acres, most of it producing oil (roughly 65%), about 30,000 boe/d.

A year after EP Energy emerged from a bankruptcy process that handed control to its creditors, EnCap Investments agreed to take over EP Energy's assets in the Eagle Ford and Uinta basins for $1.55 billion.

Although U.S. antitrust regulators threatened to hinder EnCap's acquisition of EP Energy, citing the private equity firm's dominant position in the Uinta shale formation as a concern.

According to Reuters, the U.S. government agencies finally approved EnCap's $1.5 billion purchase of EP Energy on the condition that EP Energy's entire Utah oil business be sold. If the assets from Utah hadn't been sold, there would have been just three producers that sell Uinta Basin crude oil to refineries in Salt Lake City, and consumers would have paid more in prices.

Crescent Energy was formed in December when Contango Oil & Gas and KKR went for an all-stock merge. KKR remains the company's partner, but Contango serves as its subsidiary as it manages a portfolio of assets in the Lower 48.

Having completed the Uinta acquisition, Crescent Energy expects to operate two rigs off Uinta for the remainder of the year. In addition to its acquired Uinta assets, Crescent's pro forma year-end 2021 provided reserves totaled 598 million boe, of which 83% was developed, 55% was liquid, and its provided PV-10 was $6.2 billion. Based on the production type curves used in Crescent's third-party reserve reports, a 22% decline rate for its proved developed producing reserves is expected for the first year.

Moreover, on March 30, the company reiterated its previously announced capital investment strategy and production and cost guidance for 2022. Investments in the Eagle Ford and Uinta basins will account for 80%-85% of the $600 million-$700 million capital program for 2022.

Concerning the Uinta acquisition, the Company added additional oil hedges as part of its risk management practices. Together with the expected Uinta volumes, Crescent now has derivative agreements in place covering approximately 60% of its expected total production in 2022.

Likewise, if you wish to remain in the loop concerning the U.S.’ strategic resources and gain insights into how this information can benefit your business, please contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data.

Tel. +1 713-203-3128

Email: treitmeier@hartenergy.com

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To Be or Not To Be: Bakken Assets Could Fetch $5 Billion for Exxon Mobil

Exxon Mobil Corp. is weighing prospects of selling its assets in North Dakota’s Bakken, after gauging interest from potential buyers — 5 billion is the issue price, at least according to rumors. The price point came about after the news that the oilgiant is in the final round of hiring bankers to help launch the sale. Yet Exxon Mobil itself stays tight-lipped regarding the situation.

Canada is looking at ways to increase pipeline utilization to boost crude exports as Europe seeks to reduce its reliance on Russian oil At the moment, oil exports from Canada to the U.S. are approximately 4 million barrels of oil per day, with a portion reexported to other countries. At the end of 2021 Canadian oil companies exported a record amount of crude from the U.S. Gulf Coast, mostly to big importers India, China, and South Korea. And this will only increase in the future.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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