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BP's South Haynesville Natural Gas Passed MiQ’s Certification with Flying Colours: a Straight-A Student

BP's U.S. onshore wells in the Haynesville Shale have ranked among the best performing wells for methane emissions, as the company took the opportunity to become the latest major international energy producer to differentiate its natural gas through MiQ.’s certification.

BPX Energy, the onshore unit of BP, was awarded an A grade on Dec. 8 by MiQ for its methane emissions performance from its South Haynesville Basin wells across Texas. The audit was performed by MiQ’s independent certification system. With such an audit in place, operators can differentiate themselves through methane-emissions performance. MiQ currently certifies about 10 Bcf/d or around 2.5% of the global gas market and 11% of U.S. gas production.

According to the management of MiQ, the company aims to bring forward a market where certified natural gas can be traded around the world in the same way as other traditional commodities, ultimately providing incentives to lower overall emissions of methane. And now, as a result of its certification system's innovative and independently audited nature, operators, buyers, and even regulatory agencies can viably support methane reduction in a global context.

As for BPX, its South Haynesville Facility is composed of 70 wells, and MiQ will issue one certificate per MMBtu of certified natural gas. Buyers and traders will be able to order these certificates through BP's account at the MiQ Digital Registry before the end of the year.

About 0.2 billion cubic feet of natural gas is produced by BPX's South Haynesville facility each day; these well sites have been certified using the MiQ Standard, which determines the facility's methane emissions from "A" to "F". As low as 0.05% methane concentration corresponds to an A grade, while 2% corresponds to an F grade.

Following such success, BPX is now looking closely into its Haynesville, Eagle Ford, and Permian basins assets to find additional opportunities for certification.

In accordance with all MiQ certifications, the BPX’s facility received an independent A grade from an auditor. In this case, GHD, one of eight accredited auditors by MiQ, verified the company.

In order to compile its data for audit, BPX utilized multiple methane monitoring technologies. A few examples include a drone and fixed-wing aircraft that can be equipped with OGI cameras, as well as ground-based cameras. Additionally, BPX measured methane emissions from targeted sources using field-measurement devices.

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Colgate Energy's owners are planning to go public

Colgate Energy is planning to float its shale oil producer in the Permian's Delaware Basin on the stock market. If successful, this IPO would be the first major U.S. oil producer offering since Jagged Peak Energy's IPO in January 2017. Looks like investors’ confidence in the sector is returning as U.S. crude prices hit their highest in seven years late last year S&P energy index delivered roughly twice the return of the S&P 500 in 2021.

Despite the circulating rumors concerning Colgate’s attempt to launch an IPO, on May 19 the company decided to combine with Centennial Resource Development Inc. This merger of equals is estimated at $7 billion and will found the biggest pure-play E&P company in the Delaware Basin of the Permian. The transformative combination essentially enlarges companies’ potential and hastens the growth across all financial and operating metrics. According to Centennial CEO Sean Smith, the combined company is anticipated to furnish shareholders with quickened capital return program due to a fixed dividend coupled with a share repurchase plan. Due to a recent report, the merger would increase production 7%, to 145,000 boe/d by the fourth quarter would further ratchet up next year. By third-quarter 2023, the company predicted 160,000 boe/d based on a drilling program of 140 wells per year. Colgate Energy was reported to be getting an IPO last December that sources said would value the company at approximately $4 billion. The combined company will have over 15-years of drilling inventory, assuming its current drilling pace, the companies will produce over $1 billion of free cash flow in 2023 at current strip prices.

Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.

California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.

The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.

2022 blog posts