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Colgate Energy's owners are planning to go public01/19/2022
A four-year-old “IPO silence” from the Permian Bains’ operators is about to be broken: Colgate Energy Partners III LLC is reportedly planning to float the shale oil producer on the stock market. This would be the first major IPO for a U.S. oil producer since 2017.
Colgate Energy is a privately held oil and natural gas company based in Midland, Texas. Founded in 2015 with support from Pearl Energy Investments and NGP, the company made several noteworthy acquisitions this year that have significantly boosted its position in the Permian's Delaware Basin.
The move is likely motivated by a rise in energy prices, as economies emerge from pandemic lockdowns caused by COVID-19, resulting in attractive corporate valuations after years of underperformance in the oil patch.
According to sources, in an IPO slated for the middle of 2022, Pearl Energy Investments and NGP, the companies that own Colgate Energy Partners III, are partnering with Credit Suisse Group AG on getting the company ready. And while the numbers pertaining to the valuation of the IPO are not disclosed, Reuters as well as our own sources speculated that the sum could approach $5 billion, including debt.
Colgate may also explore the possibility of selling its business. However, nothing is finalized yet and the company could also continue to operate independently as a private company with strong cash flow.
Following Vine Energy's IPO earlier in 2021, the IPO would be the first major offering in the Permian Basin since Jagged Peak Energy's IPO in January 2017.
Meanwhile, Colgate has an estimated net production of 62,000 boe/d in the Permian Basin, pending a planned acquisition announced in early November, with a position covering approximately 108,000 net acres mainly within Reeves and Ward counties in Texas and Lea County in New Mexico.
The company expects to close its acquisition in the first quarter of 2022. About 22,000 net acres were acquired directly from the seller in an undisclosed deal worth $190 million in New Mexico's Eddy and Lea counties, directly offsetting Colgate's existing holding.
Furthermore, the company has already completed two major acquisitions in the past six months: Colgate purchased Luxe Energy from Occidental Petroleum Corp. in June, followed by the acquisition of Reeves and Ward County acreage from Occidental Petroleum in July for $508 million in cash.
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.
The Permian Basin, in particular, is set to achieve record output in January, thanks to supporting commodity prices for companies such as Colgate.
So, if you want to learn more about the industry's infrastructure, don’t forget to connect with our Houston sales office, to see our intelligence for yourself.
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The crux of the matter is rather simple: productivity gains of local energy operators have been stable not only because they are drilling better acreage, but also because players finally realized capital efficiency gains. And even if some new obstacles impede Appalachia's growth at the same rate as the Permian or Haynesville, it does not detract from the value of the Marcellus and Utica basins. The Appalachians will still be the top producers at a very competitive pace as long as commercial inventory exists. After all, as long as there is commercial inventory, somebody will have to drill.
The ever-increasing demand for natural gas exports from the Gulf Coast started a race to further develop Permian Basin. Various companies, including Kinder Morgan and MPLX, are among those looking at building new pipelines in the region due to the demand spike. But Energy Transfer seems to edge past them into the lead since its project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.
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.