Since days when shale oil and gas technologies were discovered, the U.S. energy industry has been evolving more rapidly than ever before. Many changes are amazing especially when you put them on an industry map. At Rextag not only do we keep you aware of major projects such as pipelines or LNG terminals placed in service. Even less significant news are still important to us, be it new wells drilled or processing plants put to regular maintenance.
Daily improvements often come unnoticed but you can still follow these together with us. Our main input is to “clip it” to the related map: map of crude oil refineries or that of natural gas compressor stations. Where do you get and follow your important industry news? Maybe you are subscribed to your favorite social media feeds or industry journals. Whatever your choice is, you are looking for the story. What happened? Who made it happen? WHY does this matter? (Remember, it is all about ‘What’s in It For Me’ (WIIFM) principle).
How Rextag blog helps? Here we are concerned with looking at things both CLOSELY and FROM A DISTANCE.
"Looking closely" means reflecting where exactly the object is located.
"From a distance" means helping you see a broader picture.
New power plant added in North-East? See exactly what kind of transmission lines approach it and where do they go. Are there other power plants around? GIS data do not come as a mere dot on a map. We collect so many additional data attributes: operator and owner records, physical parameters and production data. Sometimes you will be lucky to grab some specific area maps we share on our blog. Often, there is data behind it as well. Who are top midstream operators in Permian this year? What mileage falls to the share or Kinder Morgan in the San-Juan basin? Do you know? Do you want to know?
All right, then let us see WHERE things happen. Read this blog, capture the energy infrastructure mapped and stay aware with Rextag data!
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.
According to the company’s press release on December 19, Northern Oil and Gas Inc. (NOG) closed its announced deal with a private seller of non-operated interests in the Northern Delaware Basin for $131.6 million in cash. The acquisition was announced with a $13 million deposit in October and is the third Permian Basin acquisition since August, adding to NOG’s $400 million of Permian Basin acquisitions in 2022. The assets of 2,100 net acres are primarily operated by a private company Mewbourne Oil Co., with production anticipated to total almost 2,500 boe/d in 2023. Also, Coterra Energy Inc. and Permian Resource Corp. are operators of the assets. The assets contain high-quality, low breakeven development that is leveraged to some of NOG’s top operating partners, as our investors have come to expect.
On November 16 Diamondback Energy Inc. decided to expand in the Midland portion of the Permian Basin with the acquisition of Lario Permian LLC in a $1.55 billion cash-and-stock transaction. The Permian operator announced another billion-dollar agreement to purchase FireBird Energy LLC, a private Midland Basin operator. In total, Diamondback is paying almost $3.3 billion to extend in the Midland Basin. When combined with the pending FireBird acquisition, Diamondback is increasing its Midland Basin footprint by roughly 83,000 net acres, is adding 500 high-quality drilling opportunities that compete for capital with the current development plan and is raising the 2023 production profile by almost 37,000 bbl/d of oil (50,000 boe/d).
Northern Oil and Gas Inc. (NOG) made a $330 million purchase in the Permian Basin, according to the release on October 19. NOG revealed an agreement to purchase a 36.7% working interest in the Mascot Project from Midland-Petro D.C. Partners LLC (MDPC). The acquisition will be funded with cash on hand, operating free cash flow, and borrowings. The Mascot Project is operated by Permian Deep Rock Oil Co., an affiliate of MPDC, which is a David H. Arrington-owned business based in Midland, Texas. NOG anticipates that the production from the acquired properties to average almost 4,400 boe/d in the first quarter of 2023 and 6,450 boe/d for the full-year 2023 (2-stream, about 80% oil).
Continental ResourcesInc. agreed to be purchased by its founder, Harold G. Hamm, in a $4.3 billion cash deal that would take the U.S. shale giant private. On October 17 Continental, based in Oklahoma City, concluded an agreement to be acquired by Omega AcquisitionInc., an entity owned by Hamm, for $74.28 per share. The offer price denotes a 15% premium to the closing price on June 13 — the day before Hamm’s family revealed their initial $70 per share proposal. Even with the proposed incremental leverage from the buyout, CLR would be almost 0.6x leveraged in 2023, and expected FCF, even before assuming reduced costs from going private (else dividend), would have the term loan repaid in about 1.5 years. As a private company, Continental should have greater freedom to operate, particularly in areas such as exploration. Being a chairman of Continental Resources, Hamm and his family own 83% of the company’s stock. Based on the shares outstanding as of October 12, the tender offer would be for almost 58 million shares of common stock, according to the Continental release. The tender offer values Continental at roughly $27 billion. The offer price is slightly under Siebert Williams Shank & Co. LLC’s $75 price target and compares to the consensus price target of $72.86 on FactSet and $71.73 on Bloomberg.
Antero Midstream Corp. bought Marcellus assets of Crestwood Equity Partners LP on September 12 for $205 million in cash, signing another sale of noncore assets by the Houston-based company. Crestwood has strategically enhanced its asset portfolio through a series of A&D transactions for the previous 18 months to create a competitive scale in the Williston, Delaware, and Power River basins. The strategy covered acquisitions of Oasis Midstream Partners, Sendero Midstream, and Crestwood Permian Basin Holdings LLC (CPJV), which was a 50:50 joint venture of Crestwood and First Reserve. The assets to be bought cover 72 miles of dry gas gathering pipelines and nine compressor stations with about 700 MMcf/d of compression capacity. The current throughput on the system is approximately 200 MMcf/d, resulting in important available capacity for increase without major capital investment. The deal includes almost 425 undeveloped drilling locations and 120,000 gross dedicated acres from Antero Resources mainly in Harrison County. The acquisition is also anticipated to raise Antero Midstream’s compression capacity by 20% and gathering pipeline mileage by 15%.
On August 31 Ring Energy Inc. purchased privately-held Stronghold Energy, adding operations that are mainly situated in Crane County, Texas, in the Permian Basin’s Central Basin Platform. According to a September 1 Ring Energy release, this transaction fully complements the conventional-focused Central Basin Platform and Northwest Shelf asset positions in the Permian Basin. The majority owned by Warburg Pincus LLC, Stronghold’s operations are concentrated on the development of about 37,000 net acres situated mainly in Crane County. In July Ring Energy entered into an agreement to buy Stronghold Energy II Operating LLC and Stronghold Energy II Royalties LP for $200 million in cash at closing and $230 million in Ring equity based on a 20-day volume weighted average price. Consideration also involved a $15 million deferred cash payment due six months after closing and $20 million of existing Stronghold hedge liability increasing the total transaction value to $465 million. Stronghold’s asset base is almost 99% operated, 99% working interest, and 99% HBP. In July, Ring announced the current net production of Stronghold’s asset base was approximately 9,100 boe/d (54% oil, 75% liquids).
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.
On 3 August the pipeline operator Plains All American LP raised its 2022 profit forecast for the second time this year, as it expects a huge demand on its pipelines transporting U.S. shale oil to the Gulf Coast. The company increased full-year adjusted earnings guidance by $100 million to approximately $2.38 billion, since it anticipates higher crude and natural gas liquids volumes. European buyers have snapped up the U.S. light sweet crude, the largest part of which is delivered in the Permian Basin of West Texas and New Mexico, as they depend on replacing Russian barrels. Average daily crude oil volumes in the second quarter grew 30% on its Permian Basin pipelines with oilfield activity trending about 10% exceeding its initial expectations. Its shares increased 3.6% in after-hours trading on August 3 to $11.19.
According to a midstream oil and natural gas company release on August 2, MPLXLP has increased total pipeline throughputs by 6% in the second quarter of 2022 and terminal throughput by 4%, versus year-ago levels. In an earnings statement of MPLX, the total pipeline throughputs were 5.9 million bbl/d, with terminal throughput of 3.1 million bbl/d for the second quarter. The company reported a net income of $875 million and adjusted earnings of $1.457 million in the second quarter, both higher than in the same period of 2021. Gathered volumes grew up by 11% from year-ago levels to an average of 5.6 Bcf/d. In the Marcellusregion, gathered volumes fell 1% compared to year-ago levels to an average of 1.3 Bcf/d. MPLX is expanding several projects, including in the Permian Basin where the Whistler pipeline is increasing from 2 Bcf/d to 2.5 Bcf/d, in addition to lateral pipelines into the Midland Basin and Corpus Christi domestic and export markets. Moreover, the construction is also maintained on the 200 MMcf/d Tornado ll processing plant, which MPLX anticipates coming online in the second half of 2022. Additionally, 68,000 bbl/d Smithburg de-ethanizer project in the Marcellus is expected to come online in the third quarter.
Earthstone Energy Inc., based in Texas, announced the transaction on June 28: the acquisition of Titus Oil&Gas which will raise production in the Delaware Basin by 26%. The $627 million acquisition fills the Permian Basin in Eddy and Lea counties, N.M. with 86 net locations on 7,900 net acres of leasehold, while it is not clear how much of the leasehold might be on federal acreage It is Earthstone’s seventh acquisition since 2021, a span that includes the closing of approximately $1.89 billion in acquisitions in the Permian Basin. The purchase of Titus Oil & Gas Production LLC and Titus Oil & Gas Production II LLC, privately held companies backed by NGP Energy Capital Management LLC, is estimated at $575 million in cash and it is the equivalent of $52 million in stock (3.9 million shares of its Class A common stock based on the June 24 closing price). Titus shared that its net production in June was 31,800 boe/d. The company had reserves of approximately 28.9 MMboe. Earthstone is sure its net production will increase, at the midpoint, by 20,500 boe/d (65% oil) in the fourth quarter.
A bolt-on acquisition of Woodland Midstream gathering and processing assets in the Permian Basin by DCP Midstream LP is under consideration and estimated at $160 million. According to a definitive agreement announced on June 14, DCP Midstream will get the James Lake System from Woodland Midstream II, a portfolio company of EIV Capital. DCP anticipates funding the bolt-on acquisition using cash on hand and borrowings under the company’s existing bank facilities. Since the James Lake System is situated within three miles of DCP’s Goldsmith processing facility in the Permian Basin, it provides the opportunity to maintain significant synergies and reduce the acquisition multiple over time. The System includes about 230 miles of gathering pipe and a 120 MMcf/d cryogenic processing facility, increasing DCP’s capacity and serving significant synergies with the company’s Goldsmith processing facility in Ector County, Texas. The James Lake System attends producers within the Permian’s Central Basin Platform in Ector, Andrews, and Winkler counties, Texas. It is expected that DCP also secures about 250,000 dedicated acres and the transaction itself is expected to be completed in the third quarter of the year. To ensure the fulfillment of this transaction: Holland & Hart LLP provides legal counsel to DCP; Intrepid Partners, LLC is a financial adviser and McDermott Will & Emery LLP is a legal advisor to Woodland Midstream II.
Around 25,000 net acres in the Permian are being sold by Percussion Petroleum II, looking to fetch up to $1.5 billion, as some sources bet on rising oil prices to pocket more than double what it paid in 2021. The company spent $375 million plus contingent payments a year ago to buy the bulk of its assets in one of the most prolific crude-producing areas in the U.S. from Oasis PetroleumInc. The oil prices increased to triple digits and buyers wanted to gain a toehold in the basin, whereas backers of private shale companies such as Percussion use it as a chance to exit their investments with big profits. Remarkably, U.S. crude oil futures have grown about 50% to approximately $109/bbl since June 29, 2021, when Percussion closed its deal with Oasis.
On June 16 Targa Resources Corp. decided to acquire Lucid Energy Group, located in the Permian Basin, which is a part of Riverstone Holdings LLC and Goldman Sachs Asset Management. Firstly, Targa enlarged due to the recent “blot-on” acquisition of Southcross Energy in the Eagle Ford for $200 million and it will become bigger thanks to the $3.55 billion cash transaction. Targa’s financial position allowed it to utilize convenient opportunities to extend its company so it bought #Lucid using available cash and debt with an estimated pro forma year-end 2022 leverage around 3.5 times. According to Targa’s estimates, the acquisition of Lucid will increase the number of natural gas pipelines by 1,050 miles and add about 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction located mainly in Eddy and Lea counties of New Mexico. The investment-grade producers source approximately 70% of current system volumes. According to the press release, a full-year standalone adjusted EBITDA is expected to be between $2.675 billion and $2.775 billion and reported year-end leverage ratio of about 2.7 times. Targa’s updated financial expectations assume NGL composite prices average $1.05 per gallon, crude oil prices average $100/bbl, and Waha natural gas prices average $6 per MMBtu for the remainder of 2022.
Matador Resources Co. acquires a gathering and processing system for $75 million in New Mexico’s Eddy and Lea counties from Summit Midstream Partners LP, filling up Matador’s midstream portfolio in the Permian Basin. Matador reached an agreement with a subsidiary of Summit to gain Summit’s Lane Gathering and Processing System on June 9. Nowadays, the Lane G&P System combines a 60 MMcf/d cryogenic natural gas processing plant, three compressor stations, and about 45 miles of natural gas gathering pipelines. As an investor presentation says, Matador began its initial midstream build-out in the Delaware Basin in 2015-2016. Since then the company has extended its midstream footprint in the Delaware using the San Mateo I and San Mateo II joint venture partnerships with Five Point Energy LLC
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.
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.
In the midst of the high prices and the U.S. government’s pushing, in the last week, the number of oil rigs increased by 5 and in total makes 557, its highest since April 2020, according to Baker Hughes Co BKR.N. Concerning the gas rigs, they gained 2 to 146, their highest since September 2019. Moreover, crude production was aimed to rise from 11.2 million barrels per day (bpd) in 2021 to 12.0 million bpd in 2022 and 13.0 million bpd in 2023, according to federal energy data. 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’s Pad Activity monitor (PAM). The overall amount of rigs in the U.S. would grow to an average of 684 in 2022 and 783 in 2023, due to U.S. investment bank Piper Sandler forecast. As Baker Hughes claimed that compares with an average of 478 in 2021.
And Petro-Hunt E&P is the new sheriff in town with 21,430 net acres of leasehold in the Basin, production of which surpasses 7,000 bbl/d and 100 MMcf/d respectively. To take advantage of it, Petro-Hunt plans to begin an active development drilling program on these assets in the coming months heavily upgrading the numbers of its 775 operating oil wells and contributing to over 8,100 non-operated wells. Time will tell, however, whether or not this move will be able to deliver such results.
Devon Energy Corp. believes that the Anadarko Basin is a hidden treasure and aims to use its position in it to fuel a robust cash return model and establish itself as an industry leader in promoting ESG. This E&P company plans to drill 45 new wells in the Midcontinent by 2022, as well as to produce 600,000 boe/d across five operating basins, including the Eagle Ford Shale, Permian, Powder River, and Williston basins. And given that Devon's recent fourth-quarter results were better than Street estimates. It appears that they are doing something right, at least for the moment.
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.
The future of shale is looking bright: economic recovery and a spike in travel lifted oil prices to multi-year highs, helping Continental Resources to a fourth-quarter profit that exceeded Wall Street expectations. Coming off such a high note, the company plans to increase its dividend rates by 15% to 23 cents per share!
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.
Enterprise decided to go in on the Permian Basin. With the surprise purchase of Navitas Midstream for $3.25 billion in cash, the company gained a foothold in the Midland Basin, as it previously lacked #naturalgas or NGL infrastructure apart from downstream pipelines in the region. Enterprise estimates that distributable cash flow accretion will be in the range of $0.18 to $0.22 per unit in 2023, while simultaneously supporting additional capital returns to their limited partners through distribution growth and buybacks of common units.
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.
Permian Basins gas infrastructure boom: Summit Midstream puts into service a new pipeline system, aimed at reducing gas flaring in the area. Besides ecological concerns, the project will also transport almost 1,5 billion cubic feet of gas per day — enough to supply 5 million U.S. homes every day. According to Federal Energy Statistics, the project cost a whopping $450 million.
Sempra Energy would develop the 4.0-mmtpa Vista Pacifico LNG export facility located next to the company's Terminal for Refined Products in Topolobampo in a bid to provide gas from the Permian basin in Texas and New Mexico to Asian markets. Once marketing begins, Sempra's management expects Vista Pacifico to be oversubscribed.
Crestwood & Oasis Midstream merge to create a top Williston #basin player. $1.8 billion deal is expected to close during the Q1 of 2022. The transaction will result in a 21.7% ownership stake for Oasis in Crestwood common units. The remaining ownership of Oasis in Crestwood will also be of benefit to the company since it will create a diversified midstream operator with a strong balance sheet and a bullish outlook after this accretive merger.
Non-core Permian assets to be sold for $160 million by Diamondback Energy in a massive Drop-Down Transaction
Diamondback Energy is willing to sell some of its Permian Water Assets in order to reduce debt and ensure a steady oil supply through the end of the year. The brokered deal will bring the company some $160 million in cash. Consolidation seems to be the trend in the industry, but for how long?
Comstock Resources decided to go through with asset divestment, selling its Bakken Shale actives for $150M to Northern Oil and Gas. The proceeds from these sales will be reinvested by Comstock Resources Inc. into the Haynesville Shale, at which point the company may acquire additional leasehold and fund drilling activities starting in 2022. Meanwhile, Northern clearly gunning for the pack leading position in the Texas shale play, but whether they succeed or not is remains to be seen.