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Breitburn Energy Partners LP Message Board

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  • moneyonomics moneyonomics Aug 20, 2010 11:02 AM Flag

    Why "not to sell" Michigan leases, yet

    Properties like collingwood-utica should carry a premium value from the eyes of a mlp-E&P. Some would say these assets do not fit an mlp-E&P model, but looking outside the box they are actually very supportive of that model from a value standpoint. If bbep can be patient and let the C-U develop somewhat they can then look to trade c-u for long life cash flow production and maybe keep a residual.

    A for example is Exxon. They will be learning a lot from their xto acquisition and maybe if c-u develops and sunniland properties continue to show promise exxon might want to trade (my recollection is exxon had leases in sunniland, not sure if they still do, again just an example as there are many more accross US from my M&A background

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    • "Properties like collingwood-utica should carry a premium value from the eyes of a mlp-E&P. Some would say these assets do not fit an mlp-E&P model, but looking outside the box they are actually very supportive of that model from a value standpoint."

      Agreed.

      ATLS and LINE, both MLP's, have been proud to publicize their c-u acreage. BBEP has more c-u acreage than both of them by the way.

      ATLS, BBEP and LINE (more recently) operate in the Antrim shale - the reason for them being there in the first place.

      ATLS, does pretty well operating in the Marcellus shale - probably more similar in well performance to the c-u. Now that completions (lateral lengths, where to land lateral, and # frac stages) have been dialed in, Marcellus wells are now delivering very consistent, repeatable long life results. In fact, ATLS's horizontal wells keep getting better with time - higher IP's and flatter declines than predictions. Of course the Marcellus is now a "proven" play, but it took a few years to figure it out.

      Will take some time before the u-c is figured out as well, if ever. Looks like ECA and CHK are going to give it the old college try.

      Also agree with BBEP's approach on c-u. Be willing to accept attractive offers but keep an interest while risking no capital as the kinks get worked out.

      Thanks for sharing your thoughts.

 
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