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Magnum Hunter Resources Corp. Message Board

  • fergadan fergadan Sep 16, 2010 10:57 PM Flag

    DCP = Duke Conoco Phillips


    DCP is a heavy hitter. Things are looking bright.

    This topic is deleted.
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    • Yes, they would have to go through the permitting process. I really hope they haven't ripped the pvc pipe up. I really think they could make it work as a recovered frac water line. It keeps thousands of trucks off roads hauling frac tanks of dirty water to treatment plants or deep injection wells.

    • Can you have more than one pipeline in an existing right of way or do they need to go through some kind of permitting and approval process?

      In other words is it possible MHR could JV with another oiler and run another pipeline side by side with the existing pipeline?

      If this is possible perhaps this is why MHR didn't hold out for a better deal on this JV.

    • I understand your disappointment in the terms of the deal. I too thought the terms would have been somewhat better. If I remember correctly, the original pipeline was pvc, low pressure (for conventional shallow wells) and could handle around 5 or 10 mmcf/d. So, Magnum basically provided the right of way and 12.5 million and DCP brings the know how and 22.5 million. MHR got paid $5 million for additional assets contributed.

      The one thing I was very disappointed with was I had hoped they would retain the pvc line in the ground to be able to flow frac water back to their deep injection wells. This is similar to what Heckmann has done in the Haynesville shale. Since the pipeline was already built, it would have taken minimal investment. Heckmann is making very good money on a per gallon basis, and it is a very good environmentally sound practice.

      The main thing that I keep pounding the table on is that many of these E&Ps have very good acreage, but are constrained due to pipeline capacity. Lil ole Magnum Hunter will not only have acreage, have pipeline access, but they will own half of the pipeline. This system will provide great cash flow for MHR as it is expanded and as 3rd party producers turn production online.

    • Ferg,

      Read the press release. Don't understand how the new JV impacts MHR. Didn't see their name in the JV with Conoco. Sorry to have to ask but what's in it for MHR?

      • 2 Replies to billglueck
      • DCP is going to pay 2/3's of the cost of the processing facility on the pipeline for removing the liquids from the gas stream. In return each will be 50% partners in the entire system. DCP will also make a $5 million dollar payment to MHR for the portion of the pipeline which MHR spent to build ($10 mill total cost - remember).

        Once the system is up and running (up to 200 mmcf/d) MHR will be paid gas transportion fees for their 50% ownership.

      • DCP Midstream is a Joint Venture between ConocoPhillips (COP) and Spectra (SE). Spectra is a spin off of Duke. The original JV was set up when Duke owned the midstream assets, hence DCP (Duke-Conoco Phillips).

        Duke is not longer affiliated with Spectra. To further muddle the picture, DCP Midstream has an MLP, called DCP Partners (DPM). Spectra also has an MLP, called Spectra Energy Partners (ticker SEP). Magnum Hunter is in good hands with DCP Midstream as its partner as they have a lot of resources and experience.

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