nosweat SA article had some important points, author totally missed the value creation possibilities of the deal (future cash flows from res/hedges). article only considered one facet of value which is current cash flow and missed the value creation of future cash flows(reserves)they bought some strong revenue generating QRE fields and hedges
" Ark-La-Tex 49 mm boe proved reserves -$859 mm NPV
The Ark-La-Tex area includes properties located in east Texas, northern Louisiana and southern Arkansas. These properties produce from formations such as the Cotton Valley Sand, Haynesville Sand, Woodbine Sand and Smackover Carbonate at depths ranging from 1,000 to 11,000 feet. During 2013, we acquired an additional interest in the East Texas Oil Field. In 2013, we invested $27.3 million in capital in this area, primarily on recompletions, returning wells to production, artificial lift enhancements and facility upgrades in the Dorcheat Macedonia, East Texas Oil Field, Gladewater, Neches and Shongaloo fields. In 2013, we drilled 2 net (2 gross) wells in the Ark-La-Tex area, both in the East Texas Oil Field."
Permian Basin 34 mm boe proved reserves -$611 mm NPV
The Permian Basin area includes properties located in west Texas and southeast New Mexico and produces from a variety of reservoirs such as the San Andres, Grayburg and Clearfork formations at depths ranging from 4,000 to 11,000 feet. Many of these properties are under secondary recovery waterflood operations. During 2013, we invested $48.4 million in capital in the Permian Basin, primarily on development drilling in the Blineberry-Drinkard, Garden City South, Turner Gregory, and Wasson fields. In 2013, we drilled or participated in the drilling of 18 net (66 gross) wells in the Permian Basin. Other Permian Basin capital was spent on recompletions, artificial lift enhancements and facility upgrades, primarily in our Fuhrman Mascho, East Corrigan, G P M, North Cowden and Turner Gregory fields.
end part 1
part 2- NPV are at 10% SM (standardized measure) requirement
Gulf Coast 21 mm boe proved reserves -$498 mm NPV
The Gulf Coast area includes properties located in southern Alabama, southeast Texas and Florida. These properties produce from formations such as the Yegua Sand and Smackover Carbonate at depths ranging from 8,000 to 15,000 feet. During 2013, we invested $21.7 million in this area, primarily on well work and facility upgrades at the Jay Field.
Mid-Continent 5 mm boe proved reserves -$68 mm NPV
The Mid-Continent area includes properties located in Oklahoma, southwestern Kansas and the Texas panhandle. These properties produce from formations such as the Cottage Grove Sand, Atoka, Redfork and Lansing at depths ranging from 3,000 to 15,000 feet. During 2013, we invested $1.0 million in capital in this area, primarily on well work and facility upgrades in our Adams Ranch and Apache fields, and in the drilling of less than 1 net (2 gross) wells in the Mills Ranch field.
Legacy Jay oil field in Permian has over 1b remaining oil in place which matches BBEP long term strategy on buying high OOIL for technological advancement value creation
-best margin vs mlp peers
-hedges are not included in NPV SM calculations which adds additional future NPV
-opportunity to refi 9.25% sr notes
-rp ratio around 16 (prefer 18 overall but do have 18 arkla ) which is good ROR indicator
-reasonable maintenance capital efficiency rate
-(no gp) old gp owners took reduced ownership
From RBN: In December 2013, Targa announced a joint venture with Kinder Morgan Energy Partners to provide fractionation services in Mont Belvieu to Utica/Marcellus producers that sign up to move mixed NGLs on a joint venture pipeline being developed by Kinder Morgan and MarkWest Energy Partners – the Utica Marcellus Texas Pipeline (UMTP). We understand that the project has yet to receive enough customer commitments to proceed – likely due to competing Utica/Marcellus fractionation. We’ll get back to this issue in a subsequent episode of this blog series. Targa and Kinder Morgan have indicated that two fractionation trains (Cedar Bayou Train 5 and Train 6) of as-yet-unannounced capacity would be built to handle both UMTP and other mixed NGLs.
Targa executives said during the company’s May 1 quarterly earnings call that, given the increasing production of NGLs in the Permian Basin, the Eagle Ford and the Mid-Continent region, there are other potential commercial needs for the two new trains planned at Mont Belvieu beyond UMTP. Like EPD, Targa is working to expand the potential for NGL-related exports, knowing that the easy ability to ship purity products from Mont Belvieu to overseas customers adds value to Targa’s fractionation service. In September 2013, Targa started commercial operation of the first phase of an export expansion project at its Galena Park Marine Terminal near Houston. Phase I of this project expanded Targa’s export capability at Galena Park to 133 Mb/d of propane and/or butane. (Included in Targa’s Phase I expansion is the capability to export international-grade “low-e” propane, which means propane with an ethane content of less than 2.5%.) Construction is underway on a project to expand Targa’s propane/butane export capacity by another 67 Mb/d, for a total of up to 200 Mb/d. Phase II is scheduled to come online within the next two or three months. By the way, Targa moves product between Mont Belvieu and Galena Park via three pipelines:...
June 2014 presentation-slide 36- many other good slides in presentation
CONSIDERABLE RESERVE BASE WITH
40 year proved reserve life based on 2013 production
Reserve base provides significant exposure to liquids-rich projects
– 3P reserves of over 2.2 BBbl of NGLs and condensate in ethane recovery mode; 33% liquids
from earnings release-this is the ways to grow. they need to expand add other producers and double this target
"...Pioneer Natural Resources, Inc. ("Pioneer"), a 27.2% partner in the WestTX system, continues to be the largest producer on this system and the contract between APL and Pioneer was recently extended 10 additional years through 2032 and includes additional acreage dedicated from Pioneer. The Partnership expects processed volumes on this system to continue to increase through 2014 and beyond as Pioneer, and the Partnership's many other producer customers, continue to pursue their drilling plans over the coming years in the Permian Basin. The previously announced 200 MMCFD Edward plant is expected to be complete in September of 2014 and the previously announced new Buffalo plant, an incremental 200 MMCFD cryogenic processing plant to be located in the northern part of the system, is expected to be complete in the second half of 2015. These two plants will serve the increasing activity in the Permian Basin and will be fully integrated with APL's WestTX gathering and processing system, increasing the processing capacity in the Permian Basin to 855 MMCFD in 2015. Management currently expects to install a new 200 MMCFD cryogenic processing facility in each of the next five years, along with all necessary infrastructure, in support of the current production plans of the Partnership's producer customers in this area...."
I have been in the oil and gas field and worked around these plants. I cannot fathom the number of major projects(pants) they have brought on line timely (they literally have it down to an assembly line process but on a major scale) with sound followup financial results. Their producers see with their awards.
On new plants in cc they said taking closer to 12 months rather than 18 getting NE plants to capacity (80%)
In their kitty they have $1.1 b liquidity with what I estimate to be $.9b to 1.1b left to spend for 2014 and was stated in cc they are at the point they can opportunity time their ATM sales .
And last but not least distribution coverage over 1.0 and debt leverage in manageable range for a high growth company.
For me supports why this is a top investment holding
excludes UMTP project and any new projects. remaining current projects at this time in 2015 will be keystone 200 mm cyro and mobley 10,000 de eth (both last half 2015) and majorsville 200 mm cyro (2016)
Goes along with prior post on NPV of assets at 10% dicount.
They will pay/issue $1.495 b with equity and another approx $915 mm for debt so total out is ~$2.415 b
-NPV is proved reserves @10% is $2.05 b plus say $110 mm is rough value of hedges not in reserves so value of proved properties in total say is $2.155 b
So they are paying $255 mm for upside (probable reserves, discount rate value below 10%, other) or 12% or of the deal.
so bob in your mind is that a good deal?
Hectatone Update-Nov 2014 in service projected
RENO, NEVADA -- (Marketwired) -- 09/08/14 -- Western Lithium USA Corporation ("Western Lithium", the "Company") (TSX: WLC)(OTCQX: WLCDF
The Company is also commissioning its Hectatone" organoclay plant, located in Fernley, Nevada that is expected to begin imminent production of specialty drilling fluid additives. Mechanical commissioning of the plant is underway and first production is expected by November 2014, based on current startup progress.
2nd qtr cc
During the quarter ended March 31, 2014 Western Lithium made a production decision for its planned organoclay business. The Company has received an environmental approval to extract hectorite clay from its Kings Valley Clay Project. The Company may consider the purchase of other clays including bentonite to make other competitive products. Currently, the Company is completing the construction of a nominal 10,000 ton per year organoclay facility at an industrial site in the City of Fernley. Mechanical commissioning has commenced, with planned production and sales starting in the fall of 2014. Western Lithium has determined that hectorite clay is an important mineral for the oil and gas sector to provide thermally stable gelling and lubricating mud when drilling in high pressure and high temperature (“HPHT“) environments. Globally, the successful implementation of directional drilling technology has commercialized new ultra deep oil reserves and certain shale gas resources in HPHT environments that are emerging as major new energy sources for nations such as the USA. Western Lithium believes that its hectorite clay business will become a niche and critical business to support major new oil and gas discoveries made using HPHT drilling technology.
second try to post
Regional news media gets it
"...Greg Mosier said the major factors for picking Reno come down to business fundamentals.
Mosier is dean of the University of Nevada, Reno's College of Business.
"While incentives are certainly required to be on the short list, factors like proximity to the Tesla northern California assembly facility, proximity to lithium deposits in Nevada, transportation infrastructure and ability to fill work force needs are the most important."
Tim Crowley, outgoing president of the Nevada Mining Association, thinks the proximity to Western Lithium's minute north of Winnemucca had to be a big part of the decision.
"They (Tesla Motors) have to have the mineral," he said. "They can either get it in Nevada or South America. We're ecstatic they're going to get it in Nevada. It showcases the essential need for minerals mined in the state."
Ray Bacon, head of the Nevada Manufacturers Association, pointed to many reasons that haven't received much discussion.
He said that if Tesla had chosen Texas or New Mexico, batteries shipped by rail to its Bay Area car factory would have to change rail lines when turning north.
The Tahoe Reno Industrial Center, where Tesla will locate, also has a looping utility system.
"The looping of all utilities may not seem like a big deal, but automated machinery can be down for hours with a utility failure," Bacon said. "Looping the service stops that issue, and TRIC is one of the few place in the world to have taken that approach. It is a big deal for a 24-7 plant operation and I expect they (Tesla) will become one of those...."
Mark Robison, RGJ 6 a.m. PDT September 5, 2014
Why Nevada for Tesla? Location, low taxes, lithium
Plant can also process simple bentonite used in most drilling
"Phase 1 construction of Western Lithium’s Hectatone™ processing plant... plant will be able to process
other clays such as bentonite for organoclay manufacturing"
Barclays on Condensate Export
Msg 142403 of 142412 at 6/27/2014 12:46:45 PM from bry board by
We believe condensate exports could help prevent
growing supply of light oils from overwhelming US markets and forcing US prices down
in future years. The forward WTI-Brent spread has already fallen ~$1 since the ruling
and will likely average $7-9 rather than the $12/bbl spread implied by ‘16-‘17 forward
prices. This suggests US prices will average of $3-5/bbl higher than what they would
have otherwise. We assume condensate prices will benefit by an extra +/- $2.
Most field condensates are extracted using stabilizers (i.e. distillation columns). The
Commerce Department view appears to be that the distillation process will qualify the
condensate for export. There are many uses for distillation columns – but this ruling
appears to apply only to one of the simpler uses – as a condensate stabilizer. The
condensate stabilizer creates 2 streams – a volatile gas stream (methane and ethane)
and heavier, stabilized, condensate (propane, or c3+) that is safe to transport to market.
A condensate splitter or NGL fractionation plant also use distillation columns – but the
purpose is to “split” the mixed hydrocarbon stream into several higher-value product
Greater investment in infrastructure needed to ensure rising US NGL production reaches international markets.
see mlp or bry iv boards for article
ny and dreiser thanks for dialogue, ny thanks for recap
Have also committed around 66,000 bbls day of ethane
As previously announced, Antero has signed an agreement to become the anchor ethane supplier for the Ascent petrochemical complex in Wood County, West Virginia. Under the agreement, Antero intends to provide 30,000 barrels per day of ethane to Ascent which represents almost half of the volume required to operate the Ascent ethane cracker that is planned for the Parkersburg, West Virginia site. This agreement is contingent upon Ascent reaching a final investment decision once the multi-year feasibility analysis is completed and a construction decision has been made.
Additionally, Antero recently signed an agreement to become an anchor ethane supplier to the proposed Shell ethane cracker complex in Beaver County, Pennsylvania. Under the agreement, Antero intends to provide 25,000 barrels per day of ethane to Shell which represents a significant portion of the volumes needed to operate the proposed cracker. This agreement is contingent upon Shell reaching a final investment decision once the multi-year feasibility analysis is completed and a construction decision has been made.
Antero is committed to a 10 year transport, terminal and storage agreement with Sunoco Logistics Partners LP related to its Mariner East II Project that will connect the NGL resources in the Marcellus and Utica Shale to Sunoco's existing infrastructure and international port at its Marcus Hook facility near Philadelphia. Mariner East II is expected to be operational in late 2016 pending final investment decision which is expected in the third quarter of 2014. Under the agreement, Antero will be an anchor shipper and have firm transportation of 51,500 barrels per day (11,500 barrels of ethane, 28,000 barrels of propane and 12,000 barrels of butane). Antero will have the ability, through the Marcus Hook facility, to market ethane, propane and butane to local markets in the Northeast as well as export product to international markets
Rex Energy Announces Significant Acquisition in Its Butler Operated Area
Rex Energy Corporation 3 hours ago GlobeNewswire
STATE COLLEGE, Pa., Aug. 12, 2014 (GLOBE NEWSWIRE) -- Rex Energy Corporation ("Rex Energy") (REXX) today announced the acquisition of approximately 208,000 gross (207,000 net) acres in the company's Butler Operated Area.
Rex Energy has entered into a definitive purchase agreement with SWEPI, LP, an affiliate of Royal Dutch Shell, plc ("Shell") to acquire a 100% interest in approximately 208,000 gross (207,000 net) acres prospective for the Marcellus, Upper Devonian/Burkett and Utica Shales in Pennsylvania and Ohio for approximately $120 million in cash, subject to customary closing adjustments. The transaction is expected to close in September 2014.
The assets to be acquired are located in Armstrong, Beaver, Butler, Lawrence, Mercer and Venango counties in Pennsylvania and Columbiana and Mahoning counties in Ohio. The additional acreage, combined with recent leasing, will bring Rex Energy's position in its Butler Operated Area to approximately 298,000 gross acres.
~ 208,000 gross acres, representing a ~230% expansion of its current Butler Operated Area and ~200% expansion of its current Appalachian Basin assets; large contiguous acreage position adjacent to existing Butler Operated Area
Acquiring ~100% working interest and ~ 83% net revenue interest
Acquisition and future bolt-on leasing expected to position the Company for a multi-year development plan of approximately 400 potential liquids-rich drilling locations (~241 liquids-rich locations at closing) on 750 foot spacing between laterals, or an immediate increase of approximately 24% over existing identified liquids-rich locations.
Assets include ~16 MMcf/d either currently producing or available to produce with minimal capital investment; estimated proved reserves of ~ 21 Bcfe from these wells
-Targa says Mt Belvieu trains 5, 6 and 7 still available to fractionate. details posted on investovillage mlp board