Hess Encouraged in the Eagle Ford

Hess announced third quarter earnings today (Oct. 26). The Eagle Ford was only mentioned briefly. The question was posed whether or not the Eagle Ford is core to the company.

Analyst:

Paying $3,000 per acre is significant, but is the company ready to call the area "Core".

John Hess:

"Focus is on delineation and what we have now. We've been encouraged to date."

Analyst:

Are you still acquiring acreage?

John Hess:

"(Hess) is being opportunistic. Pricing is pretty high, but as we see opportunity we'll do it. But, only if it will make money."

Hess is a partner with ZaZa Energy across a portion of its acreage.  The companies have acreage in less explored areas like Fayette County.  Drilling over the next year will most definitely determine whether the Eagle Ford becomes a core development area for Hess. For a company with lots of opportunities, Bakken Shale, Utica Shale, and offshore, you can bet the decision will be driven by the statement "if it will make money".

Big Firms Say Shale Plays Are Here To Stay

"Shale gases have redefined natural gas supply" is the quote from Hill Vaden of Wood Mackenzie. As large scale firms enter shale plays across the U.S., it is an indication that things have changed for the long term. The Kinder Morgan - El Paso merger is the latest shale driven deal that expands a companies foot print and leverage to the growing shale boom. With Exxon and international companies like Statoil in the fray, you can bet many of the development decisions that are made today are part of long - very long term plans. Shale plays are ushering in a new wave of domestic development. Just visit North Dakota, Pennsylvania, or Texas if you don't believe me.

Since 2008, energy companies have spent $133 billion on mergers and acquisitions related to shale, according to energy research firm IHS-Herold. That's more than China spends on its military annually — the second-largest defense budget in the world behind the United States'.

And that includes just companies gaining access to the acreage and resources for shale drilling. It doesn't count Kinder Morgan's $21.1 billion deal to buy El Paso Corp. and its network of natural gas pipelines.

Read the entire news release at mysanantonio.com

Pioneer Permits Another Long Lateral in Live Oak County

Pioneer Natural Resources permitted another long lateral in Live Oak County, TX this past week. The well is almost six miles north of Three Rivers, TX and will be drilled to a total depth of 21,000 ft in the Sugarkane field. Other permits across the play included the normal players Chesapeake, EOG, Petrohawk (BHP), and Talisman. 

 

Kinder Morgan Acquires SouthTex Treaters an Amine Plant Manufacturer

Kinder Morgan is acquiring SouthTex Treaters in a $155 million transaction. The acquisition adds to Kinder Morgan's ability to deliver needed processing in the Eagle Ford Shale. The company will now offer lease arrangements or can simply sell amine plants. Amine plants are being used more widely across the Eagle Ford due to levels of H2S (Sour Gas) in the natural gas stream. The hydrogen sulfide has to be separated from natural gas production before pipeline operators will transport the gas. One of the quickest way to get cut off from the gathering system is to go above acceptable levels of H2S (4 ppm). 

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today announced it has signed a definitive purchase and sale agreement to acquire SouthTex Treaters, a leading manufacturer, designer and fabricator of natural gas treating plants that remove CO2 and H2S, for approximately $155 million. The manufactured amine plants range in size from 5 to 1,200 gallons per minute of treating capacity. Kinder Morgan Treating, a subsidiary of KMP, is the industry leader and largest provider of contract operated treating and hydrocarbon dew point conditioning plants. The acquisition will allow Kinder Morgan Treating to build amine plants and offer customers the option to own or lease the equipment.

"This acquisition will enable us to provide large amine plants for centralized treating facilities which are often needed in the rapidly developing shale plays," said Bill Stokes, vice president of Kinder Morgan Treating. "We will also be able to replenish our already large inventory of amine plants and offer our customers even more flexibility for their treating needs." Upon closing, which is likely to occur within the fourth quarter this year, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders.

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 28,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP has an enterprise value of over $33 billion. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Combined, KMI and KMP have an enterprise value of approximately $55 billion.

Read the entire press release at kindermorgan.com