Houston-based Cabot Oil & Gas Corp., which has been boosting its natural gas exploration and development across East Texas and into northern Louisiana, agreed to pay an undisclosed private party $602.8 million to purchase some producing properties, leasehold acreage and natural gas gathering infrastructure in the Cotton Valley trend. The 25,000 gross acres to be acquired in the Minden area of East Texas would add about 32 MMcf/d net to Cabot's production, the company said. Proved reserves are estimated by Cabot to be around 176 Bcfe, but Cabot said it "expects to benefit from significant resource potential through 300-400 probable and possible" new locations. Infrastructure includes 33 miles of pipeline, 5,400 hp of compression and four water disposal wells and is valued at about $26 million. The independent would have a 97% average working interest in the leasehold. Cabot has drilled 77 wells in the Minden area on its 12,700 acres with a 100% success rate since its initial discovery in 2006, according to CEO Dan O. Dinges. To lock in margins and to ensure cash flow to execute the drilling program without diluting Cabot's 2008 capital program, the company placed swaps covering estimated production for the rest of 2008 through 2010. The volumes swapped during this period represent revenues of more than $600 million from 47.5 Bcfe, or 27%, of the acquired proved reserves, the company said. Swaps for 2008, 2009 and 2010 were set at $13.15, $12.18 and $11.43/Mcf, respectively, net to the properties for natural gas and $125.35 average swap price for oil over the same period.
German utility RWE Group has completed the acquisition of a 50% stake in the liquefied natural gas (LNG) business of Excelerate Energy LLC for an estimated $500 million. RWE Supply & Trading, which is responsible for RWE Group's LNG business, is buying the 50% interest from Excelerate Energy owner George B. Kaiser, who will own the remaining half of the company. Excelerate Energy, which confirmed the completion of the transaction, said its management and staff would remain in place. The transaction, which was first announced in February, hinged on Excelerate Energy starting its Northeast Gateway terminal off the coast of Massachusetts, Reuters reported (see NGI, Feb. 18). Excelerate's Northeast Gateway offshore system began commercial operation in late May (see NGI, May 26). It was the the first new LNG receiving terminal to be built on the U.S. East Coast in more than 30 years. The partnership will combine the upstream equity assets of RWE, a major European integrated electricity and natural gas company, with Excelerate's growing market access points, LNG infrastructure and proprietary technology, the two companies said.
Storage developer Orbit Gas Storage Inc. of Henderson, KY, has filed an application at the Federal Energy Regulatory Commission to construct and operate a 13 Bcf underground natural gas storage facility in Hopkins County, KY. Orbit proposes to convert the depleted White Plains Gas Field to gas storage and build an approximately 22-mile pipeline header, compressor station and associated facilities. The Kentucky Energy Hub Project would have an estimated 5 Bcf of working gas and 8 Bcf of cushion gas, the company said. It further noted that the storage project would have the capability to deliver and inject gas at the rate of approximately 100 MMcf/d, and would interconnect with ANR Pipeline near Rabbit Ridge, KY [CP08-409, PR08-1]. Orbit Gas has requested market-based rate authority to provide open-access firm and interruptible storage services in interstate commerce.
Linn Energy LLC agreed to sell some Oklahoma acreage now producing about 12 MMcfe/d to Warburg Pincus-backed Laredo Petroleum Inc. for $185 million in cash. Linn Energy would retain the option to participate in future production. The sale includes around 50,000 net acres in the Verden area of Oklahoma; proved reserves are estimated at 45 Bcfe. Houston-based Linn Energy would retain the option to participate in future qualifying Verden wells "after a substantial portion of the drilling risk has been mitigated," the producer said. The effective date of the transaction is July 1; closing is expected by the end of September. The sales proceeds would be used to repay debt, but the producer also wants to redeploy the capital into other projects within the United States. Laredo was launched last year by veteran Tulsa oilman Randy Foutch (see NGI, Aug. 6, 2007). Laredo's initial backing was with Foutch's long-time financial partner Warburg Pincus, which provided an initial line of equity for up to $300 million. Foutch's earlier start-ups, Lariat Petroleum and Latigo Petroleum, also were Warburg portfolio companies.
Boardwalk Pipeline Partners LP subsidiary Gulf South Pipeline Co. LP has placed in service its Southeast Expansion pipeline project. The project is one of many targeting the Southeast market. The Southeast Expansion includes 111 miles of 42-inch diameter pipeline extending from the end of Gulf South's 1.7 Bcf/d East Texas-to-Mississippi Expansion at Harrisville in Simpson County, MS, which went into service in January, to a new interconnect with Transcontinental Gas Pipe Line (Transco) in Choctaw County, AL. The expansion facilities increase Gulf South's capacity by nearly 1.3 Bcf/d. Boardwalk also announced the completion of the final compressor station on its East Texas-to-Mississippi Expansion project, located near Tallulah, LA. Bentek Energy LLC, which studies pipeline infrastructure development and its impact on gas flows, noted that the Southeast Expansion is the first in a series of major expansion projects targeting the premium Southeast market. "It should have a significant downward impact on Transco Zone 4 and FGT [Florida Gas Transmission] Zone 3 prices," Bentek's Rocco Canonica told NGI. "It also will put downward pressure on Tennessee 500 and Sonat when those interconnects are activated. It should put upward pressure on Carthage prices and will probably help lift other East Texas market points because of the new link to the premium Southeast."
Completing an effort to simplify its organizational structure, Royal Dutch Shell plc has completed the previously announced merger between its wholly owned subsidiary Shell Energy North America (US), LP and four of that company's U.S.-based Coral operating companies. Shell Energy North America (US), LP is the remaining entity. This merger affected Coral Energy Resources LP, Coral Power LLC, Coral Energy Management LLC and Coral Gas Marketing LLC, all of which became part of Shell Energy North America on June 1. The merger was announced in November 2007 (see NGI, Nov. 19, 2007). Shell Energy North America is a wholly owned subsidiary of Royal Dutch Shell and is headquartered in Houston. The company and its subsidiaries trade and market natural gas, wholesale power and risk management products. Coral Energy was formed in 1995 when Shell and Tejas Gas Corp. combined their gas marketing businesses. Shell Canada subsequently obtained an equity ownership interest in Coral. Shell Oil later acquired Tejas Gas.
Williams subsidiary Williams Partners LP is holding an open season for up to 150,000 Dth/d of additional firm transportation services on the jointly owned Discovery pipeline system that it operates in the Gulf of Mexico region. Williams Partners LP's Discovery Gas Transmission LLC said the proposal would expand capacity in two places on the system. It would include a 50,000 Dth/d expansion at Discovery's existing interconnection with Williams' wholly owned Transco pipeline in Zone 3 near Thibodaux, LA. It would also provided for the leasing of an additional 100,000 Dth/d of capacity on the Texas Eastern pipeline to a segment of Southern Natural's 22-inch diameter system near Venice, LA. Gas delivered into Southern Natural will be in its Zone 0 Area. The services offered in this open season are for gas received at the Williams-operated Larose Plant; the rates and terms will be those of Discovery's Market Expansion. The open season ends at 5 p.m. CDT on June 30. Interested shippers may contact Josh Cruzan at (713) 215-2886 or Kenny Workman at (713) 215-3122 to obtain a copy of the transportation services agreement. A unit of Williams operates Discovery Gas Transmission LLC and Discovery Producer Services LLC. The Discovery pipeline is jointly owned by Williams Partners LP and DCP Midstream Partners LP.
Saxon Oil Co. Ltd.'s Central Kansas Gas Gathering Co. LLC (CKGG) subsidiary is reactivating its 100-mile gas gathering system in central Kansas and will begin delivering natural gas within the next 30 days. In accordance with the terms of the gas purchase contract, CKGG will deliver up to 2 MMcf/d. Sacon said that revenues from the gathering system should initially increase its gross revenues by as much as 20%. CKGG acquired the gathering system and associated compression facilities in June 2007. According to CKGG, many Kansas gas producers and their connecting gas gathering systems, including the system CKGG purchased, were adversely affected in late 2006 by the unexpected shutdown of a major transport system. During the months since purchasing the system, CKGG said it has diligently searched for markets for low-Btu gas in central Kansas before entering into this gas contract. Prior to the gathering system being shut in, the system handled about 600,000 cf/d, all of it coming from third-party producers. The system has an estimated capacity in excess of 5 MMcf/d.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.