NGI The Weekly Gas Market Report

Briefs -- SM Energy | Lonestar Resources | Dominion Transmission | Driftwood LNG | Texas Eastern | SM Energy | Texas Eastern | Scout Petroleum | Cheniere Energy | Sempra Energy

September 30, 2016
/ Print
| Share More
/ Text Size+

Denver-based SM Energy Co. has hired Petrie Partners to sell noncore assets in the Williston Basin's Bakken Shale to focus additional capital on the Permian Basin and Eagle Ford Shale. According to the company, about 54,500 net acres are being marketed, consisting of the Raven/Bear Den acreage and leases outside the Divide County, ND, development.

Lonestar Resources U.S. Inc. said it has reduced its long-term debt from $319.5 million on June 30 to $284.4 million on Sept. 30, an 11% decrease. The Fort Worth, TX-based company's  debt total from the end of September included $94.5 million under the revolving credit facility for subsidiary Lonestar Resources Americas Inc. (LRAI); $38.0 million of LRAI's second tier senior notes; and $151.8 million of LRAI's 8.75% senior notes. Lonestar said as of Sept. 30, it had repurchased $68.2 million of its unsecured notes with proceeds from the issuance of $38.0 million of second lien notes and 222,821 shares of Class A common stock, at a price of $9.26/share. The stock issuance is still subject to stockholder approval. Lonestar also said it has agreed to sell its remaining conventional oil and gas assets to an undisclosed buyer for $14 million. The deal would bring its overall conventional divestiture process total to $16.2 million. The sale is expected to close by Oct. 31. Proceeds from the sale would be used to further pay down debt.

The Federal Energy Regulatory Commission has approved a Dominion Transmission Inc. (DTI)request for a partial notice to proceed for the Leidy South Project to construct the Stonewall Metering and Regulating Station in Loudoun County, VA [CP15-492]. Leidy South would serve new and existing power generation facilities with natural gas traveling from the Leidy Interconnect in Clinton, PA, to points in Loudoun County. Panda Stonewall LLC, Virginia Power Services Energy Corp. Inc, and Mattawoman Energy LLC have signed binding agreements for all of the project capacity. The estimated cost is $209.66 million. DTI filed its application for the project with the Commission in 2015 (see Daily GPIMay 15, 2015), received a favorable environmental assessment from staff in March (see Daily GPIMarch 31), and was approved in late August (see Daily GPIAug. 30).

FERC staff will prepare an environmental impact statement (EIS) for the Driftwood LNG and associated pipeline projects. Comments are due at the Federal Energy Regulatory Commission by Nov. 4 (see Daily GPIMay 13) [PF16-6]. Driftwood LNG LLC intends to construct a liquefied natural gas (LNG) export facility in Calcasieu Parish, LA, along the west side of the Calcasieu River, with a liquefaction capacity of about 26 million tonnes per annum. Driftwood LNG Pipeline Co. LLC plans to construct 96 miles of pipeline in Calcasieu, Jefferson Davis, Acadia and Evangeline parishes that would connect the liquefaction and export facility to the existing interstate U.S. natural gas grid. The proposed facilities would consist of five LNG plants, three full-containment LNG storage tanks, three berths and loading facilities, three compressor stations, 15 meter stations, a 3.5-mile, 36-inch diameter pipeline lateral, and three pipeline segments, consisting of about 74 miles of 48-inch diameter pipeline, 11 miles of 42-inch diameter pipeline, and 11 miles of 36-inch diameter pipeline. Construction is expected to begin during the second quarter of 2018, with exports expected to begin during the second quarter of 2022.

In a recent update, Texas Eastern Transmission LP said work to confirm the integrity of its Penn-Jersey system continues. A portion of the system exploded and caught fire in Southwest Pennsylvania in April (see Daily GPI,  April 29) The system consists of four parallel pipes running from Delmont, PA, to Lambertville, NJ. The company agreed to conduct a voluntary assessment of the system with the goal of returning it to full service by Nov. 1 (see Daily GPI, June 29). Lines 12, 19 and 28 are expected to return to full capacity by Oct. 17. Spokesman Creighton Welch said the seven-mile section of Line 27 that ruptured in the blast would remain out of service until 2017. The rest of Line 27 is operating at reduced capacity.

SM Energy Co. has hired Petrie Partners LLC to explore a sale of certain Williston Basin leasehold, including about 54,500 net acres consisting of the Raven/Bear Den acreage and effectively all lease holdings in the basin outside of the company's Divide County, ND, program. "We have outlined a simple strategy to focus on our Tier 1 assets in the Permian Basin and operated Eagle Ford [see Shale DailyFeb. 24]," said CEO Jay Ottoson. "As part of this strategy, we are continuing to core up our portfolio, such that we can concentrate investment dollars in the highest return programs and bring that value forward through accelerated activity. Raven/Bear Den is a terrific asset that provides attractive full-cycle returns, and we believe it will be of more value to a company that will actively pursue its near-term development." The company also said it has closed on previously announced divestitures in Montana, New Mexico, North Dakota and Wyoming, with associated net production of 3,300 boe/d, for net proceeds of about $186.7 million (see Shale DailyAug. 1).

In a recent update, Texas Eastern Transmission LP said work to confirm the integrity of its Penn-Jersey system continues. A portion of the system exploded and caught fire in Southwest Pennsylvania in April (see Shale DailyApril 29) The system consists of four parallel pipes running from Delmont, PA, to Lambertville, NJ. The company agreed to conduct a voluntary assessment of the system with the goal of returning it to full service by Nov. 1 (see Shale DailyJune 28). Lines 12, 19 and 28 are expected to return to full capacity by Oct. 17. Spokesman Creighton Welch said the seven-mile section of Line 27 that ruptured in the blast would remain out of service until 2017. The rest of Line 27 is operating at reduced capacity.

The U.S. Supreme Court has declined to hear Scout Petroleum LLC's case against Chesapeake Energy Corp. for deducting post-production costs from royalties it receives in Pennsylvania. Scout, a land-based oil and gas company that acquired rights in Northeast Pennsylvania, filed a class action case against Chesapeake in 2014 (see Shale DailyApril 10, 2014). Scout asked the American Arbitration Association to order a full refund of the deductions but Chesapeake took the case to court. TheU.S. District Court for the Middle District of Pennsylvania ruled the courts must decide the matter, which was upheld by a U.S. appeals court.

Cheniere Energy Inc. has offered to buy the remaining shares of Cheniere Energy Partners LP Holdings LLC it does not already own in a stock exchange. Cheniere is offering 0.5049 Cheniere shares for each outstanding publicly-held shares of Cheniere Partners Holdings as part of a transaction that would be structured as a merger of Cheniere Partners Holdings with a subsidiary of Cheniere. The offer represents a value of $21.90/share of Cheniere Partners Holdings, or a premium of 3.0% based on Thursday's closing price. Cheniere Partners Holdings owns a 55.9% limited partner interest in Cheniere Energy Partners LP. Cheniere Partners Holdings' only business consists of owning Cheniere Partners units and, accordingly, its results of operations and financial condition are dependent upon the performance of Cheniere Partners. "We believe the proposed transaction is attractive to investors in Cheniere Partners Holdings who, as new LNG [Cheniere Energy Inc.] shareholders, would have the opportunity to participate in the future success of the entire Cheniere complex," said Cheniere Energy Inc. CEO Jack A. Fusco. "In addition, shareholders of Cheniere Partners Holdings would receive an attractive premium over its recent trading levels and a significant increase in the trading liquidity of their investment."

Sempra Energy Mexican subsidiary Infraestructura Energética Nova SAB de CV (IEnova), has been awarded two solar energy project bids with a total value of $150 million and output of 141 MW. They are both photovoltaic (PV) plants and are the first non-oil/gas infrastructure projects that IEnova will develop and operate south of the border. The projects include a 100 MW single-axis PV project in Aguascalientes that will be developed in partnership with Trina Solar and the 41 MW Rumorosa Solar complex in Baja California. Output from the two projects will be contracted to Mexico's national electricity company, Comision Federal de Electricidad under separate 15- and 20-year renewable and clean energy agreements.

ISSN © 1532-1266

Recent Articles by NGI Staff Reports

Comments powered by Disqus