Petrohawk Energy Corp. has signed a definitive agreement to buy additional acreage in the Fayetteville Shale Trend from a private seller for an estimated $222.5 million. The transaction is expected to close in February. The assets, which are primarily located in Van Buren, Conway and Cleburne counties in Arkansas, include approximately 18,500 net acres along with a strategically located pipeline gathering system, the Houston-based independent producer said. The acquisition brings Petrohawk’s leasehold in the Fayetteville Shale Trend to an estimated 150,000 net acres. Petrohawk Energy said the new properties add significant reserve potential and a substantial number of locations to the company’s current inventory in play. Of the total net acreage acquired, it estimated that approximately 10% is classified as proved. Production from the properties is approximately 5 MMcfe/d, while proved reserves are about 50 Bcfe, according to the company. In December Petrohawk said it completed its purchase of 24,000 net acres of land in the Fayetteville play from Alta Resources LLC, Contango Oil & Gas Co. and some undisclosed parties. Petrohawk paid $343 million in cash for land that has an estimated reserve potential of more than 500 Bcfe, which is about 50% operated (see NGI, Dec. 24, 2007). The producer also has properties in North Louisiana, East Texas, Oklahoma and the Permian Basin.
Pacific Gas and Electric Co. (PG&E) said average January retail gas bills will decrease 6.9%, compared to January 2007 ($97.64 this month vs. $104.83 a year ago). The decrease is a combination of the lower wholesale costs for gas and smaller volumes of gas being used by customers, PG&E said. The utility’s calculations are based on average usage by residential customers of 77 therms expected this January, compared to an average use of 84 therms in the same month last year. PG&E sees these prices as a footnote to a winter it characterizes as having adequate gas supplies and moderate prices throughout the United States. The cost of gas this January is actually slightly higher than January 2007 (78.1 cents/th vs. 77.8 cents/th in January 2007), but this month’s gas costs are down 11.5% compared to last month when December charges averaged 88.2 cents/th, PG&E reported.
Construction has been completed on Excelerate Energy‘s Northeast Gateway deepwater liquefied natural gas (LNG) port off the coast of Massachusetts and the company is awaiting its final operating permits from the U.S. Coast Guard. Excelerate Energy expects to “realistically” have all of its operating permits by mid-January, said Edward Scott, vice president of development. He declined to say when LNG shipments would be off-loaded at the facility, explaining that the Houston-based company was in the “middle of fairly sensitive negotiations” with respect to LNG cargo. The Northeast Gateway facility, located 18 miles east of Boston, was completed in December, becoming the first new LNG terminal built on the East Coast in three decades. With peak deliveries of up to 800 MMcf/d, Northeast Gateway will be able to deliver about 500 MMcf/d into the New England market during normal operations, or approximately 20% of that market’s current annual consumption. The deepwater port will be operated by Skaugen Offshore and will accommodate Excelerate’s proprietary Energy Bridge Regasification Vessel fleet. In early December Algonquin Gas Transmission LLC got the green light to begin operating a 16-mile pipeline lateral connecting the company’s New England-area natural gas system to the Northeast Gateway LNG port (see NGI, Dec. 10, 2007). Vaporized gas will flow from the terminal through Algonquin’s HubLine pipe facilities in Massachusetts Bay to the Northeast gas market. The pipe facilities have the capacity to deliver up to 800,000 Dth/d of incremental supply.
Houston-based Contango Oil & Gas Co. is selling its 10% limited partnership interest in Freeport LNG Development LP to an unnamed “major Asian utility company” for approximately $68 million, the company said. The sale is subject to the purchaser’s board approval and customary closing conditions. Freeport is engaged in developing a 1.75 Bcf/d LNG import and gasification terminal on Quintana Island, 70 miles south of Houston. Construction of the terminal began in early 2005. Freeport closed on $383 million of private placement note funding with nine institutional investors for the construction of the first phase of the Quintana Island LNG facility in late 2005 (see NGI, Dec. 26, 2005). In 2006 Freeport received final authorization from FERC to increase the sendout capacity of the terminal to 4 Bcf/d (see NGI, Sept. 25, 2006). The sale is part of Contango’s previously announced review of strategic alternatives to enhance shareholder value. CEO Kenneth R. Peak said the company will use the proceeds to prepay an outstanding $20 million term loan from the Royal Bank of Scotland, with any remaining funds available for working capital.
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