production

Constellation Energy Partners LLC (CEP), the exploration and production partnership formed and partly owned by Constellation Energy, has completed a deal with EnergyQuest Resources LP to acquire some coalbed methane (CBM) properties in the Cherokee Basin in Kansas and Oklahoma for $115 million (see Daily GPI, March 12). The transaction includes more than 500 miles of pipeline gathering systems. According to the partnership’s CEO Felix Dawson, the acquisition will be immediately accretive to distributable cash flow per unit. Most of CEP’s assets are CBM properties, including assets in the Robinson’s Bend Field in the Black Warrior Basin of Alabama (see Daily GPI, Aug. 14, 2006).

Costs for U.S.-based exploration and production (E&P) companies are expected to remain high this year, but as a whole most of them are again pursuing aggressive capital programs in 2007, Standard & Poor’s RatingsDirect said in a report. Many E&Ps, including Occidental Petroleum Corp., Devon Energy Corp, XTO Energy Inc. and EOG Resources Inc., have upped capital spending by 10-20% year-over-year, with only a few, including Anadarko Petroleum Corp., expected to focus on debt reduction.

Houston-based Plains Exploration & Production Co. (PXP), which up to now has concentrated its exploration efforts in California and along the Gulf Coast, last week gained entry into the natural gas-rich Piceance Basin of Colorado in an agreement estimated to be worth $946 million. The transaction, with privately held Laramie Energy LLC, is 97% weighted to gas, and it gives PXP 55,000 net acres, more than 200 producing wells and more than 3,000 additional potential drilling locations.

Houston-based Plains Exploration & Production Co. (PXP), which up to now has concentrated its exploration efforts in California and along the Gulf Coast, on Wednesday gained entry into the natural gas-rich Piceance Basin of Colorado in an agreement estimated to be worth $946 million with privately held Laramie Energy LLC. The transaction, 97% weighted to gas, gives PXP 55,000 net acres, more than 200 producing wells and more than 3,000 additional potential drilling locations.

Looking to keep up with increased natural gas production from the Williston Basin, Oneok Partners LP said Tuesday it is planning a $30 million expansion of its Grasslands processing facility in McKenzie County, ND, that will increase capacity by approximately 60%.

The costs of major oil and gas production projects have risen more than 53% in the past two years, and no significant slowing is in sight, according to a benchmark index developed by IHS and Cambridge Energy Research Associates (CERA), which was announced last week.

The costs of major oil and gas production projects have risen more than 53% in the past two years, and no significant slowing is in sight, according to a new benchmark index developed by IHS and Cambridge Energy Research Associates (CERA).

Occidental Petroleum said about 288 MMcf/d of gas production remains shut in at Elk Hills, the former Naval Petroleum Reserve, north of Bakersfield, CA, in the San Joaquin Valley because of a gas pipeline rupture, explosion and fire on Tuesday.

Consolidation of Canadian exploration and production (E&P) players could be in the offing, and there is potential upside from increasing long-term price expectations as well as a rerating of various companies’ stocks to reflect their “abnormally large resource potential,” UBS Investment Research analysts said in a Monday note.