Devon, Crosstex merge midstream assets
Devon Energy Corp., Crosstex Energy Inc., and Crosstex Energy LP are forming a new midstream business combining Devon's large Texas and Oklahoma midstream platform with Crosstex's positions in the Barnett shale, Permian basin, Eagle Ford, Haynesville, Gulf Coast, Utica, and Marcellus.
The new company will have 7,300 miles of gathering and transportation pipelines, 13 processing plants with 3.3 bcfd of net processing capacity, six fractionators with 165,000 b/d of net fractionation capacity, as well as barge and rail terminals, product storage facilities, brine disposal wells, and an extensive crude oil trucking fleet.
A master limited partnership and a general partner will be created. The new midstream business is expected to bring in $700 million in earnings before interest, tax, depreciation, and amortization for 2014.
The deal is expected to close in the first quarter of 2014. Crosstex and Devon will announce a name following the close of the transaction.
EOG increases Eagle Ford drilling activity
EOG Resources Inc. has reported higher earnings in the third quarter 2013 compared to the third quarter 2012, driven by increased oil production from the Eagle Ford and Bakken-Three Forks.
In the first three quarters of 2013, EOG built momentum in its western Eagle Ford acreage in three Texas counties—Atascosa, La Salle, and McMullen—by increasing drilling activity from six to nine rigs, the company said, and initial production rates increased more than 20% since the first quarter 2013.
EOG's top well in its western Eagle Ford acreage, the Kaiser Junior Unit #1H, began initial production at 2,815 b/d of oil with 160 b/d of NGL and 940 Mcfd of natural gas in Atascosa Co. during the third quarter. Other third-quarter western wells include the Janet Unit #1H and Nelson Zella Unit #1H and #2H in La Salle Co., which were completed with initial rates of 2,430, 1,960, and 2,810 b/d of oil. In McMullen Co., the River Lowe Ranch #4H, #5H, #6H, #7H, #8H, and #9H came online at initial rates ranging from 1,970 to 2,115 b/d of oil with 125 to 135 b/d of NGL and 720 to 780 Mcfd. EOG holds a 100% interest in all 10 wells.
Highlights from EOG's eastern Eagle Ford acreage include four DeWitt Co. wells. The Justiss Unit #1H, #2H, and #3H wells were completed at an average of 3,795 b/d of oil,598 b/d of NGL, and 3.5 MMcfd. Also in DeWitt, the Vinklarek Unit #1H well was completed at 4,510 b/d of oil with 715 b/d of NGL, and 4.2 MMcfd of gas. In Gonzales Co., the Baker-Deforest Unit #5H, #6H, and #7H wells came online at an average rate of 3,625 b/d of oil, with 482 b/d of NGL, and 2.8 MMcfd of gas. EOG has a 100% working interest in these wells.
With a 25-rig drilling program, the company is increasing the total net wells planned across its Eagle Ford acreage in 2013 to 460 from 440.
Texas water transfer business expands
HII Technologies Inc. is expanding its water transfer business in the Eagle Ford shale though the $1.3 million acquisition of frac water transfer service company Aqua Handling of Texas LLC.
Aqua Handling, which operates under the name AquaTex, provides high volume water transfer services through above-ground mobile piping solutions that support the millions of gallons typically needed for hydraulic fracturing operations.
The acquisition is expected to grow HII Technologies' customer base in the Eagle Ford shale and South Texas area. In the first three quarters of 2013, AquaTex's preliminary unaudited revenues and net income were an estimated $1.6 million and $18,000, respectively, which included start-up costs.
AquaTex co-founder Chris George will continue serving as general manager and vice president of AquaTex for the next 3 years. George was previously waterline operations manager for Stallion Oilfield Services' Texas Water Transfer Division.
Houston-based HII Technologies operates in Texas, Oklahoma, Ohio, and West Virginia. The company's frac water supply and flowback services subsidiary does business as AES Water Solutions and AquaTex.
HII Technologies also recently entered a strategic alliance agreement with fluids reprocessing management company CRS Reprocessing Services. The deal will broaden the services provided by AES in its water and fluids remediation business during onsite fracing operations. It also gives AES the ability to use the proprietary technology and modular design of CRS' systems to provide drilling fluid reprocessing and top hole solids control at wellsites.
San Antonio refinery takes Eagle Ford crude
Calumet San Antonio Refining LLC has signed a deal with TexStar Midstream Logistics LP to build a 50-mile, 30,000 b/d crude oil pipeline system that will reduce the cost of transporting crude to Calumet's San Antonio refinery – which currently receives crude oil deliveries by truck.
Under the terms of the 15-year agreement, TexStar is set to construct, own, and operate the Karnes North Pipeline system. KNPS will transport crude from Karnes City, Tex., to Calumet's terminal in Elmendorf, Tex., a key supply hub for Calumet's San Antonio refinery.
The refinery is slated to receive deliveries of at least 10,000 b/d through the KNPS-Elmendorf terminal supply route. It is expected to be online in the fourth quarter 2014.
Calumet recently completed a project that enables its San Antonio refinery to blend heavy reformates, light naphtha, and ethanol to produce up to 3,000 b/d of higher-value finished gasoline. In the first quarter of 2014, the company also expects to complete a crude unit expansion that will increase total capacity at the facility to 17,500 b/d from 14,500 b/d while allowing for the increased production of jet fuel, diesel fuel, and gasoline.
Calumet San Antonio Refining is a wholly owned subsidiary of Calumet Specialty Products Partners LP.
