Pioneer Natural Resources Co. (PNR), Dallas, and Reliance Holding USA Inc. are pursuing the divestment of their Eagle Ford shale (EFS) Midstream business. PNR operates the business with 50.1% interest, and Reliance holds the remaining 49.9%.
The EFS Midstream business was formed in 2010 to construct facilities to provide gathering and handling services for condensate and natural gas produced from wells on dedicated acreage in the Eagle Ford (OGJ Online, Oct. 25, 2010). Services are provided for the Eagle Ford upstream joint venture operated by PNR with 46% interest—Reliance holds 45% and Newpek LLC holds 9%—and for various third parties.
The EFS Midstream system consists of 10 central gathering plants and 460 miles of pipelines. The system gathers and separates produced condensate from produced gas. It also stabilizes the condensate and treats the gas.
PNR’s cash flow from EFS Midstream is forecasted at more than $100 million for 2015. The company expects to open a data room in December.
Scott D. Sheffield, PNR chairman and chief executive officer, explained the decision: “The sale of EFS Midstream would allow us to strategically redeploy capital to our core, oil-rich Spraberry-Wolfcamp assets in the Permian basin of West Texas, where we are successfully transforming the substantial resource potential we delineated in 2013 into strong production growth.”
PNR previously reported capital expenditure plans of $3.3 billion for this year, $2.2 billion of which would be used to target the northern Spraberry-Wolfcamp area (OGJ Online, Feb. 11, 2014).
Full-year 2013 production in the Spraberry-Wolfcamp averaged 79 million boe/d—including the conveyance of 4 million boe/d in May 2013 to Sinochem as part of the southern Wolfcamp joint venture transaction (OGJ Online, June 3, 2013)—an increase of 19% compared with 2012.
“We currently have no plans to divest our Eagle Ford shale upstream assets,” Sheffield added. “The sale of EFS Midstream is not expected to impact our ability to export processed Eagle Ford condensate.”
