Concho Resources cuts spending by one-third
Concho Resources Inc. of Midland, Tex., cut its 2015 capital spending budget to $2 billion from $3 billion as previously stated, citing a sharp decline in commodity prices.
"With this level of activity, the company expects to generate 16% to 20% year-over-year production growth in 2015," a news release said. That compared with Concho's earlier forecast of 28-32% growth.
The revised budget includes $1.8 billion for drilling and completion activities and $200 million for midstream and facilities.
Concho plans to allocate $1.3 billion for drilling and completions in the Delaware basin, $300 million in the Permian basin in Texas and $200 million in the New Mexico shelf. As of early January, Concho ran 36 drilling rigs and expected to average 30 rigs during the first quarter.
Plans called for the company to run an average 25 rigs for the rest of the year. Executives noted the budget was subject to change depending upon economic and industry conditions.
Encana gains stake in Permian basin
A subsidiary of Encana Corp. completed its $7.1 billion acquisition of Athlon Energy Inc., giving Encana 140,000 acres in the Permian basin, and the acquisition involved Midland, Martin, Howard, and Glasscock counties.
Potential productive horizons were identified in the Middle and Lower Spraberry shale; the Wolfcamp A, B, C, and D; and the Cline formations.
Alenco Acquisition Company Inc., Encana's wholly owned subsidiary, successfully made a cash tender offer to acquire Athlon Energy (UOGR, Nov/Dec 2014, p. 28).
"We are pleased to close this transformative acquisition and look forward to welcoming the Athlon team into Encana. We are delivering on...promises we made for 2017," said Doug Suttles, Encana president and chief executive officer. Athlon became a wholly owned subsidiary of Encana.
The Permian basin is expected to contribute significantly to Encana's liquids production and help the company reach its 2017 goal of about 250,000 b/d in total liquids production. The company envisions up to 5,000 horizontal well locations having a total of 3 billion boe in potential reserves.
"Our growth areas now include the top two resource plays in Canada: the Montney and the Duvernay, and the top two resource plays in the United States: the Eagle Ford and the Permian," Suttles said.
Encana expects the acquisition will add 32,000 boe/d in current production. During 2015, Encana plans to invest at least $1 billion in the play and ramp up from four to at least seven horizontal rigs.
EagleClaw Midstream buys processing
EagleClaw Midstream Services LLC of Midland, Tex., bought natural gas gathering and processing facilities in Reeves County, Tex., to handle production from stacked pay zones in the Delaware basin, including the Upper and Middle Wolfcamp, Bone Spring, and Avalon shale formations.
The transaction included more than 50 miles of gathering pipeline, a 15-MMcfd refrigerated Joule-Thomson (JT) plant, a 60-MMcfd cryogenic plant still under construction, and seven new 1,700-hp compressors. EagleClaw declined to identify the seller of the assets.
EagleClaw's East Toyah processing plant is in Reeves County, 8 miles northeast of Toyah. The gathering system and the JT plant are in operation; the cryogenic plant is scheduled to come on stream in late 2015. East Toyah can "accommodate multiple expansions to processing capacity," the company said.
Meanwhile, EagleClaw also announced it has commissioned its Northwest Toyah gathering and processing networks, also in Reeves County, which handles production from the Delaware basin and encompasses more than 30 miles of pipeline and a 15-MMcfd refrigerated JT plant.
The Northwest Toyah plant is 6 miles northwest of Toyah and within 13 miles of the East Toyah plant. EagleClaw plans to connect the two systems.
Silverback Exploration LLC, San Antonio, has dedicated production from 50,000 acres for East Toyah, and Elevation Resources LLC, Midland, has dedicated as much as 15,000 acres to the Northwest Toyah system.
Lone Star will build NGL pipeline
Lone Star NGL LLC has received board authorization to build a 533-mile pipeline from the Permian basin to Mont Belvieu, Tex., and the pipeline is expected to be operational by third-quarter 2016.
In addition, Lone Star plans to convert its West Texas 12-in. NGL pipeline into crude oil-condensate service. The conversion project is expected to be operational by the first quarter of 2016.
The two projects are estimated to cost up to $1.8 billion. The new pipeline aims to accommodate contracted NGL transportation volumes in excess of Lone Star's current 290,000 b/d capacity.
A 24-in. pipeline initially will transport 375,000 b/d from the Permian basin to Bosque County, Tex., while the 30-in. pipeline currently is sized to transport 495,000 b/d from Bosque County to Mont Belvieu. Both can be expanded in the future.
Lone Star is a joint venture of Energy Transfer Partners LP and Regency Energy Partners LP, both limited master partnerships.