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How EOG’s Move into Ohio Utica Shale Will Affect Midstream

In 2020, EOG Resources, one of the largest oil and gas drillers in the U.S. (with international operations in Trinidad and China), sold *all* of its Marcellus assets, which were located in Bradford County, PA, to Tilden Resources for $130 million (see EOG Resources Sells Marcellus Assets for $130M, Exits Basin). EOG left the M-U building, so to speak. But the company couldn’t stay away. In November, we told you that EOG admitted to stealthily amassing 395,000 net acres in the Ohio Utica for very little money (see EOG Resources Accumulates 395K Acres in Ohio Utica for Under $500M). EOG calls its new position the “Ohio Utica combo play.” We later told you what the company means by that phrase (see EOG Resources has “Double Premium” Plans for Ohio Utica). Today we tackle the topic of how EOG’s Utica combo play will affect the midstream in Ohio.
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Midstreamer E2 Energy Gets Major Investment from Tailwater Capital

E2 Energy Services, which operates numerous natural gas processing facilities in the Marcellus/Utica, has just recapitalized “through an equity commitment from Tailwater Capital.” MDN first heard of E2 back in October 2014 when EnLink Midstream transferred ownership (“dropped down”) its investment in E2 Appalachian Compression, LLC and E2 Energy Services, LLC from one EnLink corporate entity to another (see EnLink Midstream’s Primary Focus in the Marcellus/Utica is…). EnLink, at least in 2014, owned a majority interest in E2–so we consider E2 a subsidiary of EnLink. Now comes word that a private equity investment company, Tailwater Capital, has committed a big slug of money, although we are not given the amount. When a company like E2 “recapitalizes” that typically means the company is swapping debt (bonds and notes) for equity (stocks). The announcement from E2 does not share the exact nature of the recapitalization. Below is the announcement, along with a list of E2’s assets and operations in the Marcellus/Utica region…
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EnLink OH Condensate Pipe in Trouble? Open Season Extended Again

EnLink Midstream is clearly having trouble getting enough business to justify building a new condensate pipeline in Ohio. In August 2014, EnLink announced a new 45-mile condensate pipeline that will stretch across Guernsey, Noble and Washington counties in Ohio (see EnLink Midstream Announces New Condensate Pipeline in ORV). The project, which connects to another EnLink pipeline in Washington County, is called the Ohio River Valley Pipeline, or ORV. In mid-December, EnLink launched a 30-day binding open season for shippers to sign up for capacity on the new pipeline (see EnLink Launches 1 Month Open Season for ORV Condensate Pipeline). An open season is the time when shippers sign on the dotted line and commit to paying for and using the pipeline when it’s built. If EnLink doesn’t get enough customers, they won’t build it. In January EnLink announced there were extending the open season another six weeks (see EnLink Extends Open Season for OH Condensate Pipeline by 6 Weeks). Those six weeks have come and gone, and guess what? EnLink has just announced they’re extending the open season again, another six weeks…
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Marcellus-Utica Midstream Conf: Marcellus is “Best of the Best”

The Hart Energy Marcellus-Utica Midstream Conference kicked off yesterday in Pittsburgh at the David L. Lawrence Convention Center. Unfortunately your humble Marcellus/Utica gadfly was not extended a press pass by Hart Energy (yes, we’re trying to shame them for ignoring our request), so we’re not at the event which is drawing some 2,000 attendees. However, plenty of others are there. Kicking off the first day with the opening keynote was Barry Davis, CEO of EnLink Midstream Partners. Davis had some sobering words, saying he expects shale drilling to contract by 50% nationwide. However, Davis had high praise for the Marcellus/Utica, calling it “the best of the best” that will see less cut-backs than the others…
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EnLink Extends Open Season for OH Condensate Pipeline by 6 Weeks

In August 2014, EnLink Midstream announced a new 45-mile condensate pipeline that will stretch across Guernsey, Noble and Washington counties in Ohio (see EnLink Midstream Announces New Condensate Pipeline in ORV). EnLink calls the project, which connects to another EnLink pipeline in Washington County, the Ohio River Valley Pipeline. In mid-December EnLink launched a 30-day binding open season for shippers to sign up for capacity on the new pipeline (see EnLink Launches 1 Month Open Season for ORV Condensate Pipeline). Midstream companies won’t build expensive pipelines (this one will cost $250 million) unless they have 15-20 contracts in place to guarantee they’ll make their money back. Today EnLink announced they’re extending the open season another six weeks–to the end of February. Oh oh, must mean they don’t yet have enough interested customers to build it…
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EnLink Launches 1 Month Open Season for ORV Condensate Pipeline

In August, MDN told you about EnLink Midstream’s newly planned condensate pipeline. The Ohio River Valley (ORV) Pipeline, as it’s called, will connect to EnLink’s existing 200-mile pipeline in eastern Ohio and West Virginia, providing drillers in the region access to markets through EnLink’s Bells Run barge facility and Black Run rail terminal (see EnLink Midstream Announces New Condensate Pipeline in ORV). The OVR Pipeline, expected to be completed in the second half of 2015, will have an initial capacity of approximately 50,000 barrels per day (bpd). Yesterday EnLink announced a binding open season for the pipeline–the time when drillers and other customers can sign up to reserve capacity on the new pipeline…
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EnLink Midstream Job Promotion Signals Rapid Growth Ahead

Personnel changes at upstream and midstream companies aren’t usually something we cover here at MDN. But there are times when personnel changes signal something important. This is one of those times. EnLink Midstream is the renamed Crosstex Energy that was merged with Devon Energy’s midstream division– a merger that happened in March 2014 (see Time to Congratulate Devon & Crosstex on the Birth of EnLink). Eight months later and the company, with a large presence in the Marcellus/Utica, is on a tear. They are raising money and buying assets and expanding rapidly. One of the key people in the merger and subsequent growth is Benjamin D. Lamb, who joined Crosstex in 2012. Prior to that Lamb worked for an investment bank. Lamb has just been promoted to senior vice president but retains his role in leading the company’s mergers, acquisitions and financing transactions. In other words, it’s his job to find the money and buy smaller fish. EnLink’s CEO wants to (gasp) double the size of the company in the next three years, so Lamb has his work cut out for him…
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EnLink’s Quest for Cash: Floats 10.5 Million Units to Raise $300M

EnLink Midstream, a pipeline and processing plant company that operates in the northeast and other regions, is on a mission to raise cash. The company is actually two companies on paper: EnLink Midstream LLC (stock ticker ENLC) and EnLink Midstream Partners, LP (ticker ENLK). The later is a master limited partnership, or MLP, meaning they don’t issue shares of stock but something called “units”–which are roughly the same thing as shares of stock. EnLink’s units are publicly traded on the New York Stock Exchange. It was just last week that EnLink floated notes hoping to raise around $400 million (see EnLink Midstream Floats Notes, Hopes to Raise $400M for Expansion). Yesterday the MLP announced they are issuing another 10.5 million units. At this morning’s unit price of $29.43, that would represent another $309 million of cash. Hence our comment that they’re on a mission to raise cash…
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EnLink Midstream Floats Notes, Hopes to Raise $400M for Expansion

EnLink Midstream, the merger of the old Crosstex Energy and Devon Energy midstream division, has major operations in the Marcellus/Utica region. So it was with interested we noticed the company is raising more cash by floating notes (pieces of paper, debts to be repaid at a future date) with the goal of getting $400 million to use in expanding their operations…
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EnLink Takes Ownership of Henry Hub from Chevron

Technically this is not a Marcellus or Utica story–but it does has implications for the Marcellus/Utica region. If you’re around the natural gas marketplace in the United States for any amount of time, you will soon run into this strange-sounding price point called “the Henry Hub.” The HH is a market point where natural gas is bought and sold in southern Louisiana. Once upon a time, because of the pipelines running through the Gulf Coast (many of them from off-shore), some 20% of all natural gas flowed through the HH, making it the “benchmark” or best average price for natural gas–used for futures contracts and by NYMEX in commodity trading. All natural gas prices quoted at other sales locations use the HH as its benchmark or “basis” and compare themselves with the HH price. It’s been that way for two decades. The new news is that EnLink Midstream (the former Crosstex Energy and Devon Energy midstream units merged together) has just taken ownership of the pipeline system that includes the HH…
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EnLink Midstream’s Primary Focus in the Marcellus/Utica is…

primary focusEnLink Midstream, the newly combined Crosstex Midstream + Devon Energy midstream division, has announced a “drop down transaction”–which means on paper they transferred assets from one corporate entity to another–both entities owned by EnLink. That is, they sold themselves their own assets. On paper, the “transaction” is valued at $192 million and includes E2 Appalachian Compression, LLC and E2 Energy Services, LLC, both subsidiaries with operations in the Marcellus/Utica. Beyond the financial mumbo jumbo in their announcement, MDN found one line of interest that talks about what, exactly, EnLink’s “primary focus” in the Marcellus/Utica is…
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EnLink Gets New Top Lawyer, 1st Major Personnel Change Since Merger

Last year midstream company (pipelines & processing plants) Crosstex Energy announced it would merge with the midstream division of Devon Energy. The resulting new company was christened EnLink Midstream (see Crosstex Energy Gets a Name Change, Merger with Devon Proceeds). Both Crosstex and Devon had/have major operations in the Marcellus/Utica–so this was and is an important story for MDN. We further told you that the new EnLink would be retain the Crosstex leadership–and that those leaders have a heart (see A Peek Behind the Curtain of Crosstex/Devon Midstream Marriage). The leaders of the new EnLink vowed not to lay people off–and they didn’t. The new news is that one of those leaders, Joe Davis (executive vice president and general counsel) is now either cashing in his chips and retiring, or cashing out and moving on–we’re not sure which. This is the first major change-up in EnLink’s leadership we’ve spotted since the merger was officially completed in March of this year…
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EnLink Midstream Announces New Condensate Pipeline in ORV

Earlier this year, midstream company Crosstex Energy merged with the midstream division of shale driller Devon Energy and gave birth to a new company–EnLink Midstream (see Time to Congratulate Devon & Crosstex on the Birth of EnLink). EnLink has a small but growing presence in the northeast, including the Utica Shale. EnLink’s commitment to the Ohio River Valley (Utica Shale) has just doubled by adding another $250 million committed to a project that will build a new 45-mile condensate pipeline and add compressor stations in Noble, Belmont, and Guernsey counties…
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Important Supply Chain Takeaways from Chamber Midstream Meeting

The Canton, OH Regional Chamber of Commerce recently hosted the Midstream Ohio 2014 event to help connect companies seeking to sell to the Utica drilling industry with those drilling and building pipelines. By all accounts it was a huge success for both sides. Here’s some great takeaways from the event, to help supply chain companies that want to sell, or sell more, to the Utica industry:
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Some Utica Players Tip Their Hand on Plans for Next 3-5 Years

Although drillers are often mum on future plans, some drillers (and midstream companies) who participated in the recent Ohio Oil & Gas Association (OOGA) annual winter meeting earlier this month were helpfully chatty about what’s coming in the Ohio Utica over the next few years.

Tom Knox, intrepid new reporter doing a great job at the Columbus Business Journal, was on hand at the OOGA meeting and took good notes. He reports on what PDC Energy, Antero Resources, Eclipse Resources and Enlink Midstream have planned in the next 3-5 years for the Utica…
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Crosstex Investors Cash in on Merger, Selling 18M Units for $550M

Crosstex Energy recently got hitched with the midstream operation of Devon Energy and the new couple gave birth, or rather transformed itself, into EnLink Midstream (see Time to Congratulate Devon & Crosstex on the Birth of EnLink).The new EnLink has a growing presence in both the Utica and Marcellus Shale. They are a “player” in our space, so we keep a close eye on them.

Last Friday the newly combined and renamed EnLink announced owners of 18 million shares of stock in EnLink (called units) have put their shares up for sale with an eye to raising $550 million. However, that money will not flow to the coffers of EnLink. It will go to the owners of the units–presumably top management and/or investors in the old Crosstex. The action does make us wonder: Is this a prelude to some of top management leaving EnLink, or just big money investors cashing in to realize a big ROI? We don’t know. Here’s the announcement from Friday:
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