Delphi Energy Corp. Announces Close of Alliance Service Sale and Agreement to Reactivate Alliance Lateral Line

Source Company Press Release
Company Distinction Energy Corp.
Tags Corporate: Overview/Strategy, Country: United States, M&A: Corporate Deal, Deals, Midstream: Pipeline
Date September 16, 2019

Delphi Energy Corp. (“Delphi” or the “Company”) announces the closing of the sale of a portion of its Alliance Service and the execution of an Interconnection Development Agreement with Alliance Pipeline Limited Partnership to reactivate its lateral line to the company-owned Bigstone West Gas Plant located at 14-28-59-22W5M.


As previously announced on June 17, 2019, Delphi has sold and permanently assigned 16 million cubic feet of gas per day (“mmcf/d”) (approximately 35 percent) of its firm full-path service to the Chicago area on the Alliance pipeline system for $11.9 million. As a result of Delphi’s reduced firm transportation commitment on Alliance, Delphi’s outstanding letters of credit associated with the Alliance service will be reduced by $1.8 million.  Delphi is retaining approximately 29.8 mmcf/d of firm service and 7.5 mmcf/d of priority interruptible service on the Alliance pipeline system.  The Company currently utilizes about 55 percent of the retained service. Due to the closing of this transaction, the borrowing base of the Company’s senior credit facility has been reduced by $10.0 million to $90.0 million.  The proceeds from the transaction have been used to repay bank debt.  Currently, Delphi has $71.0 million drawn on its $90.0 million senior credit facility.


Delphi and Alliance have entered into an agreement wherein the parties will exchange the following:  Delphi will pay for the updating and reactivation of the Alliance Meter Station at the Bigstone Plant and commit to deliver approximately 10 mmcf/d at such delivery point; and Alliance will repair and reactivate the Bigstone Lateral that connects the Bigstone Plant to Alliance’s natural gas mainline approximately 50 kilometres southwest of Fox Creek, Alberta.  The planned in-service date for the re-activated lateral occurs in February of 2022.  Currently, the Company’s Amine facility sweetens Montney natural gas for further processing at the Bigstone Plant.  The reactivation of the Bigstone Lateral will give Delphi access to the premium priced Chicago natural gas market for this in-field sweetened natural gas and increase access to the Alliance system to three of the four natural gas plants in which Montney natural gas is currently being processed (the Negus natural gas plant having a connection to TCPL only).  In light of the current and foreseeable natural gas market, the Company views natural gas market egress optionality, particularly to Chicago, as very strategic.  Once the Bigstone Lateral is reactivated, approximately 95 percent of Delphi’s natural gas production will be processed at the three natural gas plants that will be dually connected to the Alliance and TCPL pipeline systems.


Corporate production for the months of July and August averaged approximately 8,550 barrels of oil equivalent per day (“boe/d”) based on field estimates.  Field condensate production for this period averaged 2,250 barrels per day (“bbls/d”) and when combined with natural gas liquids, including propane, butane, pentanes and spec condensate recovered at natural gas processing plants, accounted for 40 percent of production.  Higher liquid content of the corporate production mix has been driven by results at West Bigstone, particularly the new four-well pad located at 13-34-59-24W5 (65 percent working interest).  These four wells were brought on production in the second quarter of 2019 and continue to produce liquids at a much higher ratio compared to the rest of Delphi’s Montney wells.  Current liquid content including estimated natural gas liquids recoveries of 42 barrels per million cubic feet of natural gas sales, is 56 percent of production on a barrel of equivalent basis, with field condensate accounting for over 80 percent of the liquid production.

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd