Barnett Shale

Impairments hit third-quarter earnings

Natural gas producers saw their third-quarter earnings statements generally turn into loss reports, often on account of taking "impairments" -- write-offs in the value of holdings in the wake of low product prices. The Star-Telegram has an explainer on the accounting of impairments here.

-- Jim Fuquay

KKR buys more Barnett properties

Private equity firm Kohlberg Kravis Roberts is buying more Barnett Shale assets. KKR Natural Resources, its venture with Premier Natural Resources LLC, said Monday it agreed to pay $306 million for properties in the Barnett and in the Arkoma basin from WPX Energy, the former Williams Cos. production unit. Included in the deal are 27,000 net acres in the Barnett and in eastern Oklahoma, and 66,000 net acres in the Arkoma. KNR last year bought Barnett properties in the southern Barnett Shale from ConocoPhillips and in mostly Parker County from Carrizo Oil & Gas.  KNR says it has acquired over $900 million of assets since its launch in February 2010, including over $600 million this year, and now operates properties producing more than the equivalent of 150 million cubic feet of natural gas a day. It says it has $1 billion of capital currently available for investment.

-- Jim Fuquay

 

Fire personnel investigate natural gas release

Arlington and Mansfield fire departments investigated a natural gas release this morning at Debbie Lane near Matlock Road after residents reported a loud hissing sound and a vapor cloud blanketing their neighborhoods. Arlington fire fighters arrived at the Carrizo Oil and Gas site at 1751 E. Debbie Lane in southeast Tarrant County about 7:44 a.m. and conducted air monitoring after detecting a natural gas odor, Lt. Darrel Whitfield said. The vapor released from the site was "mostly steam with some gas and at no time was anyone in danger of being harmed," according to Mansfield Fire Chief Barry Bondurant. The Arlington Fire Department did not detect measurable amounts of gas in the residential areas close to the location, according to a Mansfield Fire Department news release. The Arlington Fire Department provided the photo above.

For more, see the Star-Telegram report here, and a follow-up editorial here.

-- Jim Fuquay

Carrizo agrees to sell more Barnett properties

Carrizo Oil & Gas, a Houston-based producer among the larger operators in North Texas’ Barnett Shale, said Friday it agreed to sell $190 million worth of properties in the field to Atlas Resource Partners.Carrizo said the deal, expected to close in late April, involves 12,000 acres with 110 net producing wells in “noncore” areas. A Carrizo representative would not be more specific, but the company has previously described its Barnett Shale core as being Tarrant County, including 22 wells on the campus of the University of Texas at Arlington.

The company said it will use sales proceeds to reduce debt and help fund drilling, mostly in the Eagle Ford Shale in South Texas. Carrizo, like many other producers, says it is focusing spending on properties like the Eagle Ford and Niobrara Shale in eastern Colorado, which produce more of the oil and liquids that command much higher prices than natural gas.

Atlas, based in Philadelphia, is a master limited partnership with holdings in Appalachia and the Niobrara. Master limited partnerships generally acquire established properties on behalf of investors who are looking for steady income.Atlas CEO Edward Cohen called the deal “the first step” in a growth strategy. He said the Barnett acquisition provides “long-lived, producing assets” that will increase payouts to Atlas unitholders.

Atlas said the properties produce the equivalent of about 36 million cubic feet of natural gas daily from 277 billion cubic feet of proved reserves. It put the purchase price at 69 cents per 1,000 cubic feet and said the properties cost about 60 cents per 1,000 cubic feet to operate.In its statement, Carrizo estimated its proved reserves at 315 billion cubic feet and put production at 35 billion cubic feet a day.

Investors liked the deal, especially for Atlas.Its units (ticker: ARP) jumped more than 30 percent Friday to $28.30 on about 14 times the usual daily trading volume on the New York Stock Exchange. Carrizo’s shares (CRZO) rose 1 percent to $30.The disparity in investor reaction is likely explained by the relatively low price Atlas is paying, which comes to less than $6,000 per 1,000 cubic feet of daily production. That compares to the roughly $12,000 per 1,000 cubic feet of daily production that private equity firm KKR paid Carrizo in May 2011 for noncore Barnett properties.

-- Jim Fuquay

UTA wells paying off

The University of Texas at Arlington is the beneficiary of unusually strong production from six natural gas wells on its campus. The school said Monday it received a check for $528,495 from Carrizo Oil & Gas, its first royalty payment from production that started Nov. 4. The school said about 40 percent of the money will go toward undergraduate scholarships and graduate fellowships, with the rest to endowed faculty positions and campus improvements. Other property owners receiving royalty payments from the wells’ production include the city of Arlington, First Baptist Church of Arlington and the state of Texas. Carrizo said it issued a total of more than $675,000 in royalty checks just for November production.

For a complete report, see Tuesday's Star-Telegram.

--Jim Fuquay

Offers going up in Southwest Fort Worth area

The newly formed Southwest Fort Worth Alliance reported today that it's now up to 25 neighborhoods and includes more than 6,000 acres.

We told readers of the the Star-Telegram print edition last week about this newly merged super group. Click here for the story and to see which neighborhoods are part of the group.

Click here to see what we wrote on the blog earlier this year about the group.

The offers are also starting to tick up, but only to specific homeowners groups within the alliance. The alliance hasn't yet begun to negotiate as a group with the energy companies. The highest offer is now up to $25,000 an acre for lease bonuses and a 25 percent royalty, with the usual three-year primary term and an option for another two years.

Tolli Thomas, co-chair of the group, said the alliance is now looking to hold meetings with the drilling companies. The three that have circulated offers to various property owners in the group are Chesapeake Energy, XTO Energy and Carrizo Oil & Gas. Chesapeake and XTO each have multiple well sites that could perhaps reach most of the property owners, Thomas said. Carrizo has mostly gone after homeowners on the southen end of the group's boundaries.

--David Wethe

$25,500 deal reached with Turf Green United (SW Arl)

The group in Southwest Arlington known as Turf Green United says on its website that it has reached a deal with a relatively new drilling company Titan Resources and its land affiliate The Caffey Group.

The terms of the deal are:

• $25,500 per-acre bonus
• 25 percent royalty
• Initial three-year term with an option for another two years and another $25,500 bonus

Competition helped drive up the price. We last told you in late February about a $17,000-per acre signing bonus and a 25 percent royalty offered by Carrizo Oil & Gas. The group also reports on its website that it received an offer of $25,000 per acre from Dale Resources, representing Chesapeake Energy.

The group, which posted the deal agreement last night, also announced signing dates at The Church on Rush Creek, at 2350 SW Green Oaks Blvd., in Arlington.

They are:

• Tuesday, June 10, 4 p.m. - 9 p.m.
• Thursday, June 12, 4 p.m. - 9 p.m.
• Saturday, June 14, 10 a.m. - 4 p.m.
• Tuesday, June 17, 4 p.m. - 9 p.m.
• Thursday, June 19, 4 p.m. - 9 p.m.
• Saturday, June 21, 10 a.m. - 4 p.m.

When you go to sign, you'll need to bring a picture ID, and all parties that own the property must sign the lease, the group's Website said.

The group is also expressing frustration that officials for Dale Resources is going around the neighborhood, posting flyers on people's doors.

"The lease they are offering is not a Turf Green United approved lease. This a common tactic used by this company to cause signing date confusion within a united neighborhood. These types of dishonorable tactics are unwelcome and speak loudly on the way Dale conducts business."

Click here for the Website for Turf Green United, formerly known as Sterling Green Addition.

Click here to see what we've said about this group before.

--David Wethe

Keller group says Carrizo interested

North Keller Neighbors Together, representing property owners in North Keller, Southlake and Westlake, said Carrizo Oil & Gas has expressed an interest in leasing in the entire area and plans a presentation at the neighborhood group's July meeting. NKNT says it has commitment letters from 1,424 property owners representing more than 3,000 acres. The group also said its leadership group discussed XTO Energy's leasing activities in the area. It said XTO's use of independent landmen to solicit individual leases is contrary to the group's stated goals for dealing with the community. Click here for the group's boundaries.

-- Jim Fuquay

SWAPO2 owners get checks for street acreage

SWAPO2 (Southwest Arlington) says Carburante -- the land agent that did the neighborhood's community lease deal for Carrizo Oil & Gas -- is preparing bonus checks for street acreage calculations and will begin distributing them 3:30 p.m.-6:30 p.m. May 22 at the Park Springs Bible Church. Subsequent meetings will be May 23, 27, 29, and 31 at the church, at the same times. Only the Thousand Oaks and Trails West neighborhoods will have their checks ready at this meeting, SWAPO2 says.

"All other subdivisions will need to wait until their letter is received before coming to the church," SWAPO2 says in an email message to property owners. "If you have not signed your lease yet, please let us know as soon as possible, because Carburante is preparing street bonus checks for people who have already signed first."

Carburante says property owners who want to sign the Carburante/Carrizo lease should call Shelley at (817) 945-3830 to schedule an appointment.

-- Scott Nishimura

Nottingham (G.P.) agrees to deal with Carrizo

The Nottingham Gas Lease Association, in northern Grand Prairie straddling the Tarrant-Dallas county line, announced Saturday it has reached a deal to lease its mineral rights to Reagan Energy Services, working on behalf of the driller Carrizo Oil & Gas.

The terms of the lease it's recommending to members are:

• $16,000-per-acre bonus for a three-year initial term
• 25 percent royalty
• Optional two-year renewal, with another bonus of $10,667 per acre
• Checks to be handed out at the time of signing

The group had declined other offers from competitors, but Walt Stell, who sits on the group's membership committee, declined to name the companies or say what the terms were.

Nottingham, whose website can be found here, expects to have its members start signing the leases by Sat., May 31. The location is expected to be at the Hampton Inn at Carrier Boulevard and Texas 360, Stell said.

Here's what we've said about this group previously when it was first starting to organize late last year.

The boundaries for Nottingham are:

• North Carrier Parkway on the east
• Duncan Perry Road on the west
• Sunnyvale Road on the north
• East Avenue K on the south

--David Wethe