The Daley Note

East Daley Capital’s Daley Note provides daily proprietary market commentary on North American oil and gas fundamentals. The Daley Note (TDN), “midstream insights delivered daily,” covers news, commodity prices, security prices, and EDC research likely to affect markets in the short term. Please subscribe to get the Daley Note delivered to your email, past issues are added to this page on an ongoing basis.

November 2020

  • The Daley Note 11/19/2020

    • East Daley Releases 2021 Midstream Guidance Outlook: East Daley’s annual Midstream Guidance Outlook report is now available. In “Fight or Flight: Taking Stock of the Midstream,” we preview the biggest trends we see ahead for commodities and midstream capital markets in 2021.
    • U.S. Rigs Increase by 11 to 317 in Latest Week: Total U.S. rigs increased by 11 in the latest week, bringing the total U.S. rig count to 317, according to our Midstream Activity Tracker. Continuing a bullish trend, Targa Resources is up 3.0 rigs on its Permian and Bakken systems. TRGP
    • ET’s Texas-Sized Rig Recovery: Energy Transfer saw large rig gains this past week in the Eagle Ford, Permian, and ArkLaTex basins, according to our Midstream Activity Tracker. Producers added an average of 11.2 rigs on four ET systems in one week. ET
    • MVP Construction Moves Forward on Appeals Ruling: A federal appeals court on November 18 denied a motion to stall work on the Mountain Valley Pipeline (MVP), one of two legal wins Equitrans Midstream needs to finish work on the long-delayed MVP project. With only 8% left to complete, MVP’s uncertain outlook drives the fate of long-term Northeast production and price differentials. In our Northeast Production & Constraint Forecast, we model that rapid growth in regional gas production requires MVP to be in service by 2022 or the Northeast will face egress capacity constraints and structurally wider differentials. ETRN
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/18/2020

    • Angling for Exports: ET’s Blue Marlin Deepwater Port Joins Crowded Field: Energy Transfer’s Blue Marlin Deepwater Port recently joined the ranks of three other pending applications with the U.S. Department of Transportation’s Maritime Administration to build a deepwater port terminal to export crude oil and accommodate fully loading very large crude carriers. Despite the vast interest in expanding existing export capacity, East Daley’s Crude Hub Model models a significant overbuild in export infrastructure on the U.S. Gulf Coast. ET, EPD, ENB, PSX
    • KXL Adds First Nations Investor Ahead of Biden Decision: TC Energy said a First Nations group will invest up to C$1 billion ($764 million) in its Keystone XL Pipeline, a savvy effort to curry political favor ahead of an expected decision by the incoming Biden administration on the controversial project. While the odds remain long for the project, TRP is pursuing the only viable path we see for winning political support. ENB, TRP
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/17/2020

    • You Boys Like Mexico?! Sempra Project to Open LNG Route for Permian Gas to Pacific: By utilizing existing assets at a relatively modest investment, the Costa Azul LNG export should boost returns for TCP’s asset while opening new markets for Permian gas. TCP
    • Go North – Northern Delaware Leads Basin Rig Recovery: Delaware Basin rig activity has rebounded nicely off August lows, particularly in the northern part of the basin, which should benefit Lucid, Targa Resources (TRGP), and MPLX with systems in the area. TRGP, MPLX
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/16/2020

    • Gulfport Files Chapter 11 – Midstream Counterparty Exposure: The Oklahoma City, OK-based independent is active in the Utica in the Northeast and the SCOOP play in the Midcontinent, and its bankruptcy poses recovery risks for midstream names like Intensity Midstream, Summit Midstream (SMLP) and Equitrans (ETRN). ETRN, GPOR, MPLX, SMLP, TRP
    • I.O.U. – Plains call highlights deficiency payments: Plains All American’s (PAA) recent 3Q2020 results highlight a likely theme for Permian oil egress pipes in the coming years: deficiency payments. NS, PAA
    • Ovintiv South Texas Sale: Ovintiv (OVV) is rumored to be selling its Eagle Ford acreage, which it bought in 2014, a potential driver for midstream operators. EPD, ET, MPLX, OKE, OVV, PBA
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/12/2020

    • OXY Targets Net-Zero Emissions: Occidental Petroleum (OXY) announced on November 10 plans to eliminate carbon emissions by 2050 from the oil and gas it extracts and sells. OXY is the first U.S. oil company to announce a net-zero emissions plan, following the lead of European peers like Shell (RDS) and Total (TOT). The OXY announcement continues its prioritization of ESG initiatives, though midstream counterparties could face challenges if more U.S. operators follow. APC, EPD, OXY, RDS, TOT, TRGP, WES
    • Pioneer and Parsley Boost Targa in Permian: Targa Resources (TRGP) is ready to reap gains from recent upstream merger activity in the Permian Basin. From October 25 to November 1, Targa saw four more rigs drilling on its West Texas system in the Midland. East Daley expects Targa to be the main beneficiary in the midstream space once the PXD-PE merger closes, expected in 1Q21 (see our October 22 Snapshot, “Pioneer-Parsley: Midstream Implications of Permian Merger Mania”). In addition to their acreage overlap in the Midland, Parsley is the largest producer on TRGP’s Delaware G&P system. PE, PXD, TRGP
    • Eyeing a Rig Comeback in the Anadarko: The Anadarko Basin averaged 16 rigs in 3Q2020, a historic low, but E&Ps are returning to the basin ahead of expected higher gas prices this winter and in 2021. An average of 18 rigs drilled in October and 21 rigs in the first week of November, with operators including Continental Resources (CLR), Citizen Energy III LLC, Mewbourne Oil Co., and GBK Corp. leading the rebound. Our samples show Anadarko gas volumes increased ~12% W-o-W and by ~5% in 3Q2020. CLR, DCP, ENBL
    • LNG Exports Rise in November: Domestic LNG feedgas deliveries remain strong, with utilization averaging 95% of nameplate export capacity so far in November. Higher gas prices in Europe over $5/MMBtu have created favorable spreads for LNG exports and Sempra is closing out maintenance at its Cameron LNG facility following Hurricane Delta.
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/11/2020

    • EOG Strikes Gold in Dorado Gas Discovery: EOG Resources (EOG) announced last week the Dorado gas discovery in South Texas, a potential boost for future Eagle Ford drilling that could lift volumes on several gas gathering systems in the basin. EOG said Dorado is a 21 Tcf net natural gas resource located primarily in the prolific dry gas window in Webb County, TX. Since 2019, the Houston-based E&P has drilled 17 wells in the Dorado play. EOG said returns on its Dorado wells compete with its top oil prospects, and that Dorado provides an additional 1,250 net locations in the Eagle Ford Shale. The EOG discovery, if it fulfills expectations, could provide upside for midstream companies in the dry gas portion of the basin. CVX, EOG, EPD, SM, CVX, EPD, ET.
    • Rig Activity Rises by 10 in Latest Week: Among midstream companies, Targa Resources (TRGP) is up 6.1 rigs across its Permian midstream systems. MPLX is down 3.1 rigs on its G&P systems in the Marcellus-Utica and Bakken. Energy Transfer is up 3.4 rigs on its Permian and ArkLaTex systems.
    • Quarterly Updates Available: GEL, TCP, and WES.
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/10/2020

    • Higher ethane recovery drove NGL production and transportation volumes in 3Q2020: DCP Midstream (DCP), Enable (ENBL), EnLink (ENLC), Enterprise (EPD), Energy Transfer (ET), and ONEOK (OKE) all reported an uptick in NGL production. Even with Hurricane Laura shutting down significant cracker capacity in September, ethane recovery and production levels remained near all-time highs. Ethane export demand grew as more international ethane crackers came online and more ethane export capacity starting along the Gulf Coast. According to the EIA, ethane exports increased 15% Y-o-Y in July and August 2020 despite widespread COVID-19 degradation. DCP, ENBL, ENLC, EPD, ET, OKE.
    • Green Shoots in the Mid-Continent – Cimarex Adds A Rig: A potential harbinger of better times to come, Cimarex Energy (XEC) began operating a rig in the STACK play of Oklahoma in late October, bringing the basin total up to 19 rigs. Our proprietary G&P Allocation Model shows XEC gas production in the STACK by multiple gatherers. DCP, ENBL, ENLC, OKE, XEC.
    • East Daley’s quarterly Post-Call Board Reports are now available for 25 companies under our Midstream coverage.
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/09/2020

    • Bonanza Creek-HighPoint Deal: Wild West Wedding – Bonanza Creek Energy (BCEI) has entered into a definitive agreement to acquire.
    • M&A Heats Up for Liquids Storage Assets: Macquarie Infrastructure Corp. on November 8 said it entered into an agreement to sell its bulk liquids storage and handling business, International-Matex Tank Terminals to an affiliate of Riverstone Holdings LLC for ~$2.685 billion in cash and assumed debt, a sign that private equity interest in liquids storage terminals may be heating up.
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/06/2020

    • Trans-American Cash Flow Shrinking for TransCanada – TC Energy (TRP) reported 3Q20 earnings that beat consensus and East Daley’s estimates for the quarter by 2%. While the Keystone XL project grabs most headlines, the base Keystone pipeline drives incremental bearishness to our outlook in a $40/bbl WTI price strip. TRP
    • Northeast Constraints Lift Rover – The Rover Pipeline (owned 35% by Energy Transfer (ET) and 65% by Blackstone) has been flowing natural gas at or above nameplate capacity in recent months with spare Northeast takeaway scarce, a bullish market dynamic for the midstream pipes with unreserved capacity exiting the region. ENB, ET, KMI
    • Rig Activity Rises by 10 in Latest Week – Among midstream companies, Targa Resources (TRGP) is up 3.9 rigs across its Permian systems. DCP Midstream is down 1.7 rigs on its G&P systems in the Permian and Anadarko, and Western Gas Partners is up 1.9 on its Permian and Eagle Ford systems. DCP, TRGP, WES
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/04/2020

    • 2020 Presidential Election: What a Biden Presidency Could Mean for Midstream. ADCP, EPD, ET, PAA
    • Down-ballot Issues.BP, COP, DCP, WES, XOM
    • More MVP Delays Handcuff Northeast.ETRN
    • Spring Break for Canadian Rigs.CNQ, CVE, HUS.TO, OVV, PBA
    • DTE Midstream Spin-off. DTE
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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  • The Daley Note 11/02/2020

    • TETCO Maintenance Keeps a Lid on Northeast Prices. AR, COG, ENB, EQT, ET, KMI, RRC, TCR
    • Quick Recovery after Zeta. BP, COP, DCP, WES, XOM
    • More MVP Delays Handcuff Northeast. ETRN
    • East Daley’s October Production & Constraint Forecasts Now Available
    • North American Energy Indicators and Equity Prices
    • North American Natural Gas Prices
    • North American Crude Oil Prices
    • North American Natural Gas Liquids Prices
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October 2020

  • The Daley Note 10/26/2020

    • Cenovus-Husky Deal: E&P Merger Mania Moves North – Cenovus Energy (CVE) announced a deal to purchase Husky Energy (HSE.TO) to create the third-largest Canadian oil producer as the wave of E&P consolidation moves north to Canada. CNQ, COP, CVE, CXO, HSE.TO, PBA, PE, PXD, SU, VSN.TO.
    • Hurricane Season Rolls on with Zeta – The 2020 hurricane season continues to loom over the offshore industry as Tropical Storm Zeta gains strength over western Caribbean waters. BP, BHP, CVX, OXY, RDS, ENB.
    • Riding out the Storms – We expect Williams (WMB) to report a slight Q-o-Q uptick in 3Q2020 earnings from its Gulf of Mexico assets despite significant storm disruptions in the quarter. WMB.
    • Key North American energy indicators and midstream equity prices.
    • Key North American Natural Gas Prices, Crude Oil Prices, and Natural Gas Liquids prices by location.
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  • The Daley Note 10/22/2020

    • Permian Positives – We expect significant growth from EnLink’s Permian segment Q-o-Q, as interstate samples show a large increase in throughput volumes. ENLC’s Delaware G&P system interstate sample increased by 25% Q-o-Q, indicating that producers have possibly brought curtailed production back online.
    • Growing Aethon Keeps Midstream At Arm’s Length – Aethon Energy has been one of the most active drillers in the Ark-La-Tex Basin over the last few years, consistently running anywhere from 5 to 9 rigs, but publicly traded midstream companies have largely missed out on the volume upside as Aethon and its midstream subsidiaries gather ~90% of the company’s own Louisiana production.
    • North American Energy Indicators and Equity Prices.
    • North American Natural Gas Prices.
    • North American Crude Oil Prices.
    • North American Natural Gas Liquids Prices.
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  • The Daley Note 10/21/2020

    • Permian Merger Mania – Pioneer Resources’ (PXD) all-stock acquisition of Parsley Energy (PE) for $4.5 billion continues a trend of upstream consolidation in the Permian Basin as producers seek scale to compete at lower oil prices. We examine the midstream implications. COP, CXO, ET, PE, PXD, CXO, TRGP.
    • A Waiting Game on Colorado Setbacks – In early November the Colorado Oil and Gas Conservation Commission (COGCC) will promulgate new drilling regulations, including potential 2,000’ setback requirements for permitting new wells, that could constrain production in the DJ Basin, a concern for DCP Midstream (DPM). DCP, OXY, PDCE, WES, XOG.
    • Rig Activity Grows by 3.4 to 332 Rigs. On the midstream side, DCP Midstream is up 5.7 rigs on its G&P systems across the Permian and Eagle Ford basins. Energy Transfer LP is up 4 rigs on its G&P systems in the ArkLaTex, Eagle Ford, and Permian basins. We examine these in our Midstream Activity Tracker (MAT).
    • Key North American energy indicators and equity prices.
    • Key North American natural gas, crude oil, and natural gas liquids prices.
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  • The Daley Note 10/20/2020

    • Pioneer-Parsley Deal: All in the Family – Pioneer Resources (PXD) announced Tuesday afternoon an agreement to acquire Parsley Energy (PE) for $4.5 billion in an all-stock transaction, a deal that Targa Resources (TRGP) and its investors should monitor closely. PXD, PE, COP, CXO, TRGP, ET.
    • Gulf of Mexico Nears Return to Normal – Our Gulf of Mexico pipeline gas sample shows volumes approaching normal levels after the active hurricane season of 2020 concludes.
    • Key North American energy indicators and midstream equity prices.
    • Key North American Natural Gas Prices, Crude Oil Prices, and Natural Gas Liquids prices by location.
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  • The Daley Note 10/19/2020

    • Concho-Phillips Merger Sealed – Midstream Implications. COP, CXO, EPD, ENLC, ET, PAA, TRGP, WES.
    • Big Acquisition or Big Nothing – EOG in Play? EOG, TOT, XOM, CVX, ET, WES, EPD, MPLX,TRGP, KMI, ENLC.
    • Get It While the Getting’s Good. NM vs. TX Permian Rigs. DVN, XOM, EOG, CXO, ENLC, EPD, DCP, ET, TRGP.
    • Gulf of Mexico Almost Back to Normal.
    • Key North American Energy Indicators and Equity Prices.
    • Key North American Natural Gas, Crude Oil, and Natural Gas Liquids Prices.
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  • The Daley Note 10/15/2020

    • Conoco-Concho Merger Rumors – Midstream Implications. COP, CXO, EPD, ENLC, ET, PAA, TRGP, WES.
    • Flush Bakken Production Comes Full Circle. HESM, KMI, OKE, TRGP.
    • Gulf Production Continues Rebound after Hurricane Delta.
    • Key Energy Indicators and North American Midstream Prices.
    • Key North American Natural Gas, Crude Oil, and Natural Gas Liquids Prices by Location.
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  • The Daley Note 10/14/2020

    • Cameron LNG Recovery Sunk Again. D, LNG, SRE.
    • Eagle Ford Rigs Soar. COP, CPE, DCP, EPD, ET, KMI, MRO, PVAC, SBOW.
    • Midstream: Best House in a Bad Neighborhood – An analysis of energy Chapter 11 filings statistics.
    • Gulf Production Continues Rebound after Hurricane Delta.
    • Key Energy Indicators for North American Energy.
    • North American Midstream Universe Price and Performance Data.
    • Key North American Natural Gas Prices, Crude Oil Prices, and Natural Gas Liquids Prices.
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  • The Daley Note 10/13/2020

    • C2 Seesaw to drive Earnings for DPM, OKE.
    • XOG Buy-out Deal Rumored in DJ – Midstream Menagerie.
    • Gulf Operators Restore Production after Hurricane Delta.
    • Fundamental, E&P, and Midstream Calendar.
    • Key North American Natural Gas, Oil, and Natural Gas Liquids Prices.
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  • The Daley Note 10/12/2020

    • The Price isn’t Right – Midstream Implications of Cabot’s Curtailed Production.
    • Gulf Operators Begin Restoring Operations after Hurricane Delta.
    • A Return to Normalcy – Rebound in Gas Receipts Across Hardest Hit Basins.
    • Company & Industry News.
    • Energy Calendars.
    • Key Energy Indicators.
    • North American Midstream Universe Pricing.
    • Key North American Natural Gas, Crude Oil and Natural Gas Liquids Pricing By Location.
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  • The Daley Note 10/08/2020

    • Cameron Comeback? D, LNG, SRE.
    • Hurricane Delta Forces More Gulf Shut-ins. BP, CVX, OXY.
    • Company & Industry News.
    • Fundamental & earnings calendars.
    • Key North American energy indicators.
    • North American midstream universe price data.
    • Key location-based data for NoAM natural gas, crude oil and natural gas liquids prices.
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  • The Daley Note 10/07/2020

    • Plummeting NGL recovery at the Younger plant. PBA
    • Hurricane Delta Intensifies into Category 4 Storm. BP, CVX, OXY.
    • Company & Industry News.
    • Fundamental Calendar.
    • 3Q2020 Earnings Calendar – Midstream & Upstream.
    • Price data for the North American Midstream Universe.
    • Key Energy indicators, natural gas prices, crude oil prices and natural gas liquids prices.
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  • The Daley Note 10/06/2020

    • Hurricane Delta Intensifies into Category 4 Storm. BP, CVX, OXY.
    • Shelling the Upstream. RDS, CEQP, KEY, ET, PBA, WES, ENLC, NFG.
    • Company & Industry News.
    • Calendars: E&P & Midstream.
    • Key energy indicators, NoAm natural gas prices, crude oil prices and NGL prices.
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  • The Daley Note 10/05/2020

    • The CVX-NBL merger closure and midstream implications.
    • TC Energy’s offer for TC Pipelines and the rate-risk nuances.
    • The OAS bankruptcy and implications for OMP and other midstreamers.
    • The outlook for Tropical Storms Delta and Gamma.
    • The cumulative impact of storms to GoM production.
    • Corporate news.
    • Industry news.
    • E&P 3Q2020 Earnings Calendar.
    • Midstream 3Q2020 Earnings Calendar.
    • Key Energy Indicators – Commodities, Spreads, Indices & Rates.
    • NoAm Midstream Universe prices.
    • Natural gas, crude oil, and natural gas liquids prices by location.
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  • The Daley Note 10/01/2020

    • We follow up on SMLP’s recent restructuring agreement, with likely asset sales ahead. SMLP, WLL.
    • We talk cash flows on the Milk River-Empress exchange deal. PAA, IPL.
    • We tease today’s in-depth Snapshot report on the midstream implications of the Devon-WPX merger. DVN, WPX.
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