Producers are Stepping Out

The Daley Note: October 20, 2022

As oil prices have increased, fringe areas of some basins are seeing more exploratory drilling. One area we’re watching is Elbert County, CO, where private GMT Exploration has been running a single rig off the usual beaten path of the Denver-Julesburg Basin.

Rocky Mountain Midstream (aka “WMB – Discovery”), operated by Williams (WMB), will be the midstream beneficiary if the producer's drilling program is successful, according to East Daley's Midstream Activity Tracker.

East Daley is in the News. Click here to read a new Natural Gas Intelligence article highlighting East Daley's natural gas market perspective. Rob Wilson, EDA Vice President of Analytics, warned the LDC Gulf Coast Energy Forum of oversupply on the horizon. "By the end of next year, East Daley projects there could be more than 5 Bcf/d in added natural gas production, flooding domestic markets," NGI wrote.

Rocky Mountain Midstream is the third-largest G&P system in the DJ Basin, behind DCP Midstream (DCP) and Western Midstream (WES). The system, 50% owned by WMB, took some market share away from the two midstream incumbents following its construction in 2017.

Rocky Mountain Midstream has 485 MMcf/d of processing capacity at two plant locations. Those facilities averaged 55% utilization in 1H22 based on East Daley estimates. Civitas Resources is the major producer behind the system after inheriting processing contracts from Extraction Oil & Gas.

Elbert County is located on the southern end of most DJ Basin drilling in Colorado. Denver-based GMT Exploration completed a gathering pipeline from a drilling program in Elbert County that began delivering gas to Rocky Mountain Midstream this summer.

We're tracking GMT and other producers in the DJ through our Midstream Activity Tracker, the industry's only product monitoring weekly and monthly changes in rig activity by G&P system and operator. The Midstream Activity Tracker provides a unique midstream perspective on oil and gas upstream trends. Click here for a free MAT sample.

GMT has drilled 4 wells on 4 pads in the area, and could ramp drilling if those wells show good results. East Daley expects area gas production to feed into Rocky Mountain Midstream’s plants, which could boost throughput if drilling economics remain attractive. - Ryan Smith Tickers: DCP, WES, WMB.

3Q22 Earnings Previews Now Available

East Daley has published a complete group of 3Q22 Earnings Previews and Blueprint Financial Models for midstream companies within our coverage. Quarterly Earnings Previews and Blueprints are now available for Antero Midstream (AM), Crestwood Equity (CEQP), Enbridge (ENB), EnLink Midstream (ENLC), Enterprise Products (EPD), Energy Transfer (ET), Equitrans Midstream (ETRN), Kinder Morgan (KMI), Kinetik Holdings (KNTK), Magellan Midstream (MMP), MPLX (MPLX), ONEOK (OKE), Plains All American (PAA), Summit Midstream (SMLP), Targa Resources (TRGP), TC Pipelines (TRP), Western Midstream (WES) and Williams (WMB).

Our Earnings Previews include quarterly earnings forecasts compared to Street consensus, a detailed list of the top assets that will impact the quarter, analysis of near- and long-term risks to future earnings, along with forecasts for Adj. EBITDA by segments. Please log in to access these reports.

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