Module 7 – Connecting the Dots

Presenter: Rusty Braziel

7.1 Connecting the Dots:  Modeling Midstream Fundamental Analysis. In order to do a full-blown investment analysis on a specific gas processing plant project, you must connect all the dots.  In Module#7, we will give an outline of some of the work that it would take to do that.  This is exactly the same gas processing model that was reviewed earlier with NGLs, now incorporated as the engine that drives the economic side of the model. We’ll see what data inputs the model needs and also focus on the outputs. To make sure our plant makes sense, we’ll look at the analysis from two different but highly interrelated perspectives, the producer and the processor. The linkage between the two perspectives is the “cost to process” - a cost for the producer and a revenue for the processor, which makes the commercial terms for processing deals extremely important to both parties. Rusty takes an in depth look at the three types of processing arrangements and how the processor and producer are affected by each arrangement. He then introduces Model 7.1 – Processing Balance Yield Economics and reviews in detail the two major pieces of the model, the Economics section and the Balance and Yield section. Rusty uses the model to demonstrate how various inputs can affect processing arrangements and clearly brings together, connects the dots, for both the producer and processor in a practical, understandable and useable investment summary analysis.