Uinta

Two Denver-based E&Ps that each started out small but quickly expanded through a series of acquisitions will now combine to form one of the nation’s larger crude-oil-focused producers. With the planned merger of SM Energy and Civitas Resources, the pro forma company will be a significant player in the Permian, South Texas, the Denver-Julesburg and the Uinta. In today’s RBN blog, we’ll discuss the planned combination and the E&Ps’ rationale for it.

These are challenging times in the oil patch. Crude oil prices continue to sag. E&Ps are trimming their capex, share buybacks, and staff. Some worry that production may be peaking. And yet, upstream M&A activity continues unabated as producers seek to gain scale, expand into new plays — or double down on old ones — and replenish their inventory of top-tier well sites. In today’s RBN blog, we discuss four of the biggest deals announced in the past few weeks.

As 2023 was drawing to a close, folks with 401(k) plans and IRAs were wondering whether stocks would have another great year in 2024. Many of us tracking oil and gas E&Ps were asking a similar question about upstream M&A: Is there any way to match the consolidation frenzy that started in mid-2020 and didn’t let up? The answer is, yes — 2024 was another barn-burner year for acquisitions. (And for Wall Street and our investments!). In today’s RBN blog, we discuss highlights from our new Drill Down report on the past year in producer M&A. 

Even with all the headline-making deals we’ve seen in the North American oil and gas industry over the past two or three years, producers and midstream companies are still at it. And the M&A, the post-acquisition divestitures and the acreage swaps aren’t confined to the Permian, which has seen more than its share of big-dollar transactions lately. In fact, as we discuss in today’s RBN blog, some of the biggest deals the past few months have involved production assets in the booming Montney in Western Canada, the generally sleepy Piceance in western Colorado, the quirky-as-heck Uinta in Utah, and — on the midstream side of things — a trio of natural gas pipelines in the Midwest. 

Cushing has done it again! The all-important hub in central Oklahoma is once more broadening the range of crude oils it handles, this time by figuring out how to receive and blend the quirkiest of domestic oils: yellow wax crude from Utah’s Uinta Basin. Better still, the blending can create a fully compliant Domestic Sweet (DSW), the crude quality deliverable on the CME/NYMEX futures contract usually referenced as West Texas Intermediate (WTI). In today’s RBN blog, we discuss how it works and what it means for Uinta producers, waxy crude marketers, refiners and Cushing itself. 

<p>Newfield Exploration - the largest crude oil producer in Utah’s Uinta basin - has temporarily suspended new drilling operations there in response to lower prices. Other producers in the region have reduced their drilling and capex budgets as well.</p>

No, we aren’t talking about Colorado’s recent legalization of the “wacky weed”, but rather the high that the rush of light crudes is bringing to the refining industry in PADD IV, the Rockies region.  While John Denver’s famous lyrics spoke of the magic of the Rocky Mountains, regional refiners have found elation in recent years as both domestic and readily accessible Western Canadian production increased, stranding crude supplies, putting downward pressure on prices and lifting their margins sky high.  Today we examine how this has impacted the economics of the region and incentivized investment.

New crude oil pipelines expected online this fall are set to unlock congestion in the Rockies that has built up over the past three years. During that time, growing volumes of Canadian, Bakken and local production have descended on the Guernsey, WY trading hub that is the regional crude distribution center. The new pipelines will increase takeaway capacity from North Dakota and Montana to Cushing via Guernsey. They will also make room for more Canadian barrels travelling to market through the Rockies and for rising local production. Today in the first of a two part series we look at the existing and new pipeline infrastructure into and out of Guernsey.

Uinta crude producers and midstream operators are developing new routes to market for the distinctive black and yellow crudes that are hard to ship long distance because of their waxy composition. Rail transload terminals have recently been developed. Uinta crudes are currently discounted by about $15/Bbl to West Texas Intermediate (WTI) because of transport constraints. Today we review market pricing for Uinta Basin crudes.

The strange looking yellow and black waxy crudes produced from the Uinta Basin in Utah since the 1950’s resemble shoe polish at room temperature. Because of the complexity of transporting these waxy crudes over long distances, they have traditionally been consumed by close by Salt Lake City refineries. However, just like many other US production basins these days, Uinta production is increasing – up from 53 Mb/d in January 2011 to an estimated 88 Mb/d this month (August 2013 - source Bentek). Continued production expansion depends on finding new refining capacity or routes to distant markets. Today we begin a series on crude from the Uinta Basin.