Kimmeridge Adding Eagle Ford Natural Gas Acreage, Pipeline Capacity with Eye Toward LNG Exports

By Andrew Baker

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Published in: Daily Gas Price Index Filed under:

Kimmeridge Energy Management Co. LLC is expanding its presence in the Eagle Ford Shale of South Texas, with an upstream natural gas-weighted acquisition and a multi-year transport agreement aimed at the LNG export market.

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Kimmeridge, an alternative asset manager focused on the energy sector, said affiliate Kimmeridge Texas Gas (KTG) signed a deal to acquire upstream Eagle Ford assets from a private seller spanning about 30,000 acres. 

The assets currently are producing 65 MMcfe/d and “have a strong degree of overlap with KTG's existing 75,000-acre position in the play, offering significant scale and operational synergies,” management said. “KTG anticipates continuing its multi-rig program focused on the Eagle Ford and Austin Chalk, with a target of delivering over 500 MMcfe/d net on a pro forma basis in 2026.”

Separately, Kimmeridge signed a multi-year natural gas transport agreement with Kinder Morgan Texas Pipeline LLC “to secure midstream takeaway for its Eagle Ford natural gas, enabling KTG to deliver natural gas across multiple LNG facilities along the Gulf Coast.” 

Kimmeridge in August acquired a minority stake in the Commonwealth liquefied natural gas export project proposed for Cameron Parish, LA.

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The investment in Commonwealth, combined with the latest transactions, “deepen Kimmeridge's South Texas foothold, and will position KTG to deliver natural gas/LNG from the wellhead to the water,” according to the company.

Basis differentials between Texas hubs and U.S. benchmark Henry Hub have narrowed this year, driven by the return to service of Freeport LNG and El Paso Natural Gas Line 2000, as well as record exports to Mexico.

NGI’s Agua Dulce forward basis curve, a useful proxy for Eagle Ford natural gas, was trading at a 5.3-cent discount to Henry Hub for the balance of winter as of Thursday.

"Our acquisition of these upstream assets and agreement with KMTP will meaningfully advance KTG's ambitions of becoming fully integrated from source to sink, providing reliable, secure and clean energy to global markets,” said Kimmeridge’s Ben Dell, managing partner.

Kimmeridge also is the third-largest shareholder of Denver-based Civitas Resources Inc., which in August closed a pair of Permian Basin acquisitions valued at about $4.7 billion combined.

Kimmeridge and its partners at Civitas have touted it as “Colorado’s first carbon neutral energy company.”

Now, through the South Texas investments, “we believe we will be able to deliver net zero LNG, where all Scope 1 and 2 emissions will be offset by a combination of mitigation, sequestration and carbon removal," the Kimmeridge team said.   

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Andrew Baker

Andrew joined NGI in 2018 to support coverage of Mexico’s newly liberalized oil and gas sector, and his role has since expanded to include the rest of North America. Before joining NGI, Andrew covered Latin America’s hydrocarbon and electric power industries from 2014 to 2018 for Business News Americas in Santiago, Chile. He speaks fluent Spanish, and holds a B.A. in journalism and mass communications from the University of Minnesota.