Copano Energy's Margins Grow With Eagle Ford Volumes

Copano Energy's margins are growing as the company expands its footprint in the Eagle Ford Shale. Higher NGL prices along with increased throughput are the primary drivers for the increase. Copano Energy is one of the most active midstream companies in the Eagle Ford Shale. The company operates assets and owns a 50% interest in an Eagle Ford Gathering Joint Venture with Kinder Morgan. In total, the company has plans to invest more than $500 million in more than 1 Bcf/d of pipeline and processing capacity. 

"We are making significant progress on our Eagle Ford Shale strategy as we complete and integrate the bulk of our 2011 projects, several of which have begun accepting volumes on a limited basis.

"We continue to see strong producer activity in the Eagle Ford Shale and when these projects are placed into full-service, they will have an immediate and positive impact on our distributable cash flow and distribution coverage," Northcutt added.

The year-over-year increase resulted primarily from (i) a 9% increase in realized margins on service throughput compared to the third quarter of 2010 ($0.63 per MMBtu in 2011 compared to $0.58 per MMBtu in 2010) reflecting higher NGL prices and (ii) an increase in pipeline throughput associated with fee-based contracts in the Eagle Ford Shale and the north Barnett Shale Combo plays. During the third quarter of 2011, throughput volumes for the Eagle Ford Shale and the north Barnett Shale Combo plays increased 25% and 41%, respectively, from the second quarter of 2011. During the third quarter of 2011, weighted-average NGL prices on the Mont Belvieu index, based on Copano's product mix for the period, were $59.43 per barrel compared to $40.16 per barrel during the third quarter of 2010, an increase of 48%. During the third quarter of 2011, natural gas prices on the Houston Ship Channel index averaged $4.23 per MMBtu compared to $4.33 per MMBtu during the third quarter of 2010, a decrease of 2%.

During the third quarter of 2011, the Texas segment provided gathering, transportation and processing services for an average of 765,744 MMBtu/d of natural gas compared to 590,116 MMBtu/d for the third quarter of 2010, an increase of 30%. The Texas segment gathered an average of 463,321 MMBtu/d of natural gas during the third quarter of 2011, an increase of 45% over last year's third quarter, primarily due to increased volumes from the Eagle Ford Shale and north Barnett Shale Combo plays.

Read the entire press release at copanoenergy.com

Gulf Coast Refineries Supported by Eagle Ford Crude

Gulf Coast refineries are increasing margins as they absorb more domestic crude from the Eagle Ford Shale. Lighter crudes and condensates produced in the Eagle Ford directly offset imports to the Gulf Coast Region. For those counting, that means more jobs in the U.S. Light crude can be refined into products more easily than many of the heavy crudes imported from South America. Easier means cheaper, which in turn makes Gulf Coast refineries more competitive on a global basis. If you've missed the past few years, owning a refinery hasn't been the best of the business world. Production expectations from shales and a lighter crude slate look to be shifting the winds for refineries. 

The booming Eagle Ford shale deposits in southeast Texas offer regional refiners the opportunity to whip up a crude cocktail cheaper than imported and domestic offshore competition.

The cost benefits will get even better when new pipelines enter service that will bypass current bottlenecks and give refiners access to surging supplies of cheap crude from North Dakota and Canada.

Shale oil from the Eagle Ford deposit in southeast Texas has come on strong this year, rising to 272,000 barrels per day (bpd) in June from 70,000 bpd in April, according to energy consultancy Bentek. Some experts say it could top 400,000 bpd by 2013, enough to virtually back out all the region's imports from Nigeria.

Read the entire news release at reuters.com