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Transcript of Greystone Petroleum, L.L.C. Joe M. Bridges Chairman & CEO IPAA Private Capital Conference Houstonian...
Greystone Petroleum, L.L.C.
Joe M. BridgesChairman & CEO
IPAA Private Capital Conference
Houstonian Conference Center
January 19, 2006
The Greystone Story
Disciplined Founded in 1995 to target acquisitions in the Lower Cretaceous
and Upper Jurassic, particularly in North Louisiana• Good reserve potential at low finding costs• Multiple producing zones• Low operating costs• Long history of production
Evaluated all North Louisiana and East Texas fields for criteria –
Sligo Field met all
Patient and Persistent Began Sligo Field evaluation in April 1995 Made first acquisition proposal for Sligo Field in May 1996 Steadfastly pursued Sligo Field for the next six years, through
several commodity price cycles Shell Capital: a faithful financial partner over the years
Responsive Greystone: moved quickly on the opportunity Shell Capital: ready to help yet another time First Reserve: willing to work diligently despite tight schedule
Joe M. Bridges Chairman & CEOMichael A. Geffert President & COO
- Co-Founders of Greystone Petroleum LLC
Sligo Field Acquisition
The Sligo Field fit management’s experience and philosophy
Acquisition took years of on-again/off-again negotiations with prior owners
Management’s first purchase offer made in May 1996
Multiple offers made in ensuing years
Throughout cycles, Greystone remained disciplined in acquisition strategy and return targets
Keys to closing the transaction
Respect for Seller’s requirements
Long-term relationship with Shell Capital
First Reserve’s willingness to pursue the opportunity on short notice
Timeline
Initial meeting with First Reserve 12 December 2001
Devon confirms willingness to sell 19 December 2001
Execution of PSA 18 January 2001
Wire transfer of Purchase Price 8 March 2002
Sligo Field Attributes
Acquisition Goals:
Thoroughly studied by Greystone
Great natural gas reserve potential
Low finding costs, benign drilling
Ample acreage for expansion
Under-developed well density
Great gas marketing opportunities
Acquisition Attributes:
Sligo Field, North Louisiana
99.8% natural gas
Very large original-gas-in-place
Multiple producing zones
Multiple recompletion and drilling
opportunities
High realized prices, high Btu gas
Multiple pipelines & markets
Sligo Field
Sligo Field Overview
The Sligo field represented 98% of proved reserves. Greystone had a large, contiguous acreage position over the crest of Sligo field. Operated acreage was predominately 100% working interest with 85% net revenue interest, all held by production. Greystone also had working interests ranging from 10% to 50%, averaging 41%, in acreage operated by EOG Resources.
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33 34 35 36
3456
7 8 9 10
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27282930
31 32 33 34
13141516
21 22 23 24
25262728
33 34 35 36
15161718
19 20 21 22
27282930
31 32 33 34
T17N-R12W T17N-R11W
T18N-R12WT18N-R11W
0035-
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35-
-5
30
0
- 5300
- 5300
- 52
50
0525-
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25-
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0515-
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Legend - Acreage
100.00% WI
50.00% WI
45.00% WI
32.00% WI
10.00% WI
CV Farm Out
Sligo Field Summary
Location Bossier Ph, Louisiana
Date Discovered 1938
Cumulative Prod. 1.6 Tcf
Prod. Horizons Rodessa, Pettit, Hosston, Cotton Valley
Prod. Depth 1,100’ to 9,600’
Operators Greystone, Hunt Petroleum, EOG
Acreage 15,976 Gross
Operated Wells 107
Non-Op. Wells 58
Contract Operator Brammer Engineering
Sligo Field Development
Sligo Field - TotalBase + 2002 Recompletions & New Drills + PUDs
Greystone Operated(Date Last Posted: 6/01/04)
1000
10000
100000
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
1000
BASE Plus Remedial
RECOMPLETIONS
PUD New Drills
Allocated Daily Sales Volumes(14.73 psi P ressure Base)
55,000
14,000
10,000
7,000
Max Daily Peak @ 61,000
Start artificial lift operations
Start recompletion operations
Sligo Field Development
Sligo Field - TotalBase + 2002 Recompletions & New Drills + PUDs
Greystone Operated(Date Last Posted: 6/01/04)
1000
10000
100000
Jan-
01Fe
b-01
Mar
-01
Apr
-01
May
-01
Jun-
01Ju
l-01
Aug
-01
Sep
-01
Oct
-01
Nov
-01
Dec
-01
Jan-
02Fe
b-02
Mar
-02
Apr
-02
May
-02
Jun-
02Ju
l-02
Aug
-02
Sep
-02
Oct
-02
Nov
-02
Dec
-02
Jan-
03Fe
b-03
Mar
-03
Apr
-03
May
-03
Jun-
03Ju
l-03
Aug
-03
Sep
-03
Oct
-03
Nov
-03
Dec
-03
Jan-
04Fe
b-04
Mar
-04
Apr
-04
May
-04
Jun-
04
1000
10000
100000BASE Plus Remedial
RECOMPLETIONS
PUD New Drills
TLC 29 #1
USA #28, Murff 17 #3, Skannal 13 #1
USA 29
Greystone Fee 14 #2
Greystone Fee 14 #1, Skannal 19 #1
Murff 17 #2
USA 30
McGuire 13 #2
Roscoe 14 #1
Lawrence 24 #1
USA #25 J ohnson 24 #1
Murff 19 #1
Roos 14 #1
USA #C2
Chatman 18
Skannal #7
Devon Offer
Devon Close; 3/02 Initial Field Rate 10.1
mm/d
Murff #2
Thigpen 13
Skannal #6
Hall 20
USA 26
Hall 20 Recompletion
Allocated Daily Sales Volumes(14.73 psi P ressure Base)
Beam Pumps, P lungers & Remedial
Murff 17 #1 McGuire 13 #1
Beam Pumps & P lungers
Murff #1
J amerson 24 #1
Sligo Field Gas Marketing
Greystone owned the gathering infrastructure on operated acreage. Facilities improvements included a pipeline purchased to connect both ends of the field, a pipeline purchased to improve sales delivery points, numerous pipeline and compressor horsepower additions and a 40 MMcfd refrigeration unit that enabled Greystone to meet even the most stringent pipeline specifications without third party processing. Greystone had contracted 89 MMcfd of delivery capacity, 44 MMcfd firm and 45 MMcfd interruptible. Greystone’s system improvements and improved flexibility substantially enhanced realized pricing and therefore acquisition economics.
North Sligo Compressor Station And
Refrigeration Plant
CenterPoint Plant
Booster Station
South Sligo Compressor Station
Gulf South Koran Compressor
Station
Regency
Delivery Capacity (MMcfd)Firm: 85Interruptible: 84
Total Capacity (MMcfd)Compression: 85Dehydration: 84Refrigeration: 40
Natural Gas Markets
Delivery Points Pipelines
Koran Gulf South
TGT(Lonewa)
TGT(Henry Hub)
SNG(Perryville)
MRT(Perryville)
Transco(Henry Hub)
CenterPoint TGT
MRT
CPEGT
TET
Gulf South
Regency SNG(Driscoll)
Tennessee(Bear Creek)
Sligo Field Divestiture
Chesapeake Energy (ticker: CHK, exchange: New York Stock Exchange) News Release - 11-May-2004
Chesapeake Energy Corporation Announces Agreement to Acquire $425 Million of Natural Gas Properties
OKLAHOMA CITY, May 11 /PRNewswire-FirstCall/ -- Chesapeake Energy Corporation (NYSE: CHK) today announced that it has entered into an agreement to acquire natural gas assets in the Ark-La-Tex region of northern Louisiana through the $425 million acquisition of the equity interests of Houston-based, privately-held Greystone Petroleum LLC. Greystone's major asset is its 16,100 gross acre contiguous leasehold position over the crest of the giant Sligo Field located in Bossier Parish, Louisiana. Discovered in 1938, Sligo has produced 1.6 tcfe of natural gas from the Rodessa, Pettit, Hosston and Cotton Valley formations at depths of 4,100 feet to 9,600 feet.
Chesapeake has identified approximately 70 proved undeveloped and 75 probable and possible locations on the acreage. After allocating approximately $65 million of the purchase price to unevaluated leasehold and mid-stream gas assets, Chesapeake's acquisition cost per thousand cubic feet of gas equivalent (mcfe) of proved reserves will be $1.68. Including anticipated future drilling costs for fully developing the proved, probable and possible reserves, the company estimates that its all-in acquisition cost will be $1.94 per mcfe. The proved reserves have a reserves-to-production index of 13.0 years, are 98% gas, are 93% operated, and have current lease operating expenses of $0.39 per mcfe. Greystone's very low lease operating expenses (approximately $0.35 per mcfe below the industry average) create unusually high economic value per mcfe of proved reserves.
Greystone was formed in 1995 by Joe M. Bridges and Michael A. Geffert who later were joined as equity holders by the private equity firm First Reserve Corporation to help fund Greystone's acquisition of interests in the Sligo Field in 2002. Greystone was advised in the sale to Chesapeake by Simmons & Company International and Griffis & Associates.