Dan, I just read an article about Eagle Ford. The article stated that oil production is falling faster there than in any other major basin in the United States because of vastly higher decline rates. The article also quoted PXD as stating that they will likely be out of Eagle Ford within five years.
Dan, I wondered what your thoughts are on Eagle Ford's sustainability and how a sharp decline in oil production might affect SXE, since natural gas is frequently a byproduct of oil production.
Eagle Ford and SXE
Re: Eagle Ford and SXE
See the chart at this link for falling production by region: http://www.eia.gov/petroleum/drilling/#tabs-summary-2
The active rig count in the Eagle Ford has dropped from ~220 in mid-2014 to ~80 today. Upstream companies are not completing enough new wells in 2015 to offset the decline of wells completed in 2014, not to mention all of the wells completed prior to 2014. As you can see in the chart above, this is happening in all of the major oil basins. Central Oklahoma (not shown in the chart) and the Permian Basin are the only two areas with enough drilling activity to increase production and they are barely positive.
SXE recently updated their corporate presentation. Go to their website and check it out. I think it will answer your questions.
Unless oil prices stay near where they are today though 2016 (which I do not expect to happen), SXE will be fine and I see very little risk of their quarterly distributions being cut. They have some new assets coming on-line which will be accretive to DCF.
The active rig count in the Eagle Ford has dropped from ~220 in mid-2014 to ~80 today. Upstream companies are not completing enough new wells in 2015 to offset the decline of wells completed in 2014, not to mention all of the wells completed prior to 2014. As you can see in the chart above, this is happening in all of the major oil basins. Central Oklahoma (not shown in the chart) and the Permian Basin are the only two areas with enough drilling activity to increase production and they are barely positive.
SXE recently updated their corporate presentation. Go to their website and check it out. I think it will answer your questions.
Unless oil prices stay near where they are today though 2016 (which I do not expect to happen), SXE will be fine and I see very little risk of their quarterly distributions being cut. They have some new assets coming on-line which will be accretive to DCF.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group