LNG

Delfin Midstream, the US liquefied natural gas developer, and US oil and gas exploration and production company, Devon Energy, have entered into an LNG export partnership.

The companies agreed to a strategic investment deal and a Heads of Agreement that would give Devon up to 2 million tonnes per annum of liquefaction capacity.

The Delfin floating LNG project is based on the deployment of vessel-borne liquefaction facilities with other moored production and storage vessels and recently asked the Federal Energy Regulatory Commission to extend the deadline for the onshore completions of the venture to the 28th of September 2023.

The Delfin developers have already been awarded a deepwater port licence by the US Maritime Administration (MARAD) and the project has been approved by the US Coast Guard.

Delfin is additionally seeking to construct, operate and maintain certain onshore metering, compression, and piping facilities located onshore in Cameron Parish in Louisiana.

Offshore Louisiana

Delfin, based in Houston, Texas, said the HOA provided the framework for finalizing a definitive long-term tolling agreement representing 1 MTPA of liquefaction capacity in Delfin’s first FLNG vessel offshore Louisiana, with the ability to add an additional 1 MTPA in Delfin’s first or a future FLNG unit.

In addition to providing Devon with up to 2 MTPA of total liquefaction on a long-term basis, the HOA also provides opportunities for additional future equity investments in Delfin.

“We are delighted to execute this agreement with Devon, representing a truly strategic partnership between a US producer and a liquefaction provider,” said Dudley Poston, Delfin Chief Executive.

“We believe our unique liquefaction solution provides significant structural flexibility that allows producers to maximize the value of their natural gas, while providing a much-needed source of additional supply to the world LNG marketplace,” added Poston.

Devon is a leading independent E&P company in the US with a premier multi-basin portfolio and a world-class acreage position in the Delaware Basin of West Texas and southern New Mexico.

Investment

“Our decision to invest in Delfin was the result of a thorough process intended to create additional pricing diversification for our natural gas portfolio and deliver a sustainable and capital efficient return for our shareholders,” said Rick Muncrief, Devon’s President and CEO.

“Devon has a strong track record of finding best-in-class midstream and downstream solutions for our production and we are excited to partner with Delfin to meet the need for safe, clean and reliable energy,” stated Muncrief.

Delfin has additionally signed a binding SPA with global commodities company Vitol and an HOA on supply with UK utility Centrica.

As a modular project requiring only 2 MTPA to 2.5 MTPA of long-term contracts to begin construction, and with all necessary permits in hand, Delfin is on schedule to make its FID on its first FLNG vessel by the end of 2022.

In the Delfin-Devon deal discussions, Latham & Watkins LLP served as legal advisor to Delfin and Kirkland & Ellis LLP was legal advisor to Devon.

BKV Corp., a privately-held exploration and production company formed out of Thailand-based Banpu Public Company, has grown into one of the largest US shale-gas producers and has now purchased the Barnett Shale gas assets of US major ExxonMobil for $750 million.

The company has been investing in shale since the US business was launched in 2015 and already has shale-gas assets in the Barnett Shale of north Texas as well as in the Marcellus Shale in Pennsylvania.

BKV, based in Denver, Colorado, said it signed definitive purchase and sale agreements to acquire the Barnett natural gas upstream and associated midstream infrastructure owned by ExxonMobil subsidiary XTO Energy.

BKV is acquiring 160,000 total net acres primarily in Tarrant, Johnson and Parker counties, and additional smaller positions in Jack, Wise, Denton, Erath, Hood and Ellis counties.

“These upstream assets include low decline wells, ideal for delivering consistent cash flow, and high average working interests of approximately 93 percent in over 2,100 wells with operatorship positions,” said a statement on the takeover.

The transaction also includes about 750 miles of gas-gathering pipelines and compression and processing midstream infrastructure.

BKV has been steadily buying up natural gas assets in recent years, primarily in the Barnett Shale.

Mitchell link

Devon Energy sold its Barnett properties to BKV in 2020. Devon had developed its Barnett assets after itself taking over Mitchell Energy & Development Corp. of US shale pioneer George P. Mitchell.

BKV recently reported gross natural gas production of 550,000 thousand cubic feet per day from the Barnett and in the Marcellus Shale it holds 50,000 gross acres.

The Denver company said that in addition to the $750M payment the transaction had other contingent payments depending on future natural gas prices and was expected to close by the end of June.

“Our focus as a company is to drive value through continued expansion in the Barnett play,” said Chris Kalnin, BKV Chief Executive.

“Today, BKV is a leading natural gas operator in the United States with an integrated approach to the value chain that allows us to certify our responsibly sourced gas at the well head,” explained Kalnin.

“We are excited about the extensive synergies this transaction presents, as well as additional access to premier Gulf Coast markets,” he added.

“We look forward to building upon the strengths of XTO Energy and its team to drive future growth,” declared Kalnin.

BKV’s Thai roots are reflected in the board of directors. In addition to CEO Kalnin, the board includes Chanin Vongkusolkit as Chairman and the other board members are Akaraphong Dayananda, Anon Sirisaengtaksin, Somruedee Chaimongkol, Thiti Mekavichai, Charles Miller III and Joe Davis.

BKV said that Baker Botts LLP and Fox Rothschild acted as advisors for the company in XTO Energy transaction.

Devon Energy Corp. said it had agreed to sell a portion of its Barnett Shale position in North Texas for $553 million with a transaction expected to close in the second quarter.

US independent exploration and production company Devon Energy said it planned to sell upstream shale-gas assets worth around $1 billion, mostly in the Barnett shale area and which could be attractive to European and Asian LNG liquefaction tolling agreement holders.