Montage Resources Corp. has entered into a new consolidated gas gathering agreement and has added downside protection to natural gas prices in 2020 and 2021 through incremental hedges recently executed.
The company has recently completed the renegotiation of significant existing gas gathering contracts with a midstream partner into a single new consolidated gas gathering agreement in order to enhance its already peer-leading cash operating margins.
The new consolidated gas gathering agreement ensures a dedicated gatherer for the company’s Marcellus Ohio development with a significantly improved fee structure relative to the prior agreements for all existing and future development.
It delivers gas gathering and compression fee reductions relative to the prior agreements, with an estimated undiscounted gross cost savings over the life of the new contact (assuming the company continues its current one-rig development program) of approximately $200 million.
The agreement provides incremental flexibility to Montage by reducing the near-term minimum volume obligations below their prior levels while providing its midstream partner additional certainty on a per-unit basis for any unutilized throughput capacity.
Furthermore, the agreement also eliminates Montage’s potential obligation for incremental capital costs for future pipeline or related facilities construction on its Marcellus Ohio and Utica Dry development.
“We are happy to continue our partnership with one of the premier midstream providers in the region and believe this agreement contributes value to both parties. In addition, we are continuing to act opportunistically in the current commodity price environment and tactically add additional downside protection to our cash flows by actively managing our hedge book,” John Reinhart, president and CEO, said.
Recommended Reading
CorEnergy Infrastructure to Reorganize in Pre-packaged Bankruptcy
2024-02-26 - CorEnergy, coming off a January sale of its MoGas and Omega pipeline and gathering systems, filed for bankruptcy protect after reaching an agreement with most of its debtors.
ArcLight Creates AlphaGen to Manage Firm’s US Power Infrastructure Portfolio
2024-01-11 - Alpha Generation, owned by ArcLight Capital Partners, will manage one of the U.S.’ largest power infrastructure portfolios with annual revenues of about $2 billion.
Advent Technologies Appoints Naiem Hussain to CFO
2024-01-15 - Hussain is replacing Kevin Brackman as Advent Technologies Holdings Inc.’s CFO, who resigned from the position on Jan. 5.
Gevo Appoints Katie Ellet to Board of Directors
2024-01-07 - Gevo appointed Katie Ellet, who has held a variety of leadership roles in the chemical and energy industry, including serving as president of hydrogen energy and mobility for North America at Air Liquide.
Mark Ross to Retire as President of Chevron Shipping Co.
2024-01-24 - Barbara Pickering will succeed Mark Ross as president of Chevron Shipping Co.