Wired News - Lilis Energy Signs Crude Oil Gathering Agreement with Salt Creek Midstream
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LONDON, UK / ACCESSWIRE / May 25, 2018 / If you want access to our free research report on Lilis Energy, Inc. (NYSE: LLEX) (''Lilis''), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=LLEX as the Company's latest news hit the wire. On May 23, 2018, the Company, which is a San Antonio-based independent oil and gas exploration and production organization operating in the Permian Basin of west Texas and southeastern New Mexico, declared that it has signed a crude oil gathering agreement with ARM Energy Holdings' affiliate, Salt Creek Midstream LLC (''Salt Creek''). Salt Creek, which is a joint venture of ARM Energy Holdings LLC and funds managed by Ares Management L.P., is a full-service midstream provider. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Details of the Crude Oil Gathering Agreement
- The crude oil gathering agreement aims to fortify Lilis' strategic efforts for generating long-term infrastructure solutions, such as efficient and cost-effective movement and price maximization of its oil production out of the Delaware Basin.
- At present, Salt Creek is constructing a new regional pipeline system, through which it aims to provide gathering and transportation services for Lilis' oil production in Texas and New Mexico to the terminal in Winkler County, Texas. The Winkler terminal will permit Lilis to directly access long-haul downstream pipelines that are linked to Midland, Texas, and the Gulf Coast region. ARM Midstream Management, LLC, which is an affiliate of ARM Energy Holdings, is responsible for the construction, management, and operation of Salt Creek's system.
- Moreover, Salt Creek also has a strategic partnership in the EPIC Pipeline. It has access to several transportation options that will provide Lilis access to the Midland, Cushing, and Gulf Coast markets.
- The project is supported by a dedicated Area of Mutual Interest, which covers Lilis' entire acreage in Lea County, New Mexico, and Winkler and Loving Counties in Texas. While Lilis will provide its acreage dedication with no volume or CAPEX commitments, Salt Creek will fulfill all capital requirements for the oil gathering system.
- The construction for this project is expected to start immediately, while service is expected to begin in 2019.
Agreement for Natural Gas Midstream Services
Apart from the crude oil gathering agreement, Lilis and Salt Creek have also signed another agreement for natural gas midstream services. As per this agreement, Lilis will receive cash consideration for granting Salt Creek options for providing natural gas midstream services for Lilis' gas production within an Area of Mutual Interest.
Agreement Expected to Enhance Long-term Operational Profitability
Ronald D. Ormand, Chairman and Chief Executive Officer (CEO) at Lilis, highlighted that the crude oil gathering agreement will bring substantial benefits to Lilis, and will also resolve the majority of the issues affecting producers in the Delaware Basin. Salt Creek brings to the table operational expertise, strong capital commitments, geographic presence, and access to multiple long-haul transportation systems. Thus, this agreement will enhance Lilis' long-term operational flexibility with multiple long-term infrastructure and takeaway solutions. It should also be noted that this project will be built at no cost to Lilis; has no volume commitments; and will considerably lower the Company's gathering costs and transportation costs in the future. Also, the project will ensure efficient deliverability of Lilis' production, and maximize strong price realizations. Ormand further stated that these long-term gas and crude gathering agreements put Lilis' infrastructure systems in place and thus position it well for the future.
Zach Lee, CEO at ARM Energy Holdings, also expressed his pleasure on collaborating with one of the most exciting producers in the Delaware Basin. He believes that Salt Creek is well-positioned to offer market optionality leading to netback advantages for its huge customer base. Besides, Salt Creek and ARM Energy Holdings have extensive relationships in the Delaware Basin, and thus their team has a deep understanding of the fundamentals driving upstream and midstream economics, and their impact on the Gulf Coast downstream markets. Salt Creek looks forward to assisting Lilis with its strong and growing base in the Permian's Delaware Basin.
Stock Performance Snapshot
May 24, 2018 - At Thursday's closing bell, Lilis Energy's stock climbed 8.38%, ending the trading session at $5.95.
Volume traded for the day: 1.94 million shares, which was above the 3-month average volume of 252.68 thousand shares.
Stock performance in the last month - up 52.56%; previous three-month period - up 65.28%; past twelve-month period - up 12.48%; and year-to-date - up 16.44%
After yesterday's close, Lilis Energy's market cap was at $308.27 million.
The stock is part of the Basic Materials sector, categorized under the Independent Oil & Gas industry.
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