From the desk of
I.J. “Chip” Berthelot, II, President
Greetings: Azure Midstream Energy, LLC (“Azure”) stakeholders, investors, customers, team members, host communities and landowners:
As we embark upon the holidays and look forward to the last month of 2019, the latest update on all things Azure continues to be positive.|
Well Connects Hitting Aggressive Targets & Looking Good for Next Year
All 17 of the wells we expected to connect this summer were completed and we just connected 6 more wells in the first 3 weeks of November, bringing our total for 2019 to 36, which is stronger than we expected when we did our summer update. We are proud of our diversification efforts. Recapping for 2019, the new connections break down as follows:
- Aethon – 12 wells
- BP – 3 wells
- Chesapeake – 5 wells
- Comstock – 4 wells
- Exco – 8 wells
- Tellurian – 3 wells
- Others – 1 well
In addition, we are in constructive commercial discussions with a producer who has drilled a well near our Shelby System, at this point the well connection may slip into 2020. We are also progressing with a few other growth-oriented projects that may come to fruition in the next couple of months, so stay tuned.
Azure Asset Expansion Projects Complete
Our highly effective Engineering, Project & Operations teams continue to build significant long-term value for the company with the two major asset expansion projects completed in the past few weeks:
- Holly 9 to 12 Loop – allowing us with operational flexibility to optimize our compression assets, and
- Shelby Plant Expansion – this 200 MMscfd capacity addition is complete and ready for the volume increases from the wells we connected earlier this month.
Holly & Shelby System Volumes
Our current volume is 755 MMscfd which is slightly below our previous projections. We lost one piece of low-margin business which was set to expire at the end of this year. That drove the number down. Fortunately, this made room for the new Tellurian contract, which is long term and substantially more revenue even though the volume is less.
Thinking about 2020
As of today, we have 3 rigs working on acreage that is contracted and dedicated to our gathering systems. We have 27 wells and 3 refracs that are scheduled for next year with another 7 wells that are the focus of productive commercial discussions. This will bring our expected total well connects for 2020 to 34 (not including the refracs), making for another GREAT YEAR!
A variety of factors make the Haynesville Bossier a very attractive gas play now and into the future. At Azure, we take great pleasure in working at our highest abilities along with our colleagues and partners to deliver this essential energy to the world. We appreciate the role each of you play in our success and look forward to our continued work together.
This is the time of year when we take a moment to consider and be grateful for all the blessings, we each enjoy: our health, family and friends, the freedom provided by our great country (although a little crazy, right now!), a fulfilling workplace, and of course, our relationships with each of you!
We wish you and your families a Happy Thanksgiving and Christmas! Please stay safe!
l.J. "Chip" Berthelot, II
President, Azure Midstream Energy