Anything from the reservoir under the ground to the pipeline that carries away the product is the focus of EIG’s upstream activities. EIG has a long history of experience with conventional drilling into conventional reservoirs, horizontal drilling into shales, carbonates or tight sands, enhancing recoveries through water, steam or CO2 flooding of the reservoir, and deep water infrastructure installations using spars or FPSO’s and subsea completions. Understanding reserves, estimating costs and realizing the importance of execution are the keys to a successful upstream strategy. We believe that EIG has a staff of engineers with industry experience who can understand the risks involved in looking at these types of operations.
The following examples demonstrate EIG's experience and current area of focus in the upstream sector.
OIL & GAS
In November 2011, EIG invested in a new subsidiary of a large publicly traded oil and gas company. The new subsidiary owns and develops unconventional oil and gas reserves in the Utica Shale in Ohio, Pennsylvania, and West Virginia.
EIG saw this as an opportunity to participate in a developing stage shale play on scale with an experienced operator. The assets consist of approximately 700,000 net acres with an expected development plan of 1,500 wells. EIG sourced this opportunity based on a long-standing relationship with the company.
In November 2011, EIG invested in partnership with a leading North American E&P company, in a newly-formed company that will fund development of the Lucius and Phobos prospects located nearby Exxon's well publicized Hadrian discovery. EIG believes that the investment benefits from the expertise of the partner base in the projects. The operator has a long history in the Deepwater Gulf of Mexico.
In January 2014, EIG led a commitment to a borrowing facility for an experienced operator in Oklahoma to both acquire assets and drill in an area where the operator had previously drilled and acquired assets. The management team and other private investors committed substantial capital to the newly-formed company. The company has been successful at acquiring assets from four different companies in the same target rich area and reservoirs.
ACQUISITION & INFILL DRILLING
In April 2014, EIG participated in the acquisition of one of the largest known gas fields in the US. The reservoir has an extremely large column of gas that can be exploited through infill drilling, and over time, advances in technology will continue to unlock additional reserves. The operator has started an aggressive program to seek to reduce costs and rework wells while executing the drilling program.
In 2007 and 2008, respectively, EIG provided the financing for both a steam flood operator in California and a CO2 flood operator in Wyoming. Both companies had previously invested heavily in the projects and both had expertise in their operations.
NON-OP STATISTICAL DRILLING
EIG has provided financing to support several non-operated positions when the program was large scale, providing access to a diversified base of production and when the operator was experienced in the fields. Today’s large drilling cost requirements are causing many non-op positions to not be able to keep up with the aggressive drilling programs of the operators.