We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tesoro, EP Energy Team Up to Form Drilling Joint Venture
Read MoreHide Full Article
Independent oil refiner and marketer Tesoro Corporation has tied up with Texas-based upstream energy player EP Energy Corporation to fund oil and natural gas development in Uinta Basin in Utah.
The companies recently inked a deal to form a drilling joint venture (JV) to operate 60 wells in order to support EP Energy’s Altamont program. Under this Altamont program, EP Energy has completed the drilling of 18 wells in Uinta Basin since the first quarter of 2016. The drilling program thus holds significance in the operations of EP Energy in the region. The deal represents the second major JV entered into by EP Energy this year, following the company’s announcement in Jan to enter into a joint venture with Wolfcamp Drillco Operating L.P. to fund development in the Permian Basin.
Tesoro is also accelerating its refining scale and capacity. The company is set to close its $4.1 billion acquisition of fellow refiner Western Refining on Jun 1, which will make Tesoro the fourth-largest independent U.S. refiner, after Valero Energy Corporation (VLO - Free Report) , Marathon Petroleum Corporation (MPC - Free Report) and Phillips 66.
Deal Highlights
Per the deal, 60 wells will be drilled, with Tesoro providing capital in exchange for 50% of the working interest in the wells. EP Energy will contribute $64 million in net capital to the deal and will retain the operational control of the assets.
The companies have also signed a Crude Oil Supply Agreement under which Tesoro will purchase all the oil produced by the JV as well as the additional crude produced by other properties of EP Energy in the Uinta basin. This agreement will ensure continued supply of crude oil to Tesoro’s Salt Lake City Refinery.
Tesoro expects the JV to close on Jun 1. The initial wells under the JV are expected to commence production in July this year.
Deal Benefits
EP Energy has a deep inventory of high-return drilling opportunities in Altamont field. This deal will enable the company to boost the returns and capital efficiency of the Altamont program. EP Energy, which intends to keep two rigs active in Uinta Basin, looks forward to improve its long-term relationship with Tesoro.
For Tesoro, the agreement is likely enhance the value of its Rockies assets as well as guarantee additional supply of crude oil. This is likely to boost the operation of the company’s Salt Lake City Refinery further. The oil supplied by this project will lead to higher rates and improve profitability of Tesoro’s refinery. Further, the investment in crude oil is expected to enhance shareholders value and support the economic development of Utah.
Zacks Rank
Headquartered in San Antonio, TX Tesoro is an independent refiner and marketer of refined petroleum products in the western U.S.
The company under the Zacks categorized Oil and Gas - Refining and Marketing industry currently carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the company’s second quarter has been revised downward over the last 30 days. Over the same time frame, the Zacks Consensus Estimate for full-year 2017 has also moved south.
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Tesoro, EP Energy Team Up to Form Drilling Joint Venture
Independent oil refiner and marketer Tesoro Corporation has tied up with Texas-based upstream energy player EP Energy Corporation to fund oil and natural gas development in Uinta Basin in Utah.
The companies recently inked a deal to form a drilling joint venture (JV) to operate 60 wells in order to support EP Energy’s Altamont program. Under this Altamont program, EP Energy has completed the drilling of 18 wells in Uinta Basin since the first quarter of 2016. The drilling program thus holds significance in the operations of EP Energy in the region. The deal represents the second major JV entered into by EP Energy this year, following the company’s announcement in Jan to enter into a joint venture with Wolfcamp Drillco Operating L.P. to fund development in the Permian Basin.
Tesoro is also accelerating its refining scale and capacity. The company is set to close its $4.1 billion acquisition of fellow refiner Western Refining on Jun 1, which will make Tesoro the fourth-largest independent U.S. refiner, after Valero Energy Corporation (VLO - Free Report) , Marathon Petroleum Corporation (MPC - Free Report) and Phillips 66.
Deal Highlights
Per the deal, 60 wells will be drilled, with Tesoro providing capital in exchange for 50% of the working interest in the wells. EP Energy will contribute $64 million in net capital to the deal and will retain the operational control of the assets.
The companies have also signed a Crude Oil Supply Agreement under which Tesoro will purchase all the oil produced by the JV as well as the additional crude produced by other properties of EP Energy in the Uinta basin. This agreement will ensure continued supply of crude oil to Tesoro’s Salt Lake City Refinery.
Tesoro expects the JV to close on Jun 1. The initial wells under the JV are expected to commence production in July this year.
Deal Benefits
EP Energy has a deep inventory of high-return drilling opportunities in Altamont field. This deal will enable the company to boost the returns and capital efficiency of the Altamont program. EP Energy, which intends to keep two rigs active in Uinta Basin, looks forward to improve its long-term relationship with Tesoro.
For Tesoro, the agreement is likely enhance the value of its Rockies assets as well as guarantee additional supply of crude oil. This is likely to boost the operation of the company’s Salt Lake City Refinery further. The oil supplied by this project will lead to higher rates and improve profitability of Tesoro’s refinery. Further, the investment in crude oil is expected to enhance shareholders value and support the economic development of Utah.
Zacks Rank
Headquartered in San Antonio, TX Tesoro is an independent refiner and marketer of refined petroleum products in the western U.S.
The company under the Zacks categorized Oil and Gas - Refining and Marketing industry currently carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the company’s second quarter has been revised downward over the last 30 days. Over the same time frame, the Zacks Consensus Estimate for full-year 2017 has also moved south.
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Tesoro Corporation Price
Tesoro Corporation Price | Tesoro Corporation Quote
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>