A Denver-based energy company has announced that it will commit upwards of $500 million to the construction of a network of new pipelines in three Colorado counties.
The project, according to Mark Erickson, chief executive officer of Extraction Oil & Gas, will “enhance our upstream value by driving significant reductions in lease operating expense and well cost, greater product capture, and increased flow capture.”
In a statement, Erickson also said that the new pipeline construction, upon completion, will provide a “potentially large value uplift for Extraction shareholders upon any eventual monetization of our midstream ownership.”
Launched just 6 years ago, Extraction focuses on crude oil, natural gas, and natural gas liquid exploration and production, primarily in the lucrative Wattenberg Gas Field.
That field, located in the Denver Basin of central Colorado, encompasses more than 2,000 square miles between Denver and Greeley, and is regarded as one of the most productive of its kind in the nation.
The company’s new pipelines will be located in Adams, Arapahoe, and Broomfield counties.
Listed as the fourth largest oil producer in Colorado, Extraction has entered into a deal with the New York-based GSO Capital Partners to finance the pipeline project.
As announced, GSO, a privately owned hedge fund, is purchasing $150 million of preferred shares in the Extraction subsidiary Elevations Midstream, as part of that agreement.
In late December, Extraction announced that it would spend between $770 million and $840 million this year, drilling anywhere from 170 to 175 wells.
By Garry Boulard
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