The bulk of Memorial Production Partners’ reserves sit in the Cotton Valley and Travis Peak formations in east Texas and Louisiana; the proximity of these fields to the petrochemical complex on the Gulf Coast gives the MLP a significant price advantage relative to further-flung fields saddled with higher transportation costs.
Output from these plays consists of 70 percent natural gas, 24 percent natural gas liquids (NGL) and 6 percent crude oil.
The MLP’s assets in California and the Permian Basin account for the majority of its oil output and offer the most upside for organic growth.
Memorial Production Partners extracts 2,433 barrels of oil equivalent per day from its 384 net producing wells in the Permian Basin and has identified 23 proven but undeveloped drilling locations and as many as 258 unproven sites for development.
In California, the MLP operates two fixed drilling platforms 11 miles offshore Long Beach, as well as associated midstream infrastructure to transport production volumes onshore. This operation includes 27 net producing wells, though the firm has identified 28 additional drilling sites.
Although Memorial Production Partners’ higher percentage of proven undeveloped reserves offers ample opportunity for organic growth, these sites also entail more risk than acquiring and maintaining wells that are already in production.
However, acquisitions will drive much of Memorial Production Partners’ production and distribution growth, with the majority of these opportunities coming from a visible pipeline of asset drop-downs from its general partner, Memorial Resource Development.
Management estimates that these transactions could double the MLP’s existing reserve base over time.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Mar. 30, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.