HOUSTON and SAN ANTONIO, May 24,
2017 /PRNewswire/ -- EP Energy Corporation (NYSE:EPE) and
Tesoro Corporation (NYSE: TSO) announced the formation of a
drilling joint venture, through respective subsidiaries, to fund
oil and natural gas development in EP Energy's Altamont program located in the Uinta Basin of
Utah. Additionally, EP Energy and
Tesoro signed a multi-year Crude Oil Supply Agreement for yellow
and black waxy crude oil to supply Tesoro's Salt Lake City
Refinery.
Drilling Joint Venture Highlights
- 60 well program
- Tesoro to provide a capital carry in exchange for 50 percent of
EP Energy's working interest in joint venture wells
- Tesoro to purchase all oil production from joint venture
wells
- EPE's net share of capital is expected to be approximately
$64 million
- EPE will retain operational control of the joint venture
assets
Tesoro and EP Energy also entered into a Crude Oil Supply
Agreement, through which Tesoro will purchase all of the oil
produced through the drilling joint venture, along with additional
waxy crude oil produced by EP Energy in the Uinta Basin. This oil
will provide assured supply of local crude oil for Tesoro's Salt
Lake City Refinery.
"In the Altamont field we have
a deep inventory of high-return drilling opportunities. This joint
venture will enable us to significantly increase the well-level
returns and capital efficiency of our program," said Brent Smolik, Chairman, President, and Chief
Executive Officer of EP Energy Corporation. "We plan to keep two
rigs active in the Uinta Basin and look forward to building a
long-term relationship with Tesoro, an in-basin refinery
partner."
"This agreement with EP Energy is an important step to further
enhance our integrated value chain in the Rockies by supporting the
growth of waxy crude oil production in the Uinta Basin, and
allowing us to secure additional supply of this advantaged crude
oil to further optimize the operation of our Salt Lake City
Refinery," said Greg Goff, Chairman,
President and CEO of Tesoro. "We believe this investment in crude
oil production in Utah is good for
our shareholders, our communities and for the State of Utah as it supports economic
development in the region."
The first wells under the joint venture are expected to begin
production in July 2017. EP
Energy's average working interest in the joint venture wells is
currently approximately 80 percent.
EP Energy did not change its 2017 guidance for the new drilling
venture; however the company expects to update its full year 2017
outlook mid-year.
About EP Energy
The EP Energy team has a passion for
finding and producing the oil and natural gas that enriches
people's lives. EP Energy has a proven strategy, a
significant reserve base, multi-year drilling opportunities, and a
strategic presence in a number of the country's leading
unconventional resource areas in North American. EP Energy is active in key phases of the E&P
value chain—acquiring, developing and producing oil and natural
gas. For more information about EP Energy, visit epenergy.com.
About Tesoro
Tesoro Corporation, a Fortune 100
company, is an independent refiner and marketer of petroleum
products. Tesoro, through its subsidiaries, operates seven
refineries in the western United
States with a combined capacity of over 895,000 barrels per
day and ownership in a logistics business, which includes an
interest in Tesoro Logistics LP (NYSE: TLLP) and ownership of its
general partner. Tesoro's retail-marketing system includes over
2,500 retail stations under the ARCO®, Shell®, Exxon®, Mobil®,
USA Gasoline(TM), Rebel(TM) and
Tesoro® brands.
EPE: Cautionary Statement Regarding Forward-Looking
Statements
This release includes certain
forward‐looking statements and projections of EP
Energy. We have made every reasonable effort to ensure that the
information and assumptions on which these statements and
projections are based are current, reasonable, and complete.
However, a variety of factors could cause actual results to differ
materially from the projections, anticipated results or other
expectations expressed, including, without limitation, the supply
and demand for oil, natural gas and NGLs; the company's ability to
meet production volume targets; the uncertainty of estimating
proved reserves and unproved resources; the future level of service
and capital costs; the availability and cost of financing to fund
future exploration and production operations; the success of
drilling programs with regard to proved undeveloped reserves and
unproved resources; the company's ability to comply with the
covenants in various financing documents; the company's ability to
obtain necessary governmental approvals for proposed E&P
projects and to successfully construct and operate such projects;
actions by the credit rating agencies; credit and performance risk
of our lenders, trading counterparties, customers, vendors and
suppliers; changes in commodity prices and basis differentials for
oil and natural gas; general economic and weather conditions in
geographic regions or markets served by the company, or where
operations of the company are located, including the risk of a
global recession and negative impact on natural gas demand; the
uncertainties associated with governmental regulation, including
any potential changes in federal and state tax laws and
regulations; political and currency risks associated with
international operations of the company; competition; and other
factors described in the company's Securities and Exchange
Commission filings. While the company makes these statements and
projections in good faith, neither the company nor its management
can guarantee that anticipated future results will be achieved.
Reference must be made to those filings for additional important
factors that may affect actual results. EP Energy assumes no
obligation to publicly update or revise any
forward‐looking statements made herein or any other
forward‐looking statements made by EP Energy, whether
as a result of new information, future events, or
otherwise.
TSO: Forward-Looking Statements
This release
contains "forward-looking" statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including without limitation statements
concerning: Tesoro's operational, financial and growth strategies,
its ability to successfully effect those strategies and the
expected timing and results thereof; statements regarding Tesoro's
agreement with EP Energy, the terms thereunder, and the expected
benefits thereof, including benefits to Tesoro's business,
shareholders, communities and the State
of Utah; and expected timing of well production. For more
information concerning factors that could affect these statements,
see Tesoro's annual report on Form 10-K, quarterly reports on Form
10-Q, and other public filings and press releases, available at
www.tsocorp.com. Tesoro undertakes no obligation to revise or
update any forward-looking statements as a result of new
information, future events or otherwise.
EPE Contact:
Investor and Media Relations
Bill Baerg
713-997-2906
bill.baerg@epenergy.com
Tesoro Contacts:
Investors: Sam Ramraj, Vice President, Investor Relations,
(210) 626-4757
Media: Tesoro Media Relations, media@tsocorp.com, (210)
626-7702
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SOURCE EP Energy Corporation; Tesoro Corporation