RE:Questions about CPG's waxy oil in Uinta Basin, its core area thank you all for taking the time to answer my questions. appreciate it. good luck with CPG.
George98 wrote:
One of CPG's core areas for 2019 is Uinta Basin. Crescent Point has already invested a lot of money there. Some posters over on Cardinal's (CJ) board raised the issue with the problematic waxy oil produced in the Uinta Basin. Ultra Petroleum (UPL) a major Uinta producer filed for bankruptcy two years ago because its waxy oil was sold at a big discount to WTI , something like $15 or more discount, so it was uneconomic to drill those expensive wells that cost $7- $8 million each.
if u don't know the major issue with Uinta's waxy oil that is sold at a big discount to WTI, check these articles :
https://rbnenergy.com/do-ya-think-i-m-waxy-uinta-basin-crude-price-discounting
https://rbnenergy.com/do-ya-think-i-m-waxy-is-uinta-crude-too-hard-to-handle
Based on these articles , Uinta's waxy oil cannot be diluted like bitumen, so it cannot be piped. So the Uinta producers have to truck it to the local refineries while keeping it heated into the truck. Since they are fully dependent on the local refineries, they sell it at a big discount to WTI.
I would like to get your feedback on this issue because Uinta is a core asset for CPG.
Will CPG incur another big impairment this year recording again losses at the bottom line?
Does CPG currently generate free cash flow from its Uinta asset?
tia