Tulsa World: Arena Resources in pipeline deal

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Arena Resources in pipeline deal
The Tulsa firm will move Texas crude through the conduit.

By ROD WALTON World Staff Writer
Published: 10/23/2009 2:22 AM
Last Modified: 10/23/2009 5:54 AM

Arena Resources Inc. soon will transport its oil from a key property by pipeline instead of truck, thanks to an agreement with an unnamed midstream company.

Tulsa-based Arena signed a deal with what it called "one of the country's largest pipeline operators" to move a majority of its crude from the Fuhrman-Mascho property in West Texas. The midstream company opted not to be named in this week's news release from Arena.

Construction on a three-mile linkup got under way last week, and the gathering system should be operating by the end of the year, Arena says.

"The gathering system tie-in with pipeline transport will provide more marketing options and possibly additional increases in revenues," CEO Phil Terry said in the statement.

No financial details were released with the announcement. The unnamed transporter's assets include 12,500 miles of pipelines, and only a few U.S. companies, including Louisiana-based Teppco Partners LP, are that large.

Teppco's Web site says its "portfolio of assets is comprised of approximately 12,500 miles of pipelines that gather and transport refined petroleum products, crude oil, natural gas, liquefied petroleum gases (LPGs) and natural gas liquids (NGLs), and includes one of the largest common carrier pipelines for refined petroleum products and LPGs in the United States."

Teppco spokesman Ricky Rainey could not be reached for comment Thursday afternoon.

Arena had been contracting with Navajo Express to truck the oil out of the

Fuhrman-Mascho property in Andrews County, Texas. The pipeline tie-in and transport could save $1 per barrel of crude, a company spokesman said.

About 70 percent of Arena's current Fuhrman-Mascho production will be connected to the gathering system by year's end, the company estimated. About 95 percent of daily production will be connected when the project is completed, although 5 percent will continue to be trucked, according to reports.

Last month, Arena reported that its 2009 capital expenditure budget was expanding to $107 million from $85 million.

Fortune magazine recently put Arena on its list of fastest growing companies, while Forbes magazine listed Arena high among best small companies.

Rod Walton 581-8457
rod.walton@tulsaworld.com By ROD WALTON World Staff Writer

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