Investment Entity: IACX Energy, LLC
Geography: Texas, Kansas, and Oklahoma
Sector: Nitrogen Rejection and Gas Gathering
Investment Fund: Fund III
Initial Investment: December 2006
The gas processing business is constantly changing and has been trending toward the unconventional for some time.
Maturing conventional gas production basins have led to the industry’s search for gas in unconventional plays (tight sands, shales, and coal bed methane).
Advancements in completion technologies such as pressure fracs and other reservoir stimulation techniques coupled with higher gas prices (greater than $3.50 to $4.00 per thousand cubic foot) have moved many of these plays from the uneconomic category to economic.
Haddington’s investment in IACX Energy, LLC (“IACX”), made initially in December 2006, will open yet another unconventional gas play, low-BTU/off-spec gas. IACX has developed smaller scale, mobile, lower pressure processing technologies that can economically develop the little known unconventional play in low-BTU/off-spec gas (gas that contain high levels of nitrogen and/or carbon dioxide, typically with BTU levels that are well below that of pipeline specs). Most current processing technologies are large scale and high pressure, requiring sizeable reserve dedications and construction capital. By using IACX’s mobile processing units, processing capital can be invested in stages, with less upfront capital required during the reservoir testing and proving stage and lower risk incremental capital for the reservoir exploitation stage.
Haddington is pleased to have the opportunity to invest in IACX. The management team has extensive experience in the oil and gas upstream and midstream sectors and Haddington views their technology as a logical fit for the gas industry in that it bridges the risk/reward gap in developing low-BTU/off-spec gas reserves.
