Copano Energy's CEO Discusses Q2 2012 Results - Earnings Call Transcript
We continue to make good progress on our Eagle Ford Shale strategy and our current slated expansion projects are a key driver in the growth reflected in our 2013 guidance numbers. As I’ve said before, given the Eagle Ford’s reservoir size, gas quality and proximity to both natural gas and NGL market, we believe it is one of the best shale plays in the U.S. Due to the Eagle Ford’s reservoir characteristics and strong producer economics, we have continued to see little impact on rig count in the play even in the current pricing environment.
As an early mover, in the Eagle Ford, we have established a strong presence. Projects we’ve already placed in service as well as those in progress are supported by long-term contracts with some of the largest producers in the play. These contracts have greatly reduced our sensitivity to commodity price fluctuations by increasing our fee-based contract mix. Producer demand for additional Midstream services in the Eagle Ford remains strong and we continue to evaluate additional capital projects. While we worked hard to reduce our sensitivity to commodity prices, they remain in our overall company performance.
During the second quarter liquids prices fell significantly from first quarter averages with the largest decline in ethane and propane. Warmer than normal temperature this past winter led to higher than normal propane storage levels. As a result, propane has been competing directly with ethane as a cracker feedstock. In addition, ethane storage levels and prices were impacted by downtime at multiple crackers and fractionation facilities during the second quarter and early third quarters of 2012.
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