By: Tomas Ronolski - AllPennyStocks.com News

Monday, January 4, 2016

According to a report by Oil & Gas Monitor, the record U.S. oil production has benefited the oil & gas storage and transportation industry. However, this report was from a period when oil prices had been trading at above $100 a barrel. The oil & gas boom in the U.S. has been driven by new technology that has made it possible to extract oil and gas trapped between rocks. However, extracting oil and gas this way is significantly more expensive than the conventional methods. When oil prices were above $100 a barrel, extracting oil and gas this way was certainly feasible, but not so at current levels.

Oil prices ended 2015 at multi-year lows. The question is whether the drop in oil prices will have any impact on the storage and transportation industry. Lower prices do not have a major impact on the storage and transportation industry, however, lower prices would mean production levels at some point will drop from their 2014 highs. This is not so good news for the storage and transportation industry. Having said that, U.S. oil & gas production has been resilient in the current price environment. Indeed, production has not dropped significantly despite prices dropping to below $40 a barrel.

This morning, Tidewater Midstream and Infrastructure Ltd. (TSX-Venture:TWM), which has been formed to pursue the purchase, sale and transportation of Natural Gas Liquids (NGL) and related infrastructure throughout North America and export to overseas markets, announced that it completed an acquisition agreement with a Vendor and acquired 100% working interests in three deep cut gas processing/natural gas liquids extraction facilities with total aggregate capacity of 142 Mmcf/day of gas processing/natural gas liquids extraction capability. TWM has also acquired a 100% working interest in approximately 250 Km of related pipeline networks and infrastructure including land and rail access at Fort Saskatchewan. The acquisitions were made for nominal cash considerations.

TWM said that the acquisition is consistent with its strategy to acquire, integrate, and optimize infrastructure throughout while creating mutually beneficial relationships with producers. The acquisition is also consistent with TWM’s strategy of providing producers with better pricing for their NGLs through its owned infrastructure and established market access. TWM noted that it continues to focus on high IRR projects through the evaluation of numerous organic growth, as well as acquisition-based opportunities.

Shares have been roughed up along with other oil related companies over the last several months but have started bouncing back in early-December as investors place bets that the worst of the oil rout may be behind us.

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