Some oil producers are trying to sell parts of their lucrative saltwater disposal businesses in effort to raise cash due to low crude prices.
Many oil companies rely on outside contractors, which tend to be small, privately-held companies, to inject their salt water by product of oil production thousands of feet deep into the earth below the water table.
But for some producers which own such facilities, the high margin business, also makes them appealing to investors seeking high yields.
Putting such businesses up for sale suggests that some energy executives are coming under increasing pressure to part with good, albeit non-core, assets to ride out the crude market slump.
The U.S. Environmental Protection Agency figures show more than 9.5 million barrels of brine and other liquid byproducts get pumped into 28,000 saltwater disposal wells around the country.
Disposal fees range from 25 cents to $1 per barrel generating hundreds of millions of dollars in annual revenue for investors.
The volume of water extracted along with oil tends to increase as wells age, in some cases reaching as much as five barrels for every barrel of crude produced. This may be a factor of why rates for saltwater disposal wells has held steady even as crude prices have tumbled.
So, is it time to acquire salt water disposal properties? Maybe.
Source: Oil Producers Try Selling Parts of Salt Water Disposal Businesses, Oil And Gas Investor, September 11, 2015