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$1B Deal: Williams Buys Out Houston-based Midstream in Haynesville Basin
03/25/2022
Earlier this month, Williams announced that it has reached an agreement to purchase the gathering and processing assets of Trace Midstream, a portfolio company of Quantum Energy Partners, in a $950 million deal.
By adding the Trace system to Williams' existing footprint, the company gains expanded capacity in one of the nation's largest growth basins, bringing its Haynesville gathering capacity to over 4 Bcf/d — more than 200% growth. Following this merge, It is anticipated that Williams will invest at around 6 times 2023 EBITDA, with minimal expansion capital required and significant growth forecasted, thus helping the company's credit metrics to stay afloat.
This deal highlights Williams’s commitment to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy.
The agreement also includes a long-term capacity commitment from Trace customer and Quantum affiliate Rockcliff Energy to support Williams' Louisiana Energy Gateway project (LEG). By connecting to premium Transco markets, the LEG project will gather the responsibly sourced natural gas produced in Haynesville. It will deliver it to industrial and LNG export markets along the Texas and Louisiana Gulf Coast
The LEG project was further strengthened with the signing of a Memorandum of Understanding between Williams and Quantum to establish a joint venture that will enable Quantum to become a partner and equity investor in the project. Williams will bring its expertise as a leading developer and operator of clean energy infrastructure together with Quantum's capacity as a global provider of private capital for responsible sourcing of energy and the transition to a low carbon economy.
For Williams, the opportunity to support Rockcliff's success and enable them to access growing markets represents a unique way to demonstrate how natural gas plays an essential role in reducing emissions, lowering costs, and providing reliable, secure energy to the US and around the world.
This partnership is also welcomed by Quantum, since working with exceptional entrepreneurs such as those from Trace and Rockcliff, who developed a strategic infrastructure platform with high ESG standards, has been at the foundation of Quantum’s success. This makes the Williams-Haynesville LEG partnership a crucial link between responsibly sourced Haynesville natural gas and the Gulf Coast's premium LNG markets.
If all regulatory approvals are received, the transaction should close by the end of the second quarter. RBC Capital Markets served as lead financial advisor to Williams; Citi served as lead financial advisor to Trace. Williams was represented by Davis Polk & Wardwell LLP; Trace was represented by Vinson & Elkins LLP.
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$690 Million Deal Moves Ahead: Crescent Energy to Complete Purchase of EP Energy's Uinta Assets
Crescent Energy closed the acquisition of Uinta Basin assets in Utah that were previously owned by EP Energy for $690 million, a few hundred million dollars below the original price. The accretive deal increases Crescent's Rockies position and adds significant cash flow and a portfolio of high-quality oil-weighted undeveloped sites. In addition to its acquired Uinta assets, Crescent's pro forma year-end 2021 provided reserves totaled 598 million boe, of which 83% was developed, 55% was liquid, and its provided PV-10 was $6.2 billion.
Major: Ameredev II Oil Producer to be Sold for $4 Billion by EnCap
In light of the conflict in Ukraine, buyout firms are currently scurrying to make cash from the U.S. crudeprices reaching their highest level since 2008. And one of the largest privately-owned US-based oilproducers may be up for sale. EnCap Investments looks to sell its portfolio company Ameredev II for over $4 billion including debt. It’s important to note, however, that both EnCap and Ameredev II alike are staying tight-lipped on the matter.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.