Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
$465 Million for Stronghold Energy; Ring Energy Completes the Acquisition10/03/2022
On August 31 Ring Energy Inc. purchased privately-held Stronghold Energy, adding operations which are mainly situated in Crane County, Texas, in the Permian Basin’s Central Basin Platform.
According to a September 1 Ring Energy release, this transaction fully complements the conventional-focused Central Basin Platform and Northwest Shelf asset positions in the Permian Basin.
The majority owned by Warburg Pincus LLC, Stronghold’s operations are concentrated on the development of about 37,000 net acres situated mainly in Crane County. The company was established in 2017 by father and son duo Steve and Caleb Weatherl.
In July Ring Energy entered into an agreement to buy Stronghold Energy II Operating LLC and Stronghold Energy II Royalties LP for $200 million in cash at closing and $230 million in Ring equity based on a 20-day volume weighted average price. Consideration also involved a $15 million deferred cash payment due six months after closing and $20 million of existing Stronghold hedge liability increasing the total transaction value to $465 million.
The cash portion of the consideration was funded mainly from borrowings under a new fully committed revolving credit facility endorsed by Truist Securities, Citizens Bank NA, KeyBanc Capital Markets, and Mizuho Securities.
Stronghold’s asset base is almost 99% operated, 99% working interest, and 99% HBP. In July, Ring announced the current net production of Stronghold’s asset base was approximately 9,100 boe/d (54% oil, 75% liquids).
McKinney shared that the acquisition further spreads out Ring Energy’s commodity mix, essentially improving the company’s size and scale and lowering its per barrel operating costs while also bringing meaningful synergies and raising operations optionality on multiple fronts.
The merger of lower per barrel operating costs and a considerably extended inventory of high-margin, capital-efficient development opportunities is anticipated to raise free cash flow, hastening the rate at which the company pays down debt, and improves the leverage metrics.
Thanks to this, the company holds a much stronger position to expand through supplementary acquisitions or enlarge stockholder returns through the potential return of capital opportunities in the future.
All Stronghold’s owners now are Ring’s largest stockholders, according to the release. Ring’s board of directors has been extended from seven to nine directors, adding two members proposed by Stronghold.
The effective date of the transaction was June 1. Raymond James and Truist Securities are financial advisers to Ring, and Piper Sandler & Co. is financial adviser to Stronghold for the transaction. Mizuho Securities compiled a fairness opinion for Ring’s board. Jones & Keller, P.C. provided legal counsel to Ring and Kirkland & Ellis LLP provided legal counsel to Stronghold.
On the Central Basin Platform, Ring Energy, Inc. is targeting the San Andres formation. The San Andres is a high oil-saturated “conventional shallow non-contiguous carbonate reservoir” at approximately 5,000’ and is primarily an oil-bearing formation (approximately 96% oil) that has been drilled and produced for over 90 years. Of the over 30 billion barrels produced from the Permian Basin approximately 40%, or 12 billion barrels, came from the San Andres reservoir.
To get deeper into the upstream acquisitions and current trends, please, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Tyler Reitmeier Tel. +1 713-203-3128 Email: email@example.com
According to a midstream oil and natural gas company release on August 2, MPLXLP has increased total pipeline throughputs by 6% in the second quarter of 2022 and terminal throughput by 4%, versus year-ago levels. In an earnings statement of MPLX, the total pipeline throughputs were 5.9 million bbl/d, with terminal throughput of 3.1 million bbl/d for the second quarter. The company reported a net income of $875 million and adjusted earnings of $1.457 million in the second quarter, both higher than in the same period of 2021. Gathered volumes grew up by 11% from year-ago levels to an average of 5.6 Bcf/d. In the Marcellusregion, gathered volumes fell 1% compared to year-ago levels to an average of 1.3 Bcf/d. MPLX is expanding several projects, including in the Permian Basin where the Whistler pipeline is increasing from 2 Bcf/d to 2.5 Bcf/d, in addition to lateral pipelines into the Midland Basin and Corpus Christi domestic and export markets. Moreover, the construction is also maintained on the 200 MMcf/d Tornado ll processing plant, which MPLX anticipates coming online in the second half of 2022. Additionally, 68,000 bbl/d Smithburg de-ethanizer project in the Marcellus is expected to come online in the third quarter.
Recent acquisitions totaling $305 million in cash bring Summit Midstream the opportunity to build up its Denver-Julesburg basin assets. Its subsidiary, Summit Midstream Holdings, concluded a deal to purchase Outrigger DJ Midstream from Outrigger Energy II and Sterling Energy Investments, Grasslands Energy Marketing, and Centennial Water Pipelines from Sterling Investment Holdings. Weld County-based Outrigger’s assets in Colorado are significant as they include a 60 MMcfd cryogenic natural gas processing plant, almost 70 miles of low-pressure natural gas gathering lines, 90 miles of high-pressure natural gas gathering lines, 12,800 horsepower of field and plant compression, and roughly 30 miles of crude oil gathering pipelines. The gathering agreements for Outrigger DJ system are comprised of long-term, fee-based contracts with a weighted average term of over 10 years. Volume throughput on the Outrigger DJ system is underpinned by acreage dedications, with a valued 310,000 leased acres from its key customers, including Mallard Exploration and other producers in the region. Moreover, the Sterling DJ assets, in Weld, Morgan, and Logan Counties, Colorado, and Cheyenne County, Nebraska, have three cryogenic processing plants with a nameplate capacity of 100 MMcfd, some 450 miles of natural gas gathering lines, 8,500 horsepower of field compression, freshwater rights, and 40 miles of subsurface freshwater delivery infrastructure.
Northern Oil and Gas Inc. (NOG) made a $330 million purchase in the Permian Basin, according to the release on October 19. NOG revealed an agreement to purchase a 36.7% working interest in the Mascot Project from Midland-Petro D.C. Partners LLC (MDPC). The acquisition will be funded with cash on hand, operating free cash flow, and borrowings. The Mascot Project is operated by Permian Deep Rock Oil Co., an affiliate of MPDC, which is a David H. Arrington-owned business based in Midland, Texas. NOG anticipates that the production from the acquired properties to average almost 4,400 boe/d in the first quarter of 2023 and 6,450 boe/d for the full-year 2023 (2-stream, about 80% oil).
On November 2, Cardinal Midstream Partners, an independent Dallas-based midstream energy company, concluded definitive agreements with Medallion Midstream Services to purchase Medallion’s natural gas gathering and processing business in the Delaware Basin in West Texas. The transaction is subject to customary closing conditions and is expected to close in early 2023.
On October 19, Shell USA completed the almost $1.96 billion acquisition of the master limited partnership. The company paid $15.85 in cash for every common unit representing limited partner interests in SHLX not held by Shell USA or its affiliates. A subsidiary of Shell USA has 269,457,304 SHLX common units or roughly 68.5% of SHLX common units.