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Apache's Altus Midstream to Merge with EagleClaw in All-stock Deal11/29/21
The Altus Midstream Company and EagleClaw Midstream agreed on Oct. 21 to combine operations.
Together, they will be the world's largest integrated midstream player in one of the most prolific hydrocarbon basins — the Permian Basin, enabling them to provide scale, core operational capabilities, and fully integrated services essential to long-term success.
In West Texas, Altus and EagleClaw have a combined capacity of approximately 2 Bcf/d of state-of-the-art natural gas processing. According to the company's release, Altus will become the largest natural gas processor in the Delaware Basin, as well as the third-largest for the entire Permian Basin, following this deal.
As a result of the new processing and transportation capabilities for all three streams, top management noted that the pro forma enterprise is well-positioned to leverage the accelerated activity in the Delaware Basin.
Jamie Welch, CEO of EagleClaw, will lead the combined company's new management team. The division will remain headquartered in Midland, with corporate leadership in Houston, and operate under a new name, which will be disclosed shortly.
In addition, Apache amended its commercial agreement with Altus to incentivize activity in the Delaware Basin, and the company will continue to be an important customer of the newly combined entity's natural gas gathering and processing projects.
Apache’s parent company, APA Corp., says this transaction builds Scale and Liquidity, which are important to Altus' evolution as a publicly-traded company.
With 79% of Altus in ownership, Apache Midstream has agreed to a customary 12-month lockup period of its respective holdings with Blackstone, and I Squared. In exchange, The company may sell up to 4 million shares up until three months after the closing if the proceeds from the sale are invested in Alpine High development activities in the Delaware Basin within 18 months. The sum of investment should amount to $75 million.
APA's decision to reduce its ownership in Altus is a logical continuation of its efforts to streamline its portfolio and unlock the value of its midstream infrastructure.
By combining with BCP Raptor Holdco LP, Altus will acquire EagleClaw Midstream Ventures, Caprock Midstream, and Pinnacle Midstream, as well as a 26.7% stake in the Permian Highway Pipeline.
Midstream Logistics, formerly Gathering and Processing, and Pipeline Transportation will operate in Pro forma Company. EBITDA in 2022 from these two segments is expected to be split roughly as 65% and 35% accordingly.
During the next three years, the company expects EBITDA synergies of at least $50 million, with total integration costs of less than $100 million.
Upon completion of customary closing conditions, such as shareholder approval from Altus and regulatory reviews, the transaction is expected to close during the first quarter of 2022.
As a financial advisor to Altus Midstream, Credit Suisse Securities (USA) LLC is representing it in the deal, while Bracewell LLP is representing its legal counsel. Goldman Sachs is representing Apache in this regard. Financial advisers to BCP, Blackstone, and I Squared include Citi, Greenhill, Intrepid, and Jefferies, while legal advisors include Vinson & Elkins LLP and Sidley Austin.
A good asset will not sit on the market for long. After a deal with Berkshire Hathaway fell through, Dominion Energy managed to secure another one for Questar Pipelines in a drop of a hat. And get that, it is better than the former one by more than half a billion! Although not everyone is happy with such decisions, it seems that even Carl Icahn’s complaints won't be able to sway Southwest Gas Holdings’ decision. Though we will have our eyes peeled in any case… If everything goes as planned, a $2 billion deal will be closed before the end of the year.
TC Energy splurged $0.8 billion on the project that targets emissions. Well, sorta. According to the idea, existing lines of the ANR Pipeline Company will be expanded to serve markets in the #Midwestern US and simultaneously updated to reduce discharge by 30,000 metric tons CO2e per year - equivalent to removing almost 7000 cars from the road annually. Remarkable goals. With the current timeline, the project will be fully operational by the end of 2025, thanks to long-term transportation agreements secured by ANR.
Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.
The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.