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Bison Gas Gathering System Sold: $40M Cash Paid By Summit Midstream to Steel Reef

Steel Reef acquires Summit Midstream’s Bison Gas gathering system in North Dakota for $40 million in cash as part of Houston-based Summit’s plans to streamline its portfolio.

According to a release on September 19, with the sale of Bison Midstream, Summit’s focus in the Williston Basin will be on increasing its crude oil and produced water gathering systems mainly situated in Williams and Divide Counties, North Dakota.

The Bison agreement follows the sale of Summit’s Lane gathering and processing system in the Permian Basin to Matador Resources Co. in June for $75 million. The merger of the divestitures creates additional financial flexibility to reinvest in more strategic scale-building opportunities across Summit’s footprint.

Summit Midstream Partners LP concentrates on developing, possessing, and managing midstream energy infrastructure assets that are strategically situated in the core producing areas of unconventional resource basins, mainly shale formations, in the continental U.S. The company’s portfolio is broken down into four sections: the Barnett, Northeast, Permian, and Rockies.

After the sale of the company’s Bison gas gathering system, Summit will still possess the Polar and Divide system in the Williston Basin, which has more than 295 miles of crude oil and produced water pipelines, spanning throughout the central and western parts of Williams and Divide counties in North Dakota, from the Missouri River to the Canadian border.

Summit Midstream is interested in the status of customer development activity in central Williams County and pro forma for the transaction and anticipates over 50 new wells behind our liquids system in 2023.

The Bison gas gathering system, established in Mountrail and Burke counties in northwestern North Dakota, was purchased by Steel Reef Infrastructure Corp., an integrated owner, and operator of associated gas capture, gathering, and processing assets in North Dakota and Saskatchewan.

Bison gathers, compresses, and treats associated natural gas in the crude oil stream produced from the Bakken and Three Forks shale formations. According to the Summit release, a large U.S. independent crude oil and natural gas company and Chord Energy Corp. are Bison Midstream’s key customers.

Natural gas gathered on the Bison system is conveyed to Aux Sable Midstream LLC’s Palermo Conditioning Plant in Palermo, North Dakota. Then the gas is transferred to downstream pipelines serving Aux Sable's 2.1 Bcf/d natural gas processing plant in Channahon, Illinois.

Pro forma for the Bison transaction, Summit will have about $90 million drawn on its $400 million ABL credit facility, resulting in over $300 million of available liquidity, according to Deneke. The company continues to anticipate to trend toward the high end of our 2022 Adjusted EBITDA guidance range of $205 million to $220 million.

Locke Lord LLP served as the legal adviser to Summit and Bracewell LLP was the legal adviser to Steel Reef for the Bison transaction.

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Growing Export of US Crude Oil Is Expected to Set Record This Quarter

On 27 June, the analysts at Kpler spread the word that the exports of crude oil from the U.S. Gulf Coast could break a record 3.3 MMbbl/d this quarter as Europe has regard to U.S. crude which can outweigh sanctioned Russian oil. Due to Washington's decision to release 180 MMbbl of oil from the nation's Strategic Petroleum Reserve, U.S. exports have increased in the last three months, as it has flooded the domestic market. Exports to Europe are anticipated averaging approximately 1.4 MMbbl/d this quarter, about 30% higher than the year-ago quarter, meanwhile, export to Asia is set to decrease to less than 1 MMbbl/d. Despite that the U.S. has lost about 1 MMbbl/d of refining capacity since 2020, it also boosted exports thanks to the government’s intervention to back crude supplies which has had consequences in growth in exports. Throughput via the Port of Corpus Christi has grown by more than 150,000 bbl/d and has become 1.86 MMbbl/d. Nevertheless, Port of Houston exports also have been increasing since the third quarter of last year, they remain below pre-pandemic levels.

Antero Midstream Corp. bought Marcellus assets of Crestwood Equity Partners LP on September 12 for $205 million in cash, signing another sale of noncore assets by the Houston-based company. Crestwood has strategically enhanced its asset portfolio through a series of A&D transactions for the previous 18 months to create a competitive scale in the Williston, Delaware, and Power River basins. The strategy covered acquisitions of Oasis Midstream Partners, Sendero Midstream, and Crestwood Permian Basin Holdings LLC (CPJV), which was a 50:50 joint venture of Crestwood and First Reserve. The assets to be bought cover 72 miles of dry gas gathering pipelines and nine compressor stations with about 700 MMcf/d of compression capacity. The current throughput on the system is approximately 200 MMcf/d, resulting in important available capacity for increase without major capital investment. The deal includes almost 425 undeveloped drilling locations and 120,000 gross dedicated acres from Antero Resources mainly in Harrison County. The acquisition is also anticipated to raise Antero Midstream’s compression capacity by 20% and gathering pipeline mileage by 15%.

The United States government has announced a significant investment of $7.3 billion from the 2022 Inflation Reduction Act (IRA) to support clean energy initiatives led by rural electric cooperatives. These projects aim to reduce energy costs, enhance reliability, and promote sustainability for rural communities, where energy costs tend to be higher than in urban areas. This investment marks a substantial effort toward decarbonizing rural America while supporting job creation and infrastructure improvements.

The U.S. oil and natural gas rig count experienced a slight decline, falling by four to a total of 633 rigs for the week ending August 21. Despite this modest drop, industry analysts have noted a surprising resilience in both oil supply and natural gas prices as the year progresses, suggesting that the market may be more robust than previously anticipated.

Investors remain strongly bearish on petroleum prices, even as confidence grows that the U.S. Federal Reserve will cut interest rates to boost consumer and business spending. Last week, fund managers returned to selling oil futures and options, as the brief rally from the previous week quickly lost steam and negative sentiment took hold once again. Hedge funds and other money managers offloaded 48 million barrels across the six major futures and options contracts in the week ending August 20. This marks the sixth time in seven weeks that funds have been sellers, reducing their positions by a staggering 346 million barrels since early July, based on data from exchanges and regulators.

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