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Cardinal Acquires Natural Gas Business in Prolific Delaware Basin to Expand
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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.
The recently bought midstream infrastructure includes natural gas gathering and processing solutions for top-tier producer customers in the heart of the Delaware Basin. The system includes Reeves and Loving counties and about 80 miles of high- and low-pressure natural gas gathering pipelines and a 140 million cubic feet per day (MMcf/d) natural gas processing facility.
This purchase in the prolific Delaware Basin will serve as the cornerstone of Cardinal’s natural gas gathering and processing business strategy. The business is an ideal fit to leverage our team’s core competencies and industry relationships. The company anticipates building up the asset base and providing meaningful midstream solutions to serve area producers’ development.
Cardinal was the first management team that was backed when EnCap Flatrock was formed in 2008 and Doug Dormer, Cardinal Chief Executive Officer, has been an incredible partner. EnCap Flatrock is enthusiastic about this next chapter of the Cardinal story with the acquisition of this high-quality asset and expects Doug and his team to continue their track record of success.
Being founded in 2022 Cardinal Midstream Partners is focused on the pursuit of midstream acquisition and development opportunities in North America, especially natural gas gathering and processing and congruent carbon capture and sequestration.
The company is managed by four founders: Chief Executive Officer Doug Dormer; Chief Financial Officer Douglas Gale; Chief Commercial Officer Justin Garrity; and Chief Operating Officer Clayton Hewett. With more than 80 years of combined experience in the energy industry, the founders each have built notable careers creating, managing, constructing, and operating successful midstream businesses through a full life cycle.
As global demand development improves production and accompanying midstream infrastructure expansions, Cardinal Midstream Partners plans to build an asset-based midstream platform utilizing a hybrid method concentrated on natural gas gathering and processing, and congruent carbon capture and sequestration (CCS). This unique strategy offers a broad range of opportunities for value creation through acquisitions and greenfield projects.
EnCap Flatrock Midstream provides value-added growth capital to proven management teams focused on midstream infrastructure opportunities across North America. The firm was formed in 2008 by a partnership between EnCap Investments L.P. and Flatrock Energy Advisors, LLC.
Based in San Antonio with offices in Oklahoma City and Houston, the firm manages investment commitments of nearly $9 billion from a broad group of prestigious institutional investors. EnCap Flatrock Midstream is currently making commitments to new management teams from EFM Fund IV, a $3.25 billion fund.
Shearman & Sterling LLP serves as legal advisor to Cardinal. Locke Lord LLP serves as legal advisor and Greenhill & Co., LLC. serves as financial advisor to Medallion.
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Matador Expands In Delaware; Purchases Acreage from Advance Energy at $1.6 Billion
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On January 24, Matador spread the word that it will add oil- and gas-producing assets in Lea County, N.M., and Ward County, Texas, and some midstream infrastructure. Most of the acreage is strategically situated in Matador’s Ranger asset area in Lea County. The bolt-on includes about 18,500 net acres, 99% held by production, in the core of northern Delaware. The deal would also extend Matador’s inventory by 406 gross (203 net) drillable horizontal locations with prospective targets in the Wolfcamp, Bone Spring, and Avalon formations.
Permian O&G Basin 2022 Review
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The Permian Basin is one of the most important oil and gas basins in the world, located in western Texas and southeastern New Mexico in the United States. Oil drilling and production in the Permian Basin began in the early 1920s. The first significant discovery in the region was made in 1923 in the Westbrook field in Mitchell County, Texas. This discovery led to a boom in oil exploration and production in the area. By the 1930s, the Permian Basin had become one of the major oil-producing regions in the United States, and it continued to grow in importance throughout the 20th century.
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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.
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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.
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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.