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In Matador's Favor, For $75 Million Summit Sells Its Permian Midstream Assets
06/15/2022
Matador Resources Co. acquires a gathering and processing system for $75 million in New Mexico’s Eddy and Lea counties from Summit Midstream Partners LP, filling up Matador’s midstream portfolio in the Permian Basin.
According to the company release, this purchase is a logical extension of their strategy to keep their midstream operations and assets in control in order to hasten and assist their operations.
Matador reached an agreement with a subsidiary of Summit to gain Summit’s Lane Gathering and Processing System on June 9. In connection with the transaction, the company will also appropriate a certain takeaway capacity on the Double E Pipeline, a FERC-regulated natural gas pipeline operated by Summit.
Nowadays, the Lane G&P System combines a 60 MMcf/d cryogenic natural gas processing plant, three compressor stations, and about 45 miles of natural gas gathering pipelines. It is expected that the company will enlarge the Lane G&P System to help Matador’s environmental, safety, exploration, and production efforts in northern Eddy and Lea counties located within the Delaware Basin.
Gathering and processing services on the Lane G&P System are provided under long-term, fee-based gathering agreements with producers that are primarily targeting crude oil production from the Bone Spring and Wolfcamp shale formations.
As an investor presentation says, Matador began its initial midstream build-out in the Delaware Basin in 2015-2016. Since then the company has extended its midstream footprint in the Delaware using the San Mateo I and San Mateo II joint venture partnerships with Five Point Energy LLC.
Serving as the primary midstream solution for Matador, San Mateo provides midstream services to other E&P operators in the Delaware Basin. It owns and operates oil, natural gas, and produced water gathering and transportation systems in Eddy County, N.M., and Loving County, Texas, the Black River Processing Plant in Eddy County with a designed inlet capacity of 460 MMcf/d of natural gas and 13 commercial saltwater disposal wells in Eddy County and Loving County with a combined designed disposal capacity of 335,000 bbl/d.
This acquisition of additional takeaway from the Delaware Basin is also made to ensure Matador’s and third-party customers’ natural gas is transported to market. The company notices the diligence of all sides in negotiating the transaction and looks forward to closing later this month.
Up to $1.5 Billion for Percussion Petroleum in the Permian Basin
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Around 25,000 net acres in the Permian are being sold by Percussion Petroleum II, looking to fetch up to $1.5 billion, as some sources bet on rising oil prices to pocket more than double what it paid in 2021. The company spent $375 million plus contingent payments a year ago to buy the bulk of its assets in one of the most prolific crude-producing areas in the U.S. from Oasis PetroleumInc. The oil prices increased to triple digits and buyers wanted to gain a toehold in the basin, whereas backers of private shale companies such as Percussion use it as a chance to exit their investments with big profits. Remarkably, U.S. crude oil futures have grown about 50% to approximately $109/bbl since June 29, 2021, when Percussion closed its deal with Oasis.
Ain't Nothing Like a $2 Billion Deal: Oasis Sells Midstream Affiliate to Crestwood
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Crestwood & Oasis Midstream merge to create a top Williston #basin player. $1.8 billion deal is expected to close during the Q1 of 2022. The transaction will result in a 21.7% ownership stake for Oasis in Crestwood common units. The remaining ownership of Oasis in Crestwood will also be of benefit to the company since it will create a diversified midstream operator with a strong balance sheet and a bullish outlook after this accretive merger.
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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).
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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.
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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.