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In Matador's Favor, For $75 Million Summit Sells Its Permian Midstream Assets

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.

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Targa Resources: $3.55 Billion Cash Transaction to Acquire Lucid Energy

On June 16 Targa Resources Corp. decided to acquire Lucid Energy Group, located in the Permian Basin, which is a part of Riverstone Holdings LLC and Goldman Sachs Asset Management. Firstly, Targa enlarged due to the recent “blot-on” acquisition of Southcross Energy in the Eagle Ford for $200 million and it will become bigger thanks to the $3.55 billion cash transaction. Targa’s financial position allowed it to utilize convenient opportunities to extend its company so it bought #Lucid using available cash and debt with an estimated pro forma year-end 2022 leverage around 3.5 times. According to Targa’s estimates, the acquisition of Lucid will increase the number of natural gas pipelines by 1,050 miles and add about 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction located mainly in Eddy and Lea counties of New Mexico. The investment-grade producers source approximately 70% of current system volumes. According to the press release, a full-year standalone adjusted EBITDA is expected to be between $2.675 billion and $2.775 billion and reported year-end leverage ratio of about 2.7 times. Targa’s updated financial expectations assume NGL composite prices average $1.05 per gallon, crude oil prices average $100/bbl, and Waha natural gas prices average $6 per MMBtu for the remainder of 2022.

The future of shale is looking bright: economic recovery and a spike in travel lifted oil prices to multi-year highs, helping Continental Resources to a fourth-quarter profit that exceeded Wall Street expectations. Coming off such a high note, the company plans to increase its dividend rates by 15% to 23 cents per share!

Enbridge acquired Tres Palacios natural gas storage facility in Texas for $335 million, adding approximately 35 Bcf of natural gas storage to their portfolio. The facility uses salt caverns for storage and has a gas header pipeline system that spans 62 miles and links to 11 major gas pipelines. Crestwood Equity Partners LP intends to divest its interests in Tres Palacios by the second quarter.

The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.

Diamondback Energy, an independent oil and gas company, has successfully completed the acquisition of Lario Permian, marking the closure of two major deals in the fourth quarter of 2022. The company purchased two private operators in the Midland Basin for approximately $3.3 billion.

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