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Expansion Is The Goal: Ironwood II Completes Asset Merger And Assumes Management of Nuevo Midstream Dos’ Eagle Ford Assets

On Nov. 16, Ironwood Midstream expanded its Eagle Ford Shale operations through its merger with Nuevo Midstream Dos. Nuevo's assets, including its equipment and pipelines, along with a truck station and 300,000 barrels of crude oil storage, have been taken over by Ironwood II’s leadership team.

Earlier in the month, Ironwood CEO William Williams expressed in a statement that this acquisition heralds the company's goal of expanding its midstream infrastructure. With the title of the lead supplier of safe, consistent, and competitive access to high-quality and growing markets along the Texas Gulf Coast at stake.

The companies, both of which have private equity backing in the form of EnCap Flatrock Midstream, said in the release, that they have completed a merger and are currently managing Nuevo Midstream's Eagle Ford assets. It is not yet known how the deal was structured.

However, as a result of the consolidation of complementary Eagle Ford assets, EnCap is now poised for growth and value creation. The merger also brought Nuevo’s President and CEO Randy Ziebarth onto the Ironwood board.

In fact, Nuevo and EnCap Flatrock Midstream have had a successful partnership together for some time already. As part of its formation, Nuevo Dos received an initial equity commitment of $400 million from EnCap Flatrock Midstream way back in 2015. But Nuevo’s management team was acquainted with EnCap even before this: thanks to such backing, they were able to develop and ultimately sell a similar midstream footprint in the Delaware Basin to Western Gas a year prior, in 2014.

Now, the Eagle Ford team has established highly valuable relationships in the area and has excelled at commercializing the assets in this region. As part of its entry into the Eagle Ford Shale in 2019, Nuevo acquired Republic Midstream LLC from an ArcLight Capital Partners affiliate. In South Texas, Nuevo’s new assets include approximately 100 miles of crude oil gathering pipeline that feed the Lavaca Terminal, a crude oil storage facility with 300,000 barrels and a truck staging area.

Besides Nuevo's terminal, the system consists of a 26-mile pipeline connecting the terminal to downstream refineries, petrochemical installations, and export terminals located on the coast.

Due to this merger, Ironwood II has increased its crude oil and natural gas throughput capacities in the Eagle Ford region to approximately 400,000 barrels and 410 million cubic feet per day, respectively. With 390 miles of crude oil and natural gas pipelines, the company manages 245,000 acres of dedicated land.

In addition, the company operates 40,000 barrels per day of throughput capacity in the Permian Basin in Midland County, Texas, which delivers crude oil to the Centurion Pipeline. Ironwood II’s strategic footprint in the Eagle Ford provides multiple connections to long-haul pipelines and premium access to key Gulf Coast markets.

Attorneys Mayer Brown and Locke Lord acted for Ironwood II. Shearman & Sterling represented Nuevoand Encap Flatrock Midstream.

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Ain't Nothing Like a $2 Billion Deal: Oasis Sells Midstream Affiliate to Crestwood

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.

TC Energy, the Canadian gas giant, recently announced its environmental, social, and governance goals, as well as emission reduction strategies. The company aims to become 100% emission-free by 2050 while promising to cut greenhouse gas emissions intensity from its operations by 30% by 2030 as an interim measure.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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