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Expansion Is The Goal: Ironwood II Completes Asset Merger And Assumes Management of Nuevo Midstream Dos’ Eagle Ford Assets11/23/21
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.
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.
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.
Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.
The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.