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Expansion Is The Goal: Ironwood II Completes Asset Merger And Assumes Management of Nuevo Midstream Dos’ Eagle Ford Assets
11/23/21
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.
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