Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Matador Expands In Delaware; Purchases Acreage from Advance Energy at $1.6 Billion
02/21/2023
Advance Energy Partners Holdings LLC in the northern Delaware Basin is acquired by Matador Resources Co. for at least $1.6 billion cash.
On January 24, Matador spread the word that it will add oil- and gas-producing assets in Lea County, N.M., and Ward County, Texas, and some midstream infrastructure. Most of the acreage is strategically situated in Matador’s Ranger asset area in Lea County.
The bolt-on includes about 18,500 net acres, 99% held by production, in the core of northern Delaware. The deal would also extend Matador’s inventory by 406 gross (203 net) drillable horizontal locations with prospective targets in the Wolfcamp, Bone Spring, and Avalon formations.
Advance Energy is now operating one drilling rig to drill 21 gross (19 net) wells in the northern portion of Matador’s Antelope Ridge asset area in Lea County, but the wells are not anticipated being turned to sales until early 2024. Additionally to the initial cash payment, Matador agreed to pay an additional $7.5 million for every month in which the average oil price surpasses $85/bbl.
Matador anticipates the Advance Energy assets producing one-year adjusted EBITDA of almost $475 million to $525 million at strip prices as of mid-January 2023, which represents an acquisition price multiple of 3.2x.
According to Matador’s estimation, the PV-10 value of the assets at $1.92 billion, depended on proved oil and natural gas reserves at mid-January strip price. Moreover, the company admitted that the PV-10 of proved developed oil and natural gas reserves on December 31, 2022, is $1.14 billion, or roughly $45,600 per flowing boe, utilizing strip pricing as of mid-January 2023.
Matador will maintain a strong balance sheet with leverage anticipated resting below 1.0x. Matador’s disclosed production value of $45,600 per boe/d implies about $25,000 to $30,000 per acre (depending on monthly cash payments), and MTDR’s disclosed forward EBITDA of $475 million to 525 million implies a 3.2x multiple.
The Advance Energy deal adds about 35 miles of in-field gas and water gathering pipelines to Matador. The company is purchasing an active Devonian Salt Water Disposal well with a strong injection capacity.
For Matador it is the potential connection of undedicated acreage to Matador’s midstream subsidiary, Pronto Midstream LLC, to enhance flow assurance and provide upside midstream value.
In late November 2022, as part of the fall 2022 redetermination process, Matador’s lenders finished their review of the company’s proven oil and natural gas reserves on June 30, 2022. As a result, the borrowing base under Matador’s credit agreement was increased by 13% from $2 billion to $2.25 billion.
The acquisition should not importantly impact Matador’s leverage profile, as it is anticipated maintaining a pro forma leverage ratio below 1.0x throughout 2023. Baker Botts is representing Matador in the Advance transaction.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Grand Prix Pipeline Will Be Completely Owned by Targa: To Buy Remaining Stake For $1.05 Billion
On January 3, Targa Resources Corp asserted that it is purchasing the remaining stake for $1.05 billion in cash from BlackstoneInc's energy unit in its Grand Prix NGL Pipeline that it does not already own. Targa, which is going to acquire a 25% stake from Blackstone Energy Partners, purchased 75% interest in the pipeline last year when it repurchased interests in its development company joint ventures from investment firm Stonepeak Partners LP for almost $925 million. The Stonepeak agreement also included 100% interest in its Train 6 fractionator in Mont Belvieu, Texas, and a 25% equity interest in the Gulf Coast Express Pipeline. Grand Prix has the capacity to transfer up to 1 MMbbl/d of NGL to the NGL market hub at Mont Belvieu. The same day Targa maintained the price of the Blackstone Energy Partners agreement, which is anticipated closing in the first quarter of 2023, representing roughly 8.75 times Grand Prix's valued 2023 adjusted EBITDA multiple.
Tokyo Gas Is Set to Buy Rockcliff Energy: One of the Top Haynesville's Producers
On January 3, U.S. natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners was set to be sold to a unit of Tokyo Gas Co. Ltd. for roughly $4.6 billion, including debt. The all-cash agreement with Houston-based TG Natural Resources, which is 70% possessed by the Japanese energy firm, is decided to be claimed this month, according to anonymous resources, as the discussions were requested to be confidential. Castleton Commodities International (CCI) owns the rest of TG Natural Resources.
The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.