Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Western Expands Powder River Footprint with $885M Acquisition
09/21/2023
Western Midstream will acquire Meritage Midstream's Powder River Basin assets, including gas gathering and an NGL pipeline, for $885 million in cash.
A subsidiary of Western Midstream Partners LP is set to acquire Meritage Midstream Services II LLC in an $885 million all-cash transaction, marking a significant expansion in the Powder River Basin for the company.
This acquisition follows a trend of consolidation in the midstream infrastructure sector that began in late 2022. One of the landmark deals this year includes Energy Transfer's $7.1 billion acquisition of Crestwood Equity Partners in mid-August.
Deal Specifics
According to the terms of the agreement, Western Midstream will acquire Meritage's extensive natural gas gathering and processing operations, which are based in Wyoming's Powder River Basin.
What Meritage Brings to the Table
Meritage's assets span Converse, Campbell, and Johnson counties in Wyoming:
- Roughly 1,500 miles of both high- and low-pressure natural gas gathering pipelines
- A natural gas processing capacity of about 380 MMcf/d
- The Thunder Creek NGL pipeline, a 120-mile line with a 38 MBbl/d capacity that links to Meritage’s processing facilities
These assets are backed by dedicated acreage exceeding 1.4 million acres and contracts averaging eight years in lifespan from a diverse set of mainly investment-grade counterparties.
Market Impact and Future Projections
As of July 2023, Meritage's operations were at 65% utilization, a rise from the year's start. Following the acquisition, Western Midstream is expected to recommend a base distribution increase, enhancing shareholder value.
Capital Allocation Concerns
Some investors may question the company’s shift in focus, especially when considering existing constraints in the Permian Basin. However, the acquisition positions Western Midstream strongly for future growth opportunities in the Powder River Basin.
CEO's Statement
Michael Ure, the CEO of Western Midstream, expressed that the acquisition considerably enlarges the company's operational scale in the Powder River Basin. "This region has lured significant investments, given its multi-layered potential for pay horizons," Ure said.
Western Midstream Partners: An Overview
Western Midstream Partners (WES) maintains a diversified operational footprint across several key geographic areas, including the Rocky Mountains, North-central Pennsylvania, and the states of Texas and New Mexico. As a pivotal operator in the midstream energy industry, WES delivers a broad spectrum of services. These services range from the gathering, compression, and treatment of natural gas, to the management of condensate, NGLs, and crude oil. Beyond these operations, WES also engages in both the buying and selling of natural gas, NGLs, and condensate, functioning as a contractual agent for its clientele.
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.
OneRock Energy Acquires 160,000 Acres in the Powder River Basin
OneRock acquired Northwoods Management’s assets in Wyoming's Powder River Basin, average production of approximately 5,000 barrels of oil equivalent per day.
Who's Next after Diamondback? Potential Takeover Targets in the Permian Basin
The $26 billion purchase of Endeavor Energy Resources by Diamondback Energy, with its stock up 2.6%, is the newest big deal combining oil and gas production in the Permian Basin under a few big companies
OXY has been the leader in Permian Basin production for the past five years. Currently, the Houston-based oil and gas company is deepening its presence in the basin with a $12 billion acquisition of CrownRock, adding over 94,000 acres in the Midland Basin and increasing its oil output by about 170,000 barrels per day. Occidental announced an increase in its proved reserves to 4.0 billion barrels of oil equivalent by the end of December 2023, up from 3.8 billion the previous year. Activities in the Permian largely fueled this rise. Occidental added approximately 303 million barrels through infill development projects as well as new discoveries and the further development of existing fields brought in another 153 million barrels.
TotalEnergies kicked off 2024 with a net income of $5.7 billion in the first quarter, marking a modest 3% increase from the same period last year and a 13% rise from the previous quarter. This growth occurred despite experiencing drops in both the volume and price of gas sales over the year and the quarter. Their adjusted net earnings, which exclude one-time or unusual items, were $5.1 billion. This represents a significant 22% decline compared to last year and a slight 2% drop from the last quarter. The company's earnings before tax, depreciation, and amortization reached $11.5 billion, while their cash flow from operations significantly decreased to $2.2 billion, falling by 58% from last year and a steep 87% from the previous quarter. TotalEnergies also recorded $644 million in impairments.
New Mexico leads the Rockies region in gas production and ranks as the sixth-largest in terms of active gas wells in the U.S. Last year, the state's gas well count slightly increased by 0.2% to 30,699, with new additions in both the northwestern San Juan Basin and the southeastern Permian Basin. Meanwhile, just to the north in Colorado, gas producers grew by a modest 0.1% to 30,322, primarily due to increased drilling activity in the DJ and Piceance basins. Wyoming saw a decline in its active gas wells by 3.7%, down to 17,006, with production mainly in Sublette, Sweetwater, and Converse counties reflecting stable or slightly reduced drilling activity. Utah also experienced a slight decrease of 0.2% in its number of gas wells, totaling 6,463. In Q1 2024, oil and gas industry activity in Oklahoma, Colorado, and northern New Mexico experienced a decline. This marks the fifth consecutive quarter of contraction in drilling and business activities within these regions. According to a survey that included responses from 33 firms operating in the Rockies, this downtrend is expected to continue over the next six months.