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DCP Midstream Expands Permian Basin Footprint with $160 Million Bolt-on Acquisition
07/19/2022
An oncoming bolt-on acquisition of Woodland Midstream gathering and processing assets in the Permian Basin by DCP Midstream LP is estimated at $160 million dollars.
The president and CEO of DCP Midstream stated in the release, that the company is eager to announce the contract to enlarge its Permian gathering and processing business with assets that have connectivity to its existing infrastructure and fit its long-term strategy of securing cumulative volumes for the downstream assets.
According to a definitive agreement announced on June 14, DCP Midstream will get the James Lake System from Woodland Midstream II, a portfolio company of EIV Capital. DCP anticipates funding the bolt-on acquisition using cash on hand and borrowings under the company’s existing bank facilities.
Since the James Lake System is situated within three miles of DCP’s Goldsmith processing facility in the Permian Basin, it provides the opportunity to maintain significant synergies and reduce the acquisition multiple over time. The System includes about 230 miles of gathering pipe and a 120 MMcf/d cryogenic processing facility, increasing DCP’s capacity and serving significant synergies with the company’s Goldsmith processing facility in Ector County, Texas.
It is deeply considered that achieving the record first quarter performance and recent investment grade rating is an exciting next step in strengthening the company’s operating model, generating additional value for its stakeholders, and driving improved reliability for the customers. DCP said the bolt-on acquisition of the James Lake System is an immediately accretive transaction representing an approximately 5.5 times EBITDA multiple.
Two years earlier, the James Lake System had been acquired by Woodland Midstream II from a privately-owned seller for an undisclosed amount in October 2019. Woodland’s partnership with EIV Capital in February 2019 was represented by the transaction of the first operating asset, which encompassed a substantial capital commitment from EIV Capital.
The James Lake System attends producers within the Permian’s Central Basin Platform in Ector, Andrews, and Winkler counties, Texas. It is expected that DCP also secures about 250,000 dedicated acres and the transaction itself is expected to be completed in the third quarter of the year. The James Lake System cash flows are underpinned by primarily fee-based, long-term agreements with a varied group of independent operators and investment-grade public companies.
To ensure the fulfillment of this transaction: Holland & Hart LLP provides legal counsel to DCP; Intrepid Partners, LLC is a financial adviser and McDermott Will & Emery LLP is a legal advisor to Woodland Midstream II.
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Momentum Midstream Becomes a Leader in Haynesville Due to Latest Acquisitions
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Houston-based company Momentum Midstream LLC on September 22 purchased Midcoast Energy LLC’s East Texas business from an affiliate of Arc Light Capital Partners LLC and Align Midstream LLC from Tailwater Capital and claimed that it establishes a leading presence in the Haynesville Shale. New Generation Gas Gathering or NG3 project will collect natural gas produced in the Haynesville Shale for re-delivery to premium Gulf Coast markets, including LNG export. Moreover, the NG3 project includes a carbon capture and sequestration component that will eliminate 100% of the CO₂ and accumulate it underground for a long time, creating a net negative carbon footprint. With the combined assets of Midcoast ETX and Align Midstream, Momentum is currently delivering volumes of more than 2 Bcf/d for a diverse customer base composed of producers, utilities, end-users, and LNG exporters. Momentum’s footprint in the Haynesville includes about 3,000 miles of gathering pipelines, 1.5 Bcf/d of treating capacity, 700 MMcf/d of processing capacity, 200,000 HP of compression, and 820 miles of pipelines transporting gas to the Gulf Coast markets in southeast Texas and the Carthage and Bethel markets in East Texas.
Cheniere’s LNG Is on the Next Level Due to Corpus Christi Expansion FID
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According to CheniereEnergy’s board of directors announcement on June 22, the company declared the further expansion of its CorpusChristi, Texas. Moreover, the LNG plant could come sooner than expected due to the announcement of a final investments decision (FID) related to Stage 3 Liquefaction Project work at the export facility. It will ensure the capacity to ship 10-plus million tonnes per annum (mtpa) from 7 midscale trains. Furthermore, TudorPickering, Holt & Co. (#TPH) declared on June 23, that the possible ultimate capacity of the facility could be in the 11-12 mtpa range given 10.7 mtpa of long-term contracts have been signed with companies such as CPC, PGNiG, Sinochem, Foran, ENGIE, Apache, EOG and ARX CN. Additionally, Cheniere announced two sale and purchase agreements (SPAs) with #ChevronCorp.: Firstly, Chevron will obtain 1 mtpa of LNG from Sabine Pass Liquefaction LLC with deliveries considered to start in 2026. Deliveries will reach full capacity in 2027 and expire in mid-2042. Secondly, Chevron will obtain 1 mtpa of LNG from Cheniere Marketing LLC with deliveries considered to start in 2027 and continue for about 15 years. The purchase price for the LNG under both SPAs will be indexed to the Henry Hub price, plus a fixed liquefaction fee as Cheniere claimed. Since the expansion will have been completed, Cheniere’s aggregate nominal production capacity will be increased to more than 55 mtpa by the end of 2025 compared to 45 mtpa now. It will become a part of the industry-wide decarbonization movement away from coal and oil as this allows Cheniere to provide the global market with additional low-carbon fuels. First exports from the facility are anticipated in 2025.
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Rangeland Energy has agreed to sell Rangeland Midstream Canada to Kingston Midstream Alberta and remains committed to future Canadian midstream investments. Texas-based Rangeland Energy, supported by financial partner EnCap Flatrock Midstream, has inked a deal to sell its Canadian subsidiary, Rangeland Midstream Canada Ltd., to Calgary's Kingston Midstream Alberta Ltd. for cash.
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The merger between ONEOK and Magellan received approval from Magellan shareholders, securing just 55% of the total votes at Magellan’s meeting on Sept. 21. ONEOK Inc. has successfully concluded the acquisition of Magellan Midstream Partners LP on Sept. 25. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
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