Although upstream mergers and acquisitions has had a slow start in the first half of 2015, the midstream sector is picking up the pace. On Monday, Dallas-based Pioneer Natural Resources, along with Reliance Holding USA Inc. agreed to sell their Eagle Ford midstream business to an affiliate of Enterprise Products Partners LP for $2.15 billion.
Pioneer owns 50.1 percent of the assets, and Reliance owns the remaining 49.9 percent. The midstream unit provides gas gathering, treating, compression and condensate processing services in the Eagle Ford shale. Enterprise will pay for the business in two installments, $1.15 billion at closing, which is expected in the third quarter, and $1 billion a year after closing.
Also on Monday, Ferrellgas Partners unveiled plans to buy Dallas-based Bridger Logistics for $838 million. Expected to close in July, the transaction consists of $563 million in cash and $11.2 million in Ferrellgas common units, according to a news statement. It represents an 8.4 multiple on Bridger’s estimated earnings for a 12-month period. As part of the deal, Ferrellgas’ board approved a $0.125 increase in its quarterly distribution.
Bridger, which provides integrated crude oil midstream services, has operations in 14 states and a presence in most major U.S. oil plays, including the Permian, Bakken, Rockies, Niobrara, Mid-Continent, Gulf Coast and Eagle Ford. Those assets are expected to be immediately accretive to Kansas-based Ferrellgas, and give it a platform to expand its distribution services.
Ferrellgas, one of the nation’s largest propane retailers, has only been in the midstream game since last May, when it acquired Sable Environmental LLC.
In a recent report, Foster Mellen noted that U.S. midstream activity is dominating energy’s M&A field. Other recent midstream transactions include Houston pipeline giant Kinder Morgan Inc.’s $3 billion purchase of Hiland Partners, and Vanguard Natural Resources purchase of two midstream rivals, Eagle Rock Energy Partners and LRR Energy LP.Same story, another source is here.
A report from Bentek, the forecasting unit of energy news agency Platts, found oil production in the Permian basin increased 50 percent and natural gas production increased 30 percent in the last three years.
While other reserve basins are seeing a decline in rig activity, Bentek said the Permian shale has shown resiliency in the era of low oil prices.
Enterprise last month said it had the long-term agreements in place to support the development of a 416-mile pipeline to send crude oil and condensate, an ultra-light grade of oil found largely in U.S. shale deposits, from its terminal in Midland, Texas, to a storage facility in Sealy, west of Houston.
The new pipeline would be able to carry as much as 540,000 barrels per day, largely from the Permian shale basin in Texas, and be in service by 2017. With the new midstream asset in hand, the company said it was establishing itself as a vital cog in Texas shale basins.
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