On April 1, 2015 4:01 pm
By: Rick Stouffer, Senior Energy Editor, Shale Energy Business Briefing
Contribution By: Kristie Kubovic, Director of Communications, Shale Media Group
Edited By: Mindy Gattner, Editor, Shale Media Group
The current downturn of the shale oil and gas industry has initiated various changes within the industry—some positive and others negative. To weather the storm many companies are adjusting accordingly. Some are pushing forward, while others are cutting back.
Here is a look at some of the top transactions thus far in 2015 as they appeared in Shale Energy Business Briefing (SEBB). The mergers and acquisitions (M&A), joint ventures (JV), and pipeline projects below highlight that even in this industry downturn there are still advantageous actions occurring and companies are benefitting. Once the storm passes, many of these companies will be very favorably positioned.
Mergers and Acquisitions
(Top 5 M&A Deals since January 1)
1. Energy Transfer Partners Acquiring Regency Energy Partners in $18 Billion Deal
Pipeline giant Energy Transfer Partners (ETP) is acquiring midstreamer Regency Energy Partners (RGP) in an $18 billion deal, including the assumption of debt and other liabilities totaling $6.8 billion.
The transaction is characterized as a unit-for-unit merger, plus a one-time cash payment to Regency unit holders totaling $18 billion. The deal is expected to close in the second quarter of 2015.
Energy Transfer Equity (ETE), which owns the general partner and 100% of the incentive distribution rights of both Regency and ETP, has agreed to reduce the incentive distributions it receives from ETP by $320 million over five years.
The merger creates cost savings, capital efficiencies, and valuable ancillary benefits for both Regency’s and ETP’s unitholders, the companies said.
The presence of ETP and Regency in the Marcellus and Utica will also be complemented by the significant activity of Sunoco Logistics Partners, another Energy Transfer unit.
ETP said it intends to become a major player in the Marcellus and Utica Shales and believes pro forma this merger, it’s positioned to achieve that goal near-term.
2. Talisman Energy Shareholders Approve $13.3 Billion Acquisition by Spain’s Repsol
Calgary-based Talisman Energy said Wednesday, Feb 18, the holders of its common and preferred shares approved the proposed $13.3 billion acquisition of the company by Spain’s Repsol SA.
The deal remains subject to the granting of a final order by the Court of Queen’s Bench of Alberta province, the receipt of required regulatory approvals and the satisfaction or waiver of other customary closing conditions. The buy is anticipated to occur in the second quarter of 2015.
3. Enterprise Products Partners, Oiltanking Partners Complete $5.9 Billion Merger
Enterprise Products Partners and Oiltanking Partners said Friday, Feb 13, the $5.9 billion merger of Oiltanking into Enterprise has been completed.
Approximately 99.87% of the Oiltanking Partners common units voted were cast in favor of the merger, including 54.8 million units (roughly 66% of the outstanding Oiltanking Partners common units) owned by Enterprise Products Operating, a wholly-owned subsidiary of Enterprise.
Under the terms of the merger agreement, unitholders of Oiltanking Partners (other than Enterprise and its subsidiaries) are entitled to receive 1.3 Enterprise common units for each Oiltanking Partners common unit. Cash will be paid to Oiltanking Partners unitholders in lieu of any fractional units they otherwise would have been entitled to receive in accordance with the agreement.
4. Atlas Energy, Atlas Pipeline Unitholders OK Mergers with Targa Resources, Targa Resources Partners
Atlas Energy and its midstream oil and gas subsidiary, Atlas Pipeline Partners, announced Friday, Feb 20, the companies’ unitholders approved the pending merger transactions of Atlas Energy with a subsidiary of Targa Resources and Atlas Pipeline with a subsidiary of Targa Resources Partners.
Targa Resources and the partnership it controls is acquiring Atlas Energy and Atlas Pipeline for roughly $5.87 billion, including $1.8 billion in debt assumption.
The deal adds to Targa’s ability to process, ship, and export US natural gas. Targa, which owns a Gulf Coast plant to export natural gas liquids including propane and ethane, gains a foothold in the Eagle Ford Shale play, as well as the Mississippi Lime and Woodford plays.
5. Kinder Morgan Closes $3 Billion Hiland Acquisition
Houston-based Kinder Morgan on Friday, Feb 13, closed its previously announced $3 billion acquisition of billionaire Harold Hamm’s Hiland Partners, including the assumption of roughly $1 billion of debt.
Hiland’s assets, mostly fee based, consist of crude oil gathering and transportation pipelines and natural gas gathering and processing systems, primarily serving production from the Bakken Formation in North Dakota and Montana.
Hiland’s customers include Hamm’s Continental Resources, Oasis Petroleum, XTO Energy, Whiting Petroleum, and Hess.
(Top 3 JV Agreements since January 1)
1. Enterprise, Anadarko, DCP Midstream, MarkWest Form JV to Own Panola NGL Pipeline
Midstreamers Enterprise Products Partners, DCP Midstream Partners, and MarkWest Energy Partners, along with independent producer Anadarko Petroleum announced Tuesday, Feb 24, the quartet has formed a joint venture, with Enterprise splitting 45% of its ownership equally among the three partners in its Panola Pipeline Co.
Enterprise will continue to serve as Panola Pipeline operator and own the remaining 55% of the company.
The Panola Pipeline, which transports natural gas liquids, originates in Carthage, TX, and extends 181 miles to Mont Belvieu, TX.
Following a successful open season, Enterprise recently announced plans to install 60 miles of new pipeline, as well as pumps and other associated equipment as part of an expansion project designed to increase Panola capacity by 50,000 barrels per day (BPD). The incremental capacity is expected to be available in the first quarter of 2016.
2. Santa Fe Midstream Forms Partnership with PEF Energy Spectrum Capital
Plano, TX-based Santa Fe Midstream on Wednesday, Feb 11, announced it’s partnering with private equity firm Energy Spectrum Capital, which will initially invest up to $150 million in equity to pursue midstream opportunities across the US.
Santa Fe Midstream’s management team is led by the company’s four founding partners, including Greg Kegin, CEO; Amer Rathore, Founder; Clay Gordon, Vice President-Commercial; and Paul Dolan, Vice President-Engineering.
3. Plains All American Forms JV with Delek Logistics to Build $100 Million Caddo Pipeline
Midstreamer Plains All American Pipeline on Monday, March 23, announced the formation of Caddo Pipeline, a 50/50 joint venture with Delek Logistics Partners, to develop the $100 million Caddo Pipeline.
The 80-mile, 12-inch Caddo line will originate at the Plains Atlas Terminal in Longview, TX, and will have the capacity to move up to 80,000 barrels per day (BPD) of domestic crude oil to supply refineries in the Shreveport, LA, area and Delek Logistics’ pipeline system supplying Delek US Holdings’ El Dorado, AR, refinery.
(Top 5 Pipeline Projects since January 1)
1. Magellan Midstream, Plains All American to Build $800 Million-$850 Million Saddlehorn Pipeline
Tulsa, OK-based Magellan Midstream Partners may have been forced to extend the open season for its proposed Saddlehorn Pipeline six times, but on Friday, Feb 27, the company announced it had found a project partner: Plains All American Pipeline.
The two companies announced Friday, Feb 27, they have formed Saddlehorn Pipeline Co, a 50-50 limited liability company (LLC), to construct, own, and operate the $800 million-$850 million Saddlehorn.
The roughly 550-mile pipeline will transport various grades of crude oil from the Denver-Julesberg Basin, and potentially the broader Rocky Mountain area resource plays, to storage facilities in Cushing, OK, owned by the partners.
A pipeline extension to Carr, CO, in north-central Colorado, is also under consideration for connection to existing crude oil assets owned by Plains in that region.
2. Tallgrass, AGL Conclude Non-Binding Open Season for Proposed Prairie State Pipeline
The pipeline company, Tallgrass Development, and energy services firm, AGL Resources, said Thursday, Feb 12, they have successfully concluded the non-binding open season for their proposed Prairie State Pipeline.
The line is designed to move natural gas from supply connections in central Illinois to the Chicago Market Center and points in between.
The roughly 140-mile Prairie State Pipeline’s expected capacity is between 1.2 billion cubic feet per day (Bcf/d) to 1.5 Bcf/d, which will provide additional supply diversity and access to the Illinois and Midwest markets, while increasing reliability through new infrastructure construction.
The project will connect interstate pipelines in Douglas County, IL, to 4 Bcf/d of delivery points, including gas distribution systems, natural gas storage fields, and interstate pipeline companies in the Chicago market.
3. EQT Selling Marcellus Pipeline System to Midstream Unit for $1 Billion
Pittsburgh-based EQT said Tuesday, March 10, it plans to sell its Northern West Virginia Marcellus Gathering System, along with a preferred interest in an EQT subsidiary, for $1.05 billion, to the company’s pipeline unit, EQT Midstream Partners.
EQT Midstream said it plans to invest $370 million over the next few years in system expansion projects, including the installation of 100 miles of gathering pipeline and five compressor units. Currently, the system has 70 miles of natural gas gathering pipeline and nine compressor units with 25,000 horsepower of compression in the Marcellus Shale play, according to the company.
In addition, the system includes a 30-mile, high-pressure wet gas header pipeline that moves wet gas from the development areas to the MarkWest Mobley (WV) processing facility. EQT contracted for 10-years of firm capacity on the system.
EQT holds roughly 76,000 acres in northern West Virginia that surround the acquired gathering system, including approximately 59,000 undeveloped acres. At Dec 31, there were 199 Marcellus wells and 20 Upper Devonian wells being serviced by the gathering system, with an average gathered volume of about 410 million cubic feet per day (MMcf/d).
4. Marathon Pipe, Ohio River Pipe Extend Binding Open Season for Cornerstone, Utica Projects
Marathon Pipe Line and Ohio River Pipe Line, both subsidiaries of Marathon Petroleum’s MPLX, on Friday, March 13, announced an extension of the binding open season for the Cornerstone Pipeline and other associated Utica Shale build-out projects to April 13, from the original March 13, Shale Energy Business Briefing (SEBB) learns.
The proposed Cornerstone Pipeline will originate in Harrison County, Ohio, and deliver crude oil to Marathon Petroleum’s Canton, Ohio, refinery and to Ohio River Pipe Line’s East Sparta, Ohio, tank farm.
Cornerstone is being designed as a 16-inch pipeline system that will be routed to provide for connections to various Utica Shale condensate stabilization facilities, fractionator facilities, cryogenic facilities, along with potential future gathering and storage facilities.
The pipeline will be a batched system with the ability to transport condensate, natural gasoline, diluent, and butane. The estimated in-service date for the Cornerstone Pipeline is anticipated to be late 2016.
Marathon Pipe Line, as operator of Ohio River Pipe Line, is also moving forward with various Utica build-out projects to provide service to additional markets beyond Canton.
Cornerstone will deliver product into the East Sparta tank farm for transportation to additional markets via the Utica build-out projects, which include new construction and utilization of existing pipelines.
5. Medallion Pipeline Launches Binding Open Season for Crude Oil Pipeline
Medallion Pipeline, a subsidiary of Irving, TX-based midstreamer Medallion Midstream, on Wednesday, Feb 11, announced a binding open season for firm transportation capacity on the second major expansion of the company’s existing crude oil pipeline system.
The proposed project will further extend and expand the geographic scope of the existing 200-mile, 95,000 barrel per day (BPD) system.
The Santa Rita Lateral is a proposed 65,000 BPD, 10-inch and 8-inch crude oil line which, along with smaller diameter pipe, will extend roughly 55 miles southwest of Medallion’s existing Reagan Station in Reagan County, TX, to production areas in southwestern, central, and northeastern Reagan County.
A part of the overall project is a proposed 30,000 BPD minimum expansion of Medallion’s existing 10-inch Reagan Gathering Extension, which originates at the Reagan Station and extends roughly 55 miles north to the Garden City Station in Glasscock County, TX.
Shale Media Group (SMG) is the news, information, and education resource dedicated to the shale oil and gas industries by messaging across video, Internet, publications, events, and radio. For more, check out ShaleMediaGroup.com to access all platforms. In addition, join us on April 23rd for our next Elite Energy Event in at the Holiday Inn Express in Bentleyville, PA from 5-8pm. Rick Stouffer is the Senior Energy Editor at Shale Media Group. Contact him at RStouffer@ShaleMediaGroup.com. Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at Kristie@ShaleMediaGroup.com.