The massive energy-industry dislocations caused by the COVID-19 pandemic forced every upstream, midstream, and downstream player to consider what it all meant for them and what they could and should do to weather the storm. A common theme emerged: management needed to delay or even jettison their plans for growth and instead focus on efficiency by cutting costs, working to maximize the revenue from every molecule, and seeking out opportunities to streamline and optimize their operations. A prime example of this push for efficiency came last week with the announcement by Plains All American and Oryx Midstream that each will contribute assets to a new, Plains-operated crude oil pipeline joint venture in the heart of the Permian’s Delaware Basin. Today, we review the plan and its rationale.
In the course of our lives, we’ve likely all had situations that invoked the phrase that begins, “the best laid plans …” And in early 2020, nearly all of us were simultaneously gob-smacked by that old saw as the pandemic stymied so much in our personal and professional lives as well as the global economy. The shock waves roiled the U.S. midstream sector, which in 2019 was wrapping up a massive infrastructure build-out to transport surging hydrocarbon production. The plan was to harvest cash flow from rising output on the newly built systems in the 2020s to paydown the sizable debt accumulated during the last half-decade and to reward shareholders. Then oil prices and production crashed, raising significant concerns about a possible infrastructure overbuild, elevated leverage, the creditworthiness of producers, and the stability of distributions. Like their upstream counterparts, midstream management teams quickly shifted from growth to efficiency, and considered how best to position themselves for what’s next.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
Major energy-market disruptions often spur a spate of corporate bankruptcies and acquisitions, and that certainly happened with COVID — especially in the upstream sector, a topic we discussed in our blog Good Vibrations. Among midstreamers, two often-rumored candidates for marriage were privately backed Permian provider Oryx Midstream, which has a significant footprint, primarily in the Delaware Basin, and large, publicly held Plains All American, which has an extensive gathering and transportation system in the Permian to feed its interstate pipes and storage system. On July 13, they did announce a combination — not an acquisition of Oryx by Plains, but an agreement by both companies to contribute their assets to a Plains-operated, debt-free joint venture. Today, we look at the motives behind this pairing, explain the structure of the deal, analyze what it does and doesn’t do for the parties involved, and explore the implications for the Permian midstream market.
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About the song
"We Belong Together" was written by Mariah Carey, Jermaine Dupri, Manuel Seal, Johnta Austin, Kenneth Edmonds, Darnell Bristol, Bobby Womack, Patrick Moten, and Sandra Sully. The song appears as the second number on Mariah Carey's 10th studio album, The Emancipation of Mimi. Released as the second single from the album in March 2005, it went to #1 on the Billboard Hot 100 Singles, Dance Club Songs, Mainstream Top 40, and Hot R&B/Hip-Hop Songs charts. It has been certified 4X Platinum by the Recording Industry Association of America (RIAA), and won Grammy Awards for Best R&B Song and Best Female R&B Performance in 2006. The song was named Song of the Year at both the ASCAP Awards and the BMI Awards. Personnel on the record were: Mariah Carey (vocals, production), Jermaine Dupri (production), and Manuel Seal (production).
The Emancipation of Mimi was recorded during 2004 at Right Track and SouthSide in Atlanta, Honey West Studios and Datkidcluescrib Studios in New York City, The Record Plant and Marsh and Jan in Los Angeles, CRC Studios in Chicago, and Capri Studios in Capri. It was produced by Mariah Carey, Jermaine Dupri, Manuel Seal, Bryan-Michael Cox, Swizzs Beatz, LRoc, James Wright, The Neptunes, Kanye West, James Poyser, and Rodney Jerkins. Released in April 2005, the album went to #1 on both the Top R&B/Hip-Hop Albums chart and the Billboard Top 200 Albums chart. It has been certified 6X Platinum by the RIAA. Seven singles were released from the LP.
Mariah Carey is an American singer, songwriter, record producer, and actress. She is the first and only artist in history to have their first five singles reach #1 on the Billboard Hot 100 Singles chart. She has released 15 studio albums, eight compilation albums, two EPs, two soundtrack albums, and 72 singles. Carey has sold over 200 million records worldwide, and has won 10 American Music Awards, 10 Billboard Music Awards, 31 BMI Awards, five Grammy Awards, 19 World Music Awards, and one Ivor Novello Award. She is a member of the Songwriters Hall of Fame, and has a star on the Hollywood Walk of Fame. She continues to record and tour.
