Acquire, expand, and acquire again. That’s proven to be a successful strategy for a number of midstream companies providing crude oil and natural gas gathering services in the Permian Basin. In the past couple of years, the hydrocarbons-packed shale play in West Texas and southeastern New Mexico has been experiencing major gathering-system buildouts and Pac-Man-like acquisitions that aggregate small and midsize systems into regional behemoths. A case in point is EagleClaw Midstream, which has used the acquire-and-expand approach to great effect, most recently with the concurrent acquisition of Caprock Midstream Holdings and Pinnacle Midstream — two deals that, by the way, gave previously gas-focused EagleClaw a strong foothold in Permian crude gathering. Today, we discuss EagleClaw and its holdings in the Permian’s Delaware Basin.
We’ve now posted a dozen blogs in our series on Permian crude gathering systems, and a key takeaway so far is that these systems — now with thousands of miles of pipeline among them — have been developed by folks with a strong entrepreneurial streak. In many cases, these companies with extensive midstream experience (and, often, private-equity backing) started out small, building or acquiring gas and/or crude gathering systems of only a few miles each. Then they expanded them, and soon thereafter, they either bought out nearby systems or got bought out by someone else. Today’s is another story like that.
Before we turn to EagleClaw Midstream, we’ll take a quick look back at what we’ve discussed in this series so far. In Part 1, we looked at the Beta Crude Connector, a 100-mile-plus, 150-Mb/d system that a joint venture of Concho Resources and Frontier Energy Services is developing in the Midland Basin to serve Concho and other producers. Part 2 considered Reliance Gathering’s 185-Mb/d pipeline network — also in the Midland — which was originally developed to serve the affiliated producer Reliance Energy, but has since undergone a number of expansions to serve other producers too. In Part 3, we reviewed San Mateo Midstream’s crude gathering systems in the Delaware Basin — one in Eddy County, NM, and the other in Loving County, TX — and the company’s plans for two new systems on the New Mexico side of the state line. Part 4 focused on Medallion Midstream’s fast-growing, 1,000-mile crude oil gathering/header system in the Midland (which provides access to firm shippers serving 20 producers) and its 116-mile Delaware Express gathering/shuttle system in the southern Delaware. Part 5 looked at the 200-mile gathering system that refiner Delek US has been developing in the Midland to deliver locally produced crude to Delek’s Big Spring, TX, refinery and others. Part 6 considered the crude gathering system that a joint venture of WPX Energy and Howard Energy Partners (HEP) has been developing in the Delaware Basin’s Stateline area, while Part 7 examined Oryx Midstream Services’ 860-mile Oryx Trans-Permian gathering and regional transport system. In Part 8, we discussed 3 Bear Energy’s Hat Mesa Oil Gathering System, which over the past couple of years has grown to become a network of 200 miles of gathering lines and small trunk lines serving nine shippers in the northern Delaware Basin. Part 9 reviewed the Permian gathering system owned by Andeavor Logistics, a master limited partnership (MLP) — currently owned by Marathon Petroleum Corp. (MPC, with a ~64% share) and investors (~36%), and to be acquired by MPLX later this month. In Part 10, we discussed EnLink Midstream’s Greater Chickadee gathering system in the Midland and its Avenger system in the Delaware. And last time, in Part 11, we turned to NuStar Energy, which entered the Permian two-plus years ago with its acquisition of Navigator Energy Services’ 520-mile crude gathering system in the Midland, and has since added some 350 miles of new pipe and tripled the volume of crude flowing through the system. [One more thing: in our Happy Together blog last month, we looked at Salt Creek Midstream’s ongoing buildout of extensive gathering assets in the Permian — not just for crude, but for natural gas, NGLs and produced water.]