It’s not just the upstream side of the Permian that’s in the midst of a major consolidation. Over the past couple of years, a slew of significant M&A deals have been made in the midstream space, most recently Energy Transfer’s $1.45 billion plan to acquire Lotus Midstream. Backed by private equity, Lotus has assembled an impressive array of crude-oil gathering, storage and long-haul pipeline assets in West Texas and southeastern New Mexico — including the Centurion pipeline system that links the Permian with the crude oil hub in Cushing, OK. In today's RBN blog, we discuss the deal and what it means for Energy Transfer, whose role in the U.S.’s most prolific crude-oil-focused production area is poised to expand by leaps and bounds.
In the late 2010s, when Permian production was increasing rapidly, midstream companies active in the play were in development overdrive, quickly adding new gathering systems, takeaway pipelines and other infrastructure in a bid to simply keep pace. But when production declined with the onset of the COVID pandemic, many midstreamers were forced to compete to keep their pipelines full, and many projects being planned were delayed or canceled, as we detailed in Finish What Ya Started. In the couple of years since then, there’s been a flurry of Permian midstream M&A activity, a phenomenon we’ve followed in individual blogs and a four-part series that we continue today. Here are a few examples of our coverage in 2021 and 2022:
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