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Just the Two of Us, Part 4 - U.S. Midstream Consolidation Continues on Many Fronts

Amid all the energy-market excitement of the past few months — the soaring demand for LNG, the march to $100/bbl crude oil, sky-high propane prices, and the like — there also has been a continuing consolidation and repositioning in the U.S. midstream sector. While midstream M&A activity has been all over the map, literally and figuratively, it also has revealed discernible themes, chief among them a push to increase the scale and efficiency of gathering systems. Also evident is the desire to expand into growing production areas and, for some energy giants, to either buy out stakes held by joint venture partners or absorb midstream master limited partnerships they had spun off a few years ago. In today’s RBN blog, we discuss a variety of recent midstream deals and what they tell us about 2022’s energy market.

As we said in Part 1 of this blog series, there has been a flurry of large-scale M&A activity in the midstream sector since the start of the pandemic — and the collapse and subsequent recovery of oil and gas markets — back in 2020. Like their upstream counterparts, midstreamers have been scaling back capital spending and instead focusing on improving the efficiency of existing operations by teaming up with others that held adjoining, complementary assets — or that gave the acquiring firm a strong foothold in a highly desirable production area. We also discussed Crestwood Equity Partners’ acquisition of Oasis Midstream, a combination that gives Crestwood more scale and sway in both the Bakken and the Permian’s Delaware Basin.

In Part 2, we looked at the merger of Altus Midstream and BCP Raptor Holdco LP (the corporate parent of EagleClaw Midstream) into a new entity called Kinetik Holdings. That deal, which closed February 22, formed the largest integrated midstreamer in the Delaware Basin, with an extensive network of crude, gas, and produced water gathering systems, about 2 Bcf/d of gas processing capacity, and ownership interests in four recently completed takeaway pipelines. Most recently, in Part 3, we turned our attention to Enterprise Products Partners’ acquisition of Navitas Midstream, which over the past seven years built out a massive and flexible hub-and-spoke network of gas gathering pipelines and processing plants in what may be the absolute core of the Permian’s Midland Basin.

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