Energy Firms Scramble to Invest in Pipelines and Producing Assets Amid Ongoing Oil Price Volatility
The recent surge in oil prices has led to a significant shift in the market, with investors increasingly focused on delivery risk rather than reserves. As a result, capital is no longer flowing into drilling new wells, but instead into existing pipelines and producing assets.
According to Goldman Sachs, Brent crude could reach $120 in 2027 if Gulf output remains four million barrels per day below pre-war levels. Meanwhile, the U.S. Energy Information Administration expects Brent to average $87 a barrel across 2026.
In response to these market conditions, several companies have announced significant transactions. Enbridge Inc. (NYSE: ENB) has agreed to acquire Tallgrass Energy's crude oil business for approximately $2.55 billion, expanding its North American crude oil franchise. The portfolio includes the Pony Express Pipeline and a 51% interest in the Powder River Gateway system.
The Williams Companies, Inc. (NYSE: WMB) completed its acquisition of Momentum Midstream for $5.5 billion, adding a gathering platform with approximately 6 billion cubic feet per day of capacity in the Haynesville shale. Diversified Energy Company plc (NYSE: DEC) announced definitive agreements to acquire Birch Permian Holdings, Inc. and certain affiliated companies from affiliates of Elliott Investment Management L.P. for approximately $1.8 billion.
Tamarack Valley Energy Ltd. (TSX: TVE) and Headwater Exploration Inc. (TSX: HWX) have agreed to merge in an all-stock transaction valued at $10 billion, creating a pure-play Clearwater producer.