Midstream Deals Surge Amid Infrastructure Demand
The energy sector is experiencing a surge in deal-making activity, particularly in the midstream sector. This includes pipelines and gathering systems that transport oil and gas from wellheads to refineries or LNG export hubs.
Andrew Dittmar, principal analyst at Enverus Intelligence Research, notes that 'midstream has been pretty busy' due to a high demand for infrastructure, particularly on the natural gas side. This is driven by increasing LNG demand on the Gulf Coast and data center demand.
The midstream sector received a potential boost with the Senate introduction of a bipartisan infrastructure permitting reform bill. Such legislation could expedite oil and gas pipelines and projects, as well as wind, solar, and electric transmission projects.
Lately, major deals have been announced in the midstream sector, including ONEOK's $4.42 billion acquisition of Brazos Midstream's Permian Basin assets. Williams acquired Momentum Midstream for $5.5 billion, while Western Midstream paid $1.6 billion for Brazos's Delaware Basin facilities.
Dittmar states that the market favors larger, integrated midstream systems, and smaller players are being rolled up by large companies with a considerable acquisition appetite.