( This story was updated because an earlier version included an inaccuracy .)
A Houston-based natural gas company agreed to a $450 million acquisition of Tall Oak Midstream lll, which owns assets in southeastern Oklahoma, and will close by the end of 2024, the company announced in a news release Oct. 4.
Summit Midstream Partners will acquire more than 400 miles of pipeline energy infrastructure and two natural gas processing plants as part of the acquisition from Edmond-based oil and gas company Tall Oak Midstream lll in the fourth quarter of the year after entering an agreement Oct. 1.
"The Arkona Basin has a very unique position both geographically and (production-wise)," said Ryan Lewellyn, president and CEO of Tall Oak Midstream. "Tall Oak's assets have high-processing capacity to keep up with Summit's growth and bring the product to market fairly quickly."
Acquiring Tall Oak III will allow Summit Midstream Partners to draw a straight line of production to the Gulf Coast from Oklahoma, making it a valuable investment for the company. With high gas-producing energy infrastructures in place and lower costs to drill wells, Lewellyn said he expects there to be significant production growth.
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"This transaction represents a unique opportunity to partner with the Summit organization to support the long-term growth and value creation initiatives already underway at the Company," Jason Downie, Co-Founder and Managing Partner at Tailwater Capital, which owns Tall Oak Midstream III, said in the news release. "The Tall Oak assets are complementary to Summit's existing gas portfolio, and we believe the Company is well positioned to drive even more value for shareholders over the coming years."
Tailwater Capital, a Dallas-based energy and environmental infrastructure private equity firm, purchased land and infrastructure from Tall Oak Midstream in January 2021, which included Midstream ll and Midstream lll. Financial costs were not confirmed at that time.
"Our company that they're acquiring will still operate the way they operate today with the same assets and employees," Lewellyn said.
Summit Midstream Co.
Acquiring firm Summit Midstream Partners reported poor performance in their last second quarterly financial reports ending in June with a net loss of $23.8 million, a news release published Aug. 8 showed.
Adjusted earnings totaled $43.1 million, falling far behind competitors like EnLink and NGL Energy Partners, who reported hundreds of millions dollars earned before interest, taxes, and depreciation.
The company also reported more than 100 drilled wells were left incomplete while only 34 were connected.
However, Lewellyn said the transaction should allow Summit Midstream Partners to reduce their debt and improve their overall value.
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"This should allow them to capture more opportunities moving forward as they improve their portfolio," he said. "Together, it should be better."
Earlier this year, Summit Midstream Partners announced it reorganized as a C-corporation, which allows the company to operate separately from its owners, with expectations to deliver significant tax benefits to shareholders and enhance trading liquidity, appealing to a broader investor market. Before this, the company operated as a master limited partnership, which combines the tax benefits of the parent company, Summit Midstream Corp.
"Summit has made considerable progress towards executing on its long-term strategy over the last four months," Heath Deneke, president, CEO and chairman, said in the news release. "On July 26, 2024, Summit closed on a refinance of the capital structure, including a new $500 million ABL facility and a new $575 million Senior Secured Notes issue, both maturing in 2029."
This article originally appeared on Oklahoman: New ownership to acquire Oklahoma natural gas assets
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