Trace Midstream Enters the Northern Delaware Basin With the Acquisition of LM Energy’s Natural Gas Gathering and Transportation Infrastructure
Trace Midstream Partners II, , backed by Quantum Capital Group, has acquired LM Energy Delaware's natural gas gathering and transportation assets in the Northern Delaware Basin. The system, located in Eddy and Lea counties, New Mexico, includes high- and low-pressure gas pipelines with associated infrastructure. Upon completion of ongoing projects, the system will comprise 170 miles of pipeline and 12 compressor stations, with a total design capacity of 650 million cubic feet per day. The acquisition marks Trace's entry into the Northern Delaware Basin, addressing substantial natural gas midstream constraints in the region. The system has over 80,000 dedicated acres and is supported by long-term, fixed-fee contracts from multiple producers.
Trace Midstream Partners II, sostenuta da Quantum Capital Group, ha acquisito gli asset di raccolta e trasporto di gas naturale di LM Energy Delaware nel Northern Delaware Basin. Il sistema, situato nei distretti di Eddy e Lea, in Nuovo Messico, include oleodotti a alta e bassa pressione con infrastrutture collegate. Una volta completati i progetti in corso, il sistema comprenderà 170 miglia di oleodotti e 12 stazioni di compressione, con una capacità di progettazione totale di 650 milioni di piedi cubi al giorno. L'acquisizione segna l'ingresso di Trace nel Northern Delaware Basin, affrontando notevoli vincoli nel settore del gas naturale nella regione. Il sistema dispone di oltre 80.000 acri dedicati ed è supportato da contratti a lungo termine a tariffa fissa da diversi produttori.
Trace Midstream Partners II, respaldada por Quantum Capital Group, ha adquirido los activos de recolección y transporte de gas natural de LM Energy Delaware en la Cuenca del Delaware del Norte. El sistema, ubicado en los condados de Eddy y Lea, Nuevo México, incluye oleoductos de gas de alta y baja presión con infraestructura asociada. Una vez completados los proyectos en curso, el sistema contará con 170 millas de tuberías y 12 estaciones de compresión, con una capacidad total de diseño de 650 millones de pies cúbicos por día. La adquisición marca la entrada de Trace en la Cuenca del Delaware del Norte, abordando importantes limitaciones de gas natural en la región. El sistema cuenta con más de 80,000 acres dedicados y está respaldado por contratos a largo plazo y tarifa fija de varios productores.
Quantum Capital Group의 지원을 받는 Trace Midstream Partners II가 LM Energy Delaware의 천연 가스 수집 및 운송 자산을 북부 델라웨어 분지에서 인수했습니다. 이 시스템은 뉴멕시코의 에디 및 레아 카운티에 위치하고 있으며, 고압 및 저압 가스 파이프라인과 관련 인프라를 포함합니다. 진행 중인 프로젝트가 완료되면, 이 시스템은 170마일의 파이프라인과 12개의 압축 스테이션으로 구성되며, 총 설계 용량은 하루 6억 5천만 입방피트입니다. 이번 인수는 Trace의 북부 델라웨어 분지 진입을 의미하며, 이 지역의 상당한 천연 가스 중간 제약을 해결합니다. 이 시스템은 8만 에이커 이상의 전용 면적을 보유하고 있으며, 여러 생산자로부터 장기 고정 요금 계약을 지원받고 있습니다.
Trace Midstream Partners II, soutenue par Quantum Capital Group, a acquis les actifs de collecte et de transport de gaz naturel de LM Energy Delaware dans le Northern Delaware Basin. Le système, situé dans les comtés d'Eddy et de Lea, au Nouveau-Mexique, comprend des pipelines à haute et basse pression avec l'infrastructure associée. Une fois les projets en cours terminés, le système comptera 170 miles de pipelines et 12 stations de compression, avec une capacité totale de conception de 650 millions de pieds cubes par jour. Cette acquisition marque l'entrée de Trace dans le Northern Delaware Basin, répondant à des contraintes importantes du secteur médian du gaz naturel dans la région. Le système dispose de plus de 80 000 acres dédiés et est soutenu par des contrats à long terme à frais fixes de plusieurs producteurs.
Trace Midstream Partners II, unterstützt von Quantum Capital Group, hat die Sammlungs- und Transportanlagen für Erdgas von LM Energy Delaware im Northern Delaware Basin erworben. Das System, das sich in den Landkreisen Eddy und Lea in New Mexico befindet, umfasst Hochdruck- und Niederdruckgasleitungen mit zugehöriger Infrastruktur. Nach Abschluss der laufenden Projekte wird das System 170 Meilen Pipeline und 12 Kompressorenstationen umfassen, mit einer Gesamtkapazität von 650 Millionen Kubikfuß pro Tag. Die Akquisition markiert Trace's Eintritt in das Northern Delaware Basin und adressiert erhebliche Erdgasmittelstandsengpässe in der Region. Das System verfügt über mehr als 80.000 Hektar und wird von langfristigen, festen Gebührenverträgen mehrerer Produzenten unterstützt.
- Acquisition of LM Energy's assets expands Trace Midstream's presence into the Northern Delaware Basin
- System will have a total design capacity of 650 million cubic feet per day upon completion
- Over 80,000 dedicated acres supported by long-term, fixed-fee contracts from multiple producers
- Addresses substantial natural gas midstream constraints in the Northern Delaware region
- Trace's proven track record in developing and operating large-scale midstream infrastructure projects
- Potential integration challenges and costs associated with acquiring and expanding the existing infrastructure
- Ongoing construction projects may face delays or cost overruns
- Dependence on multiple producers' long-term contracts for revenue stability
Insights
This acquisition marks a significant strategic move for Trace Midstream, expanding its footprint into the lucrative Northern Delaware Basin. The deal includes 170 miles of pipeline and 12 compressor stations with a total design capacity of 650 million cubic feet per day. This infrastructure is important in a region facing substantial natural gas midstream constraints.
The system's 80,000+ dedicated acres and long-term, fixed-fee contracts from multiple producers provide a stable revenue stream, reducing risk for Trace. This acquisition positions Trace to capitalize on the growing demand for midstream services in the area, potentially leading to increased market share and revenue growth.
Trace's previous successful exit of assets for
The Northern Delaware Basin is a hotspot for oil and gas production and this acquisition addresses a critical need for midstream infrastructure in the region. The system's capacity of 650 million cubic feet per day is substantial, indicating Trace's confidence in the basin's long-term production potential.
The high-pressure southern extension is particularly noteworthy, as it allows producers access to multiple processing outlets. This flexibility can alleviate local downstream constraints, potentially increasing the system's attractiveness to producers and its overall utilization rate.
The addition of Jack Harper, former Executive VP at ConocoPhillips, to Trace's board brings valuable upstream expertise. This could enhance Trace's ability to align its midstream strategy with producers' needs, potentially leading to more efficient operations and stronger customer relationships.
This acquisition reflects the ongoing consolidation trend in the midstream sector, as companies seek to build scale and efficiency. Trace's entry into the Northern Delaware Basin diversifies its portfolio geographically, potentially reducing risk and opening new growth opportunities.
The transaction's timing is strategic, coinciding with a period of increased natural gas demand and rising energy prices. As the U.S. continues to expand its LNG export capabilities, midstream assets like these could become increasingly valuable.
However, investors should note the potential risks associated with the energy transition. While natural gas is often seen as a bridge fuel, long-term demand could be affected by accelerating renewable energy adoption. The fixed-fee contracts provide some insulation against short-term price volatility, but the long-term outlook for natural gas infrastructure investments remains uncertain.
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High- and low-pressure midstream system located in
Eddy andLea counties inNew Mexico - System includes both existing and new-build infrastructure which, upon completion, will consist of 170 miles of pipelines and 12 compressor stations
- New high-pressure southern extension allows producers access to multiple processing outlets, alleviating local downstream constraints
Located in
“This acquisition marks a significant milestone for Trace as we enter the
“I am sincerely grateful to our customers, whose success was our tailwind over the last five years. It was very important to us to find a successor who would continue to focus on customer service and facilitate our customers’ growth,” said Elliot Gerson, LM Energy Chief Executive Officer. “Trace is an excellent team who we know will execute, and we are excited to watch them take this business to the next level.”
“We are pleased to expand our longstanding partnership with the Trace team,” said Blake Webster, Partner with Quantum. “We are confident the commercial, operational, and project development capabilities of the Trace management team, combined with our financial support, will allow Trace to build a scalable natural gas infrastructure platform offering competitive midstream solutions to
Sean O’Neill, Managing Partner of Old Ironsides Energy, added “LM Energy was established to build a leading midstream platform designed around the needs of its customers and partners. I am incredibly proud of the LM team for executing its goals and developing this critical midstream solution for its world-class producer base in an area of great activity and infrastructure need. Congratulations to Quantum and the Trace team, who are well-positioned to continue growing this great asset.”
In connection with the transaction, Quantum Senior Advisor Jack Harper has joined the Trace Board of Directors. Prior to joining Quantum, Harper served as Executive Vice President, Lower 48 at ConocoPhillips (NYSE: COP) and was a member of its Executive Committee. Earlier in his career, Harper served in various executive roles at Concho Resources, including as President from 2017 to 2021, until the company merged with ConocoPhillips.
Formed in 2017, Trace Midstream has a proven track record of success in the development and operations of large-scale midstream infrastructure projects. In 2022, Trace successfully exited its previous midstream business with the sale of its Haynesville assets to Williams (NYSE: WMB) and its Mid-Continent assets to Energy Transfer (NYSE: ET) for a combined transaction value of approximately
Vinson & Elkins LLP represented Trace in the LM Energy acquisition. Piper Sandler and Co. and Kirkland & Ellis LLP represented LM Energy.
About Trace
Founded in 2017 and based in
About LM Energy
LM Energy Holdings, LLC is a midstream oil and gas company based in
About Quantum Capital Group
Founded in 1998, Quantum Capital Group (“QCG”) is a leading provider of private equity, credit, and venture capital to the global energy and energy transition industry, having managed together with its affiliates more than
About Old Ironsides Energy
Old Ironsides Energy, LLC is an energy-focused private equity firm that partners with experienced management teams to pursue upstream and midstream opportunities in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240806418464/en/
Trace and LM Energy
Meredith Hargrove Howard
Redbird Communications Group
210-737-4478
meredith@redbirdpr.com
Quantum Capital Group
Kate Thompson / Erik Carlson / Madeline Jones
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Source: Trace Midstream Partners II, LLC
FAQ
What assets did Trace Midstream acquire from LM Energy in the Northern Delaware Basin?
How many miles of pipeline will the acquired system have upon completion?
What is the total design capacity of the acquired natural gas system?
How many dedicated acres does the acquired system have?
Who joined the Trace Board of Directors in connection with this transaction?
