BlackRock to acquire NGL’s 50 percent stake in Glass Mountain Pipeline

NGL Energy Partners LP has agreed to sell its 50 percent stake in Glass Mountain Pipeline, which delivers crude oil, to BlackRock Inc for a total consideration of $300 million. The deal is expected to close before December 31, 2017. Navigator Energy Services has teamed up with BlackRock on the transaction and will manage Glass Mountain Pipeline after the closing. Deutsche Bank Securities Inc is serving as financial adviser to NGL while Morgan Stanley is doing likewise to BlackRock. Glass Mountain Pipeline is a joint venture owned equally between NGL and SemGroup Corporation. PRESS RELEASE TULSA, Okla.–(BUSINESS WIRE)–NGL Energy Partners LP (NYSE: NGL) (the “Partnership” or “NGL”) announced today that it has entered into a definitive agreement with an affiliate of BlackRock Inc.’s Global Energy and Power Infrastructure Fund (“GEPIF”) in partnership with Navigator Energy Services to sell its 50% interest in Glass Mountain Pipeline, LLC (“Glass
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Partners Group invests in Raven

Partners Group said Dec. 22 that it has invested in Raven, along with Quanta Capital Solutions Inc and institutional investors. Financial terms weren’t announced but Partners Group is providing 50 percent equity, while Quanta and other investors are putting in the remainder. Raven is a midstream processing facility to be located in Baytown, Texas. PRESS RELEASE Partners Group, the global private markets investment manager, has invested in the construction of Raven, a midstream processing facility to be located in Baytown, Texas, on behalf of its clients. Partners Group has invested 50% of the equity in the construction project as the lead independent investor, with the remainder provided by Quanta Capital Solutions, Inc. and institutional investors. Site preparation activities have already begun, with the completion of construction and start of commercial operations currently scheduled for 2018.   The Raven facility is essential energy infrastructure within the North American natural gas
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Oaktree Capital invests in NGL Energy Partners

Oaktree Capital Management LP has increased its investment in NGL Energy Partners LP to $240 million from $200 million. The transaction, private placement, includes a vehicle funded by Partners Group. RBC Capital Markets, UBS Investment Bank and Deutsche Bank Securities acted as placement agents and financial advisors to NGL and Andrews Kurth LLP acted as legal counsel to NGL. Barclays acted as financial advisor to Oaktree and Vinson & Elkins acted as legal counsel to Oaktree. PRESS RELEASE June 27, 2016 06:30 AM Eastern Daylight Time
TULSA, Okla.–(BUSINESS WIRE)–NGL Energy Partners LP (NYSE: NGL) (“the Partnership” or “NGL”) today announced that on June 24, 2016, it completed its private placement of 10.75% Class A Convertible Preferred Units with funds managed by Oaktree Capital Management L.P. (“Oaktree”), including a vehicle funded by Partners Group, a global private markets investment manager, on behalf of its clients.
On April
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NGL Energy to sell preferred units to Oaktree

NGL Energy Partners LP, the Tulsa, Oklahoma, energy firm, formed a partnership with funds managed by Oaktree Capital Management, the Los Angeles investment manager. Under the terms, NGL will issue $200 million of 10.75% Class A convertible preferred units to Oaktree. Oaktree will acquire 16.6 million preferred units for $12.03 each as well as 3.6 million warrants, which are subject to certain vesting and exercise terms. NGL expects to use the proceeds to repay borrowings outstanding on its revolving credit facility. It said it may reborrow those funds to finance capital expenditures and other matters. RBC Capital Markets, UBS Investment Bank and Deutsche Bank Securities were placement agents and financial advisers to NGL. Andrews Kurth LLP was legal counsel to NGL. Oaktree took financial advice from Barclays and legal advice from Vinson & Elkins. Press Release NGL Energy Partners LP Announces Investment From Funds
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ArcLight to buy TransMontaigne for $350 mln

NGL Energy Partners LP has agreed to sell TransMontaigne GP LLC to ArcLight Capital Partners for $350 million cash. The deal is expected to close by the end of this month. UBS Investment Bank is providing financial advice to NGL on the transaction while BofA Merrill Lynch is doing likewise for ArcLight. Denver-based TLPGP is the general partner of TransMontaigne Partners LP, a terminaling and transportation company. PRESS RELEASE TULSA, Okla.–(BUSINESS WIRE)–NGL Energy Partners LP (NYSE:NGL) today announced that it has entered into an agreement with an affiliate of ArcLight Capital Partners (“ArcLight”) to sell TransMontaigne GP LLC (“TLPGP”) for $350 million in cash. TLPGP is the general partner of TransMontaigne Partners L.P. (“TLP”) and holds the 2% general partner (“GP”) interest and incentive distribution rights (“IDRs”) of TLP. NGL expects to close the transaction by the end of January 2016 and will use the cash proceeds to
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NGL Energy Partners to acquire PE-backed Magnum for $280 mln

NGL Energy Partners has agreed to buy Haddington Ventures-backed Magnum NGLs LLC, which owns and operates a natural gas liquids storage facility in Utah. The estimated price of the acquisition is $280 million. RBC Capital Markets LLC is providing financial advice to NGL on the transaction while Simmons & Company International is acting as financial advisor to Magnum Development and Haddington Ventures. PRESS RELEASE February 09, 2015 07:00 AM Eastern Standard Time TULSA, Okla.–(BUSINESS WIRE)–NGL Energy Partners LP (NYSE:NGL) announced today it has entered into a definitive purchase agreement with Magnum Development LLC, a portfolio company of Haddington Ventures LLC, and other Haddington-sponsored investment entities to acquire Magnum NGLs, LLC (“Magnum”). Magnum owns and operates a natural gas liquids storage facility with multiple existing salt caverns and a potential capacity of greater than 10 million barrels. The facility is strategically located southwest of Salt Lake City, Utah with rail and truck access to Western U.S. markets. This acquisition will enhance NGL’s existing asset footprint to better support Western U.S customers, while increasing the Partnership’s fee-based revenue stream from current and future contracts on the facility. The definitive agreement contemplates the purchase of Magnum NGLs, LLC on a debt-free basis for a purchase price of $280 million plus working capital adjustments at closing. The transaction is fully-financed and will be paid through a combination of $80 million cash and $200 million in NGL Common Units issued to seller and subject to certain lock-up provisions. The transaction is expected to be DCF neutral in the first year and significantly accretive to NGL’s DCF / LP unit thereafter, with an EBITDA multiple expected to be 7.1x in FY2017. The consummation of the transaction is subject to customary closing conditions and is expected to close in the first quarter of 2015.
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Tech Talk – A Dickensian Situation Revisited

Back in March 2005, I posted my first offering to the new site that Kyle and I had agreed to call “The Oil Drum.” Now, some eight years later, this will be my final Tech Talk to appear on the site, and it is perhaps appropriate to go back to that first post and make a couple of comments on how it panned out. It read as follows:

When I was young I was fascinated by a small china statuette that my grandparents had of Mr Micawber. He is a character, and a sympathetic one, in Charles Dickens's book "David Copperfield", in the course of which he goes into debt. His explanation of his financial condition can be compared to the coming world experience as we now live through Hubbert's Peak. You might, in today's phraseology, call this the Money quote:

'My other piece of advice, Copperfield,' said Mr. Micawber, 'you know. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and - and in short you are for ever floored. As I am!'.

In this case, consider that our expenses, i.e. the world use of oil, went up last year to around 83 million barrels every day (mbd). (A barrel is 42 gallons). Now as long as our supplies (income) can match this outlay then we are in happiness. This was, in relative terms, where we ended last year.

However this year our expenses are going to go up. It is a little difficult to predict exactly how much but current predictions are for this to be around 2 mbd. Let us equate this to the old English sixpence (which was back then worth about a dime. Twenty pounds being worth about $100).

If we follow the Micawber example - if our income, world oil supply is equal to or greater than our expenses, then we can stay happy. But here is the rub:

When world oil production is just about as high as it can be (non-OPEC countries are now producing just about as fast as they can) and OPEC spare capacity is down to around an additional 1.3 mbd, then our income this year will likely not be much above 85 mbd, if it gets there. (In a later post I will explain why it probably won't).

So we are at the point where, within the next few months, income and expenditures will be in balance (Micawber's twenty pounds). Except that the industry being a big one there are always things going wrong. In the latter part of last year for example we had:

• the hurricanes in the Gulf that closed down about 0.5 mbd of production for several months

• oil production in Iraq, which should be around 3 mbd, but because of pipeline bombings etc dropped below 2 mbd

• there were frequent threatened strikes on the oil platforms in Nigeria

• and Russian production declined more drastically than had been anticipated

Some of these are still with us, some have been resolved. And other problems, such as the complete employment of the world tanker fleet, have yet to make an impact. But any one can drop supply.

Yet while our supply (income) is about at a peak (twenty pounds), our expenses (demand) are still going up by this sixpence a year. So that some time this year expenses will have gone from twenty pounds to twenty pounds and sixpence. A number of economists had been predicting that there would be a reduction in the rise in demand to keep us below that figure, but it is already clear that they do not adequately recognize the considerable needs in China and India that drive this increase (and they only have to read the papers to see it).

The big question is when will we reach the point that we cross over the balance point? Right now with the Saudi Arabian government saying that they can increase production by up to 1.5 mbd, one might think we could get through to just about the end of this year. Unfortunately, some of us are a little cynical about that number, and I'll explain why in another post.

One final gloomy thought - production in other countries (such as the UK) is falling, and the countries that used that supply must find another source. And if we are now at the peak of production, then our income cannot increase above twenty pounds and and may indeed fall back below twenty pounds, while our expenses will continue to increase to twenty pounds and sixpence. It is not the absolute size of the market that will now drive, but the relatively small fluctuations that take us out of balance.

The result is misery, and we are forever floored.

Looking around it is reasonable to note that we don’t see the level of misery that, from reading that post, one might have expected to happen. We have gone through a major recession, yet demand has, overall, increased and production has risen to meet that demand. Yet looking at how this has been met is instructive.

Figure 1. Changes in liquid supply sources from 2000 to 2040 as anticipated by Exxon Mobil, with lines added to show 2005 and 2013. (The Outlook for Energy: A view to 2040)

I have added lines to show the situation in 2005, when the piece was written, and for this year. It is worth noting that using the definitions that Exxon Mobil give, conventional crude and condensate production has indeed declined since I wrote those words. And if one includes Oil Sand and Deepwater, then production has remained fairly stable at the levels back in 2005 and will (according to EM) likely stay so into the projected future.

The three sources that I had underestimated in terms of production growth were in Biofuels (which is now at around 2 mbd), the growth in Natural Gas Liquids (which for OPEC alone is now projected to reach 6 mbd by next year up from around 3 mbd in 2005, and the growth in tight oil. This latter development, particularly with the use of long horizontal wells that are artificially fractured and injected with a slick-water suspension of a proppant, has been very successful in developing resources which were otherwise at best marginally economic. However, the relative contribution that this is expected to make in overall supply is not that great, and I expect that, because of the high decline rates in individual wells, that this will only contribute on the margin of the problem.

When I began writing at The Oil Drum I was concerned that there was a lack of understanding of the impact that reservoir decline rates would have on long-term supply. As larger fields are depleted, so the world turns to smaller fields and these drain more rapidly, so that more and more are needed. (The Red Queen situation that Rune Likvern and others have so aptly described.

Deepwater resources have proven to be more difficult to bring on line than originally estimated and thus, for example, in the case of Brazil OPEC now anticipates that the production from the Lula field (originally Tupi) will only offset declines from wells in the rest of the country, with perhaps only a gain of 10 kbd overall from the addition of the 100 kbd expected from wells now coming on line. And thus, while this is a resource getting more attention (there are expected to be 60 Deepwater rigs in the Gulf of Mexico by 2015) the slow pace of development may not fill the increasing gap left as conventional oil production continues to fall, as Exxon Mobil suggest.

In retrospect, therefore, I was wrong in anticipating a relatively immediate impact from an anticipated imbalance between oil supply and demand. But, within the time frame, the price of oil has risen and the future looks no happier than it did back in 2005. The threats have changed – we seem to be in a quiescent period for major Gulf Hurricanes, for e.g. – but the threat of growing and spreading turmoil in MENA makes it less certain that we can count on much increase in production from Iraq, among others. Russian production rebounded more than I expected, but whether that can be sustained is still in doubt. The hope at the beginning was that the threat would spur increased looks into alternate sources of liquid fuel. But while there was a flurry of activity into biofuels, (and I myself saw algal work that held a great potential, though funding has now disappeared for that effort) there is less of a feeling of urgency in the air. Wind and solar sources have reached a point where they are no longer novel, and there is not much else in the near term that holds much potential.

Oil production takes money and resources, but most critically, it takes time. Without that investment, particularly in viable alternatives, the oil “income” (supply) will likely soon start to fall short of the oil “expenses” (demand) and as Mr. Micawber so aptly said “we are forever floored.”

When these posts began, technical blogs such as TOD posed the potential for mass education in a way that had not been seen before. Readers have been kind in regard to the quality of the posts themselves. But the contributions from those interested, and those in industry who took the time to comment and debate, ended up making this much stronger than the initial words in any post. Expertise came in many forms and informed me as well as the rest of the readers in what turned into a wonderful opportunity for many people to understand some of the complexities of supplying the world with hydrocarbon energy. I was thus able to help bring a little understanding of the energy business to vastly more folk than I had in the entirety of my academic career.

I will always be grateful to Kyle for giving me the opportunity to make this contribution, and to his efforts which led to its great success. I can illustrate that with some numbers – as an academic I took persuasion to allow my class size to rise much above 20, and at Bit Tooth Energy I see about 300 readers on a typical good day – Kyle had us above that number in a very few months, and at its peak TOD was handling 200 times that number. The site would not have continued too long as it grew in size without the indefatigable SuperG, who kept the site up under wide ranging pressures, and took care of the technical side of the house. Leanan brought in and kept us readers, and provided many of the topics that we needed to create the posts on site, and Gail kept me going with encouragement and support in more difficult times. Nate orchestrated the closing posts and that was not easy.

The folks Kyle brought in to build an international forum were formidable and highly productive, and so to them, and to all of the gentle readership I say again a heartfelt “Thank You!”

(Heading Out – Dave Summers in the mundane world – will continue to write Tech Talks at Bit Tooth Energy, though he writes on a wider range of topics at that site).