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MPLX Acquires Utica Shale Assets From Summit Midstream Partners
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MPLX LP (MPLX - Free Report) has agreed to purchase the Utica shale assets from Summit Midstream Partners for $625 million in cash.
The strategic acquisition includes nearly 36% of Summit Midstream Utica's stake in Ohio Gathering (“OGC”), around 38% in Ohio Condensate (“OCC”) and Summit Midstream Partners’ wholly-owned assets in the Utica Shale.
Located in southeastern Ohio, particularly across Belmont and Monroe counties, the Summit Utica natural gas gathering system is a key component of this deal. It plays a crucial role in supporting producers targeting the dry-gas reserves of the Utica and Point Pleasant shale formations. The Summit Utica system specializes in the gathering and delivery of natural gas, primarily under long-term, fee-based gathering agreements that include acreage dedications.
The transaction also encompasses OGC and OCC, collectively known as Ohio Gathering, which features a natural gas gathering system and a condensate stabilization plant in the Utica Shale. This system is crucial for a range of producers operating across the condensate, liquids-rich and dry-gas windows of the Utica Shale in counties like Belmont, Guernsey, Monroe, Noble and Harrison.
Highlighting the significance of this acquisition, Summit Midstream Partners noted that the sale culminates a strategic review process initiated by its board in October of 2023. This sale is not just a business transaction but a strategic pivot, enabling Summit Midstream Partners to focus more on crude oil-oriented basins, with a transition in its portfolio to nearly 55% in these sectors.
From a financial perspective, Summit Midstream Partners anticipates the sale to substantially reduce its debt, boost liquidity and dramatically improve its credit profile. The expected financial uplift includes adding a $400-million credit facility and more than $325 million of unrestricted cash, with a revised EBITDA guidance for 2024 being set at $220 million, up from $185 million.
MPLX, which has been a joint venture partner and operator of the OGC and OCC assets since Summit's entry into the Utica Shale in 2014, stands to further solidify its presence in the region with this acquisition. The deal underscores MPLX's commitment to enhancing its portfolio in the Utica Shale, an area that has proven to be of significant interest to the energy sector, particularly for natural gas production.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2024 and 2025.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 earnings per share (EPS) is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 and 2025 EPS is pegged at $26.32 and $27.94, respectively. The company has a Zacks Style Score of B for Value, Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Sunoco LP (SUN - Free Report) is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate stable cash flow.
The Zacks Consensus Estimate for SUN’s 2024 and 2025 EPS is pegged at $4.96 and $4.40, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
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MPLX Acquires Utica Shale Assets From Summit Midstream Partners
MPLX LP (MPLX - Free Report) has agreed to purchase the Utica shale assets from Summit Midstream Partners for $625 million in cash.
The strategic acquisition includes nearly 36% of Summit Midstream Utica's stake in Ohio Gathering (“OGC”), around 38% in Ohio Condensate (“OCC”) and Summit Midstream Partners’ wholly-owned assets in the Utica Shale.
Located in southeastern Ohio, particularly across Belmont and Monroe counties, the Summit Utica natural gas gathering system is a key component of this deal. It plays a crucial role in supporting producers targeting the dry-gas reserves of the Utica and Point Pleasant shale formations. The Summit Utica system specializes in the gathering and delivery of natural gas, primarily under long-term, fee-based gathering agreements that include acreage dedications.
The transaction also encompasses OGC and OCC, collectively known as Ohio Gathering, which features a natural gas gathering system and a condensate stabilization plant in the Utica Shale. This system is crucial for a range of producers operating across the condensate, liquids-rich and dry-gas windows of the Utica Shale in counties like Belmont, Guernsey, Monroe, Noble and Harrison.
Highlighting the significance of this acquisition, Summit Midstream Partners noted that the sale culminates a strategic review process initiated by its board in October of 2023. This sale is not just a business transaction but a strategic pivot, enabling Summit Midstream Partners to focus more on crude oil-oriented basins, with a transition in its portfolio to nearly 55% in these sectors.
From a financial perspective, Summit Midstream Partners anticipates the sale to substantially reduce its debt, boost liquidity and dramatically improve its credit profile. The expected financial uplift includes adding a $400-million credit facility and more than $325 million of unrestricted cash, with a revised EBITDA guidance for 2024 being set at $220 million, up from $185 million.
MPLX, which has been a joint venture partner and operator of the OGC and OCC assets since Summit's entry into the Utica Shale in 2014, stands to further solidify its presence in the region with this acquisition. The deal underscores MPLX's commitment to enhancing its portfolio in the Utica Shale, an area that has proven to be of significant interest to the energy sector, particularly for natural gas production.
Zacks Ranks & Other Stocks to Consider
MPLX currently carries a Zacks Rank #2 (Buy).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. The three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2024 and 2025.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 earnings per share (EPS) is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 and 2025 EPS is pegged at $26.32 and $27.94, respectively. The company has a Zacks Style Score of B for Value, Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Sunoco LP (SUN - Free Report) is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate stable cash flow.
The Zacks Consensus Estimate for SUN’s 2024 and 2025 EPS is pegged at $4.96 and $4.40, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.