POSTED BY Jason Bauer | POSTED IN Blog, CTRM

Asset Acquisitions: Opportunities for Midstream Oil and Gas Companies

Large-scale mergers and acquisitions dominated the market in 2016, when midstream oil and gas companies sought to reduce operating costs and capture emerging market opportunities. More recently, the trend seems to be going in the opposite direction, and the focus is on much smaller greenfield infrastructure builds and new asset acquisitions.

The Permian, Anadarko, and Utica basins are the current premier plays in the not-so-new-normal world of $3 natural gas and $45 oil. In these basins, the ramp-up in gas production presents opportunities for investment in several areas; primarily, the need for processing and takeaway capacity for the gas and hydrocarbon streams to get these products to market. Both asset acquisition and greenfield infrastructure builds provide several advantages for companies:

1. Vertical integration with upstream and downstream markets

  • Lower operational and transactional costs
  • React more quickly to changes in the market
  • Mitigate risks (value often cycles between upstream, midstream, and downstream markets)


2. Diversification of commodities

  • Gain exposure to different markets and geographical areas
  • Reduce the risk of losses if one market is underperforming

3. Potential growth in profits through access to new markets

However, with these opportunities and advantages also come challenges. Integrating new businesses or assets with existing businesses and processes requires several critical elements:

Technology Integration

Produce Data

  • Ensure that new assets can produce data for systems to interface, either using meters or some other measurement system. This is the foundation for all future data analysis and is critical to understanding assets and confirming that they operate efficiently and at optimal levels. It also reduces the need for human hands to be the input for key data that would be used for analysis.

Integrate Data

  • Build interfaces that enable technologies and systems across your network to communicate and share information. This decreases the possibility of errors through manual data entry, conserves resources while enhancing efficiency, and creates a strong data foundation on which to build analytic software.

Data Analytics

After a strong data foundation is created, the next step is to deploy software that creates data visualization and optimization models. With this analysis, data becomes actionable and you can:

  • Make better informed decisions
  • Ensure assets operate efficiently
  • Optimize assets according to shifting market conditions

Business Processes

As midstream companies build and acquire additional assets, a critical consideration is whether a business has the processes and systems in place to enable growth. Streamlining business processes and improving their capacity for scale and repeatability requires:

  • Integrating new business processes with existing processes
  • Understanding resource gaps and filling them accordingly
  • Incorporating technology to automate processes and give your organization the information it needs

 

The outcome of integrating technology, analyzing data, and improving business processes will determine whether a new acquisition or infrastructure build benefits your company and increases profitability.

With a strong focus on midstream, capSpire can help companies plan for growth. Our consultants evaluate the current state of your organization by gathering your unique business requirements and needs. Then our consultants use this information to identify optimal, best-in-class technologies needed for measurement, hydrocarbon asset management, and downstream commodity marketing that will fit your organization’s future state. Next, capSpire can deploy these technologies and establish best practices to help adapt workflows and processes to company growth. We create a model that can be rolled out to future assets acquired by your organization, which provides the repeatable adaptability that a midstream oil and gas company needs to thrive in the hydrocarbon-rich environment we are experiencing today. For more information, contact us at info@capspire.com.

About capSpire

capSpire, a global consulting and solutions company with a focus on energy and commodities, provides the unique combination of industry knowledge and business expertise required to deliver impactful business strategies and solutions. Trusted by some of the world’s leading companies, capSpire’s team of industry experts and senior advisors enables clients to effectively streamline business processes and attain maximum value from their supporting IT infrastructure. For more information, please visit www.capspire.com.