Page 6 - NorthAmOil Week 15 2022

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

Delek to buy 3Bear in midstream expansion

NEW MEXICO DELEK Logistics is expanding its midstream analytics firm noted that 3Bear’s system has 18
presence in the Delaware Basin in New Mexico third-party customers. Currently Delek receives
– part of the prolific Permian Basin – with the just 6% of its pipeline revenue from third par-
acquisition of 3Bear Energy for $624.7mn. The ties and 94% from its sponsor, refiner Delek US
acquisition is forecast to result in an investment Holdings. Upon completion, Delek’s share will
multiple of about 6.25 times 2023 earnings before decline to 65%, while third-party revenue will
interest, taxes, depreciation and amortisation grow to 35%.
(EBITDA), Delek said in an April 11 statement. The company said the deal would deliver
Under the terms of the deal, DKL Delaware immediate accretion to distributable cash flow,
Gathering, a newly formed subsidiary of Delek, while also providing environmental, social and
will acquire 100% of the equity interests of 3Bear governance (ESG) optionality through car-
Delaware Holding, which is an indirect subsid- bon capture opportunities and greenhouse gas
iary of 3Bear. This includes the acquisition of its (GHG) reduction projects that have already been
oil and gas gathering, processing and transpor- started.
tation businesses as well as water disposal and “We are witnessing significant growth in our
recycling operations. existing Permian gathering system, where aver-
The 3Bear asset base includes about 350,000 age daily volumes have increased from 83,000
dedicated acres (1,416 square km) and long-term bpd in the fourth quarter of 2021 to approxi-
fixed fee contracts, as well as roughly 485 miles mately 135,000 bpd exiting the first quarter of
(781 km) of pipelines, 88mn cubic feet (2.5mn 2022. This level of growth and demand from
cubic metres) per day of cryogenic gas-process- producers provides us with confidence to move
ing capacity, 120,000 barrels of crude storage forward with this transaction,” stated Delek’s
capacity and 200,000 barrels per day (bpd) of chairman, president and CEO, Uzi Yemin.
water disposal capacity. The deal is expected to be finalised by mid-
The acquisition will allow Delek to increase its 2022. Delek will fund the transaction mainly
third-party revenue, while also further diversi- through existing credit facilities and debt
fying its customer and product mix. Energy data financing.™

INVESTMENT

Canadian banks more than

double oil sands financing

CANADA CANADA’S leading banks more than doubled the Trans Mountain pipeline expansion comes
their financing of oil sands operations in 2021 online in 2023. Nonetheless, current geopoliti-
to $16.8bn. This comes despite the fact that the cal trends stand to increase overseas appetite for
banks have signed up to the UN’s net-zero bank- Canadian crude despite concerns over the emis-
ing alliance on greenhouse gas (GHG) emis- sions intensity of oil sands projects.
sions, the Financial Times reported this week. The five Canadian banks are among those to
According to data from the Rainforest Action have committed last year to achieving net-zero
Network, an activist group that tracks fossil fuel emissions across their operations and portfolios
financing, Canadian lenders increased their by 2050 when they joined the Net-Zero Banking
financing to the top 30 oil sands producers Alliance. Environmental groups have criticised
and six oil sands pipeline companies by almost their oil sands investments as being at odds with
$9bn in 2021. The group of five Canadian banks this goal – though it is worth noting that the
includes the Royal Bank of Canada (RBC), leading oil sands producers are also pursuing
Toronto-Dominion Bank, the Canadian Impe- net-zero emissions by 2050.
rial Bank of Commerce (CIBC), Scotiabank and RBC, CIBC and Scotiabank fought off
Bank of Montreal. shareholder proposals calling for stricter poli-
The findings are being reported as oil prices cies on climate change mitigations at the start
continue rising amid Moscow’s war in Ukraine. of April. However, pressure from environmen-
Indeed, Canada is keen to boost oil exports to tal groups and certain shareholders over the
countries trying to reduce their dependence on funding of oil sands projects looks set to con-
Russian oil, though it will be largely dependent tinue, even as more countries pursue purchases
on an export route via the US Gulf Coast until of non-Russian oil.™

P6 www. NEWSBASE .com Week 15 14•April•2022