Mora Energy Expands Midland Basin Footprint With Two Acquisitions and New Capital
Mora Energy has completed two significant acquisitions in the Midland Basin, expanding its natural gas midstream operations across a broader portion of West Texas while strengthening its financial position to support future growth.
The company announced the closing of its acquisitions of Tejon Treating and Carbon Solutions LLC, known as Tejon, and West Texas Midstream Gas Services LLC, commonly referred to as the Quail system. At the same time, Mora secured substantially increased equity commitments from funds managed by NGP Energy Capital Management LLC and closed a new revolving credit facility led by BOK Financial and Huntington Bank.
The combination of new infrastructure and additional liquidity provides Mora with a larger operating platform and greater financial flexibility as it looks to pursue organic development projects and additional acquisitions in the Permian Basin.
Mora Adds Tejon Midstream Assets
Mora recently completed the acquisition of Tejon from funds managed by Bayswater Exploration & Production LLC. Tejon operates a natural gas gathering, compression and sour gas treating business in the northeast Midland Basin.
The acquisition gives Mora additional midstream infrastructure in an active area of the Permian Basin, one of the most important oil and natural gas producing regions in the United States. Tejon’s assets are designed to support the gathering and processing needs of producers operating in the region, providing Mora with an established infrastructure base from which it can pursue additional opportunities.
Natural gas gathering systems play an important role in the upstream oil and gas value chain by collecting production from individual wells and transporting it through pipeline networks to processing, treating or downstream markets. Compression facilities help maintain the pressure needed to move gas through these systems, while treating infrastructure can prepare gas streams for transportation and further processing.
Tejon’s sour gas treating capabilities also add a specialized component to Mora’s expanded asset portfolio.
Quail Acquisition Expands Western Midland Presence
Mora has also closed its acquisition of West Texas Midstream Gas Services LLC, the entity operating the Quail system, from Williams Companies Inc.
Quail consists of natural gas gathering and compression infrastructure located in the northwest Midland Basin. The system complements Mora’s newly acquired Tejon assets and significantly broadens the company’s presence across the basin.
With the two transactions completed, Mora now has an operating footprint comprising approximately 200 miles of natural gas gathering pipelines, four compressor stations, an amine treating facility and an acid gas injection well.
The combined infrastructure provides Mora with a diversified midstream platform spanning multiple counties and gives the company opportunities to connect additional production to its existing systems.
Mora’s operations now extend across Andrews, Martin, Howard, Borden, Scurry and Mitchell counties in Texas. The geographic reach gives the company access to multiple areas of Midland Basin activity and positions it to potentially expand alongside producers as drilling and development programs progress.
Platform for Organic and Acquisition Growth
Mora said it intends to use the newly acquired infrastructure as a foundation for continued organic expansion as well as future acquisitions.
The Permian Basin remains a major center of U.S. oil and gas production, creating ongoing demand for gathering, compression, treating and other midstream services. As producers increase or optimize development activities, midstream operators can pursue infrastructure expansions to accommodate additional volumes.
For Mora, the two acquisitions establish a platform from which it can potentially add new pipelines, compression capacity and treating infrastructure while expanding relationships with producers operating throughout its footprint.
The company also expects acquisitions to play an important role in its strategy. Existing midstream infrastructure can provide opportunities to build scale through bolt-on transactions, particularly when new assets can be integrated into an established operating network.
NGP Increases Equity Commitment
Alongside the acquisitions, funds managed by NGP Energy Capital Management significantly increased their equity commitments to Mora.
The additional equity capital gives the company greater financial resources to pursue its expansion strategy and provides support for investments associated with growing its midstream platform.
Equity backing is particularly important for a company pursuing acquisitions and infrastructure development because such opportunities can require substantial upfront investment. Increased sponsor commitments can provide a stronger capital base while allowing management to evaluate additional opportunities as they become available.
Mora’s enhanced capitalization also coincides with the closing of its new revolving credit facility led by BOK Financial and Huntington Bank.
The new credit facility, combined with the increased equity commitments from NGP, provides Mora with substantial liquidity. The company said this capital availability will support its efforts to pursue additional expansion opportunities in the Permian Basin.
Having access to both equity capital and revolving debt capacity can give a midstream operator greater flexibility when evaluating acquisitions, infrastructure projects and other investments.
Management Sees Significant Growth Potential
Elliot Gerson, Chief Executive Officer of Mora Energy, described the transactions as an important milestone for the company and its return to owning and operating midstream infrastructure in the Permian Basin.
Gerson said Mora intends to move quickly to pursue both organic development and acquisition opportunities. He also emphasized that the increased support from NGP, together with the new credit facility, gives the company the financial flexibility needed to expand its footprint.
The company’s leadership team brings experience in developing and operating midstream businesses in the Permian, which Mora views as an important advantage as it establishes its new platform.
Drew Bredthauer, President of Mora, said the company and its management team have spent much of their careers building midstream businesses in the region. He described the acquired infrastructure as a high-quality foundation supported by relationships with several premier oil and gas operators.
According to Bredthauer, the combination of infrastructure, operating experience and financial resources positions Mora to build a large-scale midstream business in the Permian Basin.
Strengthening Its Position in the Permian
The completion of the Tejon and Quail transactions marks a significant step in Mora Energy’s strategy to establish a larger midstream presence in West Texas.
The approximately 200 miles of gathering pipelines, four compressor stations, amine treating facility and acid gas injection well provide the company with a substantial initial asset base. The infrastructure also creates potential opportunities for incremental development as production volumes and customer requirements evolve.
With operations now spanning six Texas counties, Mora has established a broader geographic platform than it previously held. The company’s expanded capital resources could further accelerate the development of that platform through new projects and strategic acquisitions.
The combination of acquired infrastructure, increased equity commitments and new debt capacity therefore positions Mora to pursue a growth-oriented strategy in one of the country’s most active energy-producing regions.
Moelis & Company LLC served as financial advisor to Mora on the Quail transaction, while Kirkland & Ellis LLP provided legal counsel to the company.
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