A Summit Midstream Corp. (SMC) subsidiary had acquired the Denver-Julesburg (D-J) Basin’s Moonrise Midstream LLC from Fundare Resources Co. in a cash-and-stock deal valued at $90 million.
The deal expands Summit's gathering and processing (G&P) footprint in the D-J Basin, adding about 80 miles of natural gas gathering pipeline, 25 miles of crude oil gathering pipeline and 65 MMcf/d of additional processing capacity—expandable to ~100 MMcf/d with modest capital investment, Summit said in a March 10 press release.
Summit Midstream Holdings LLC will purchase Moonrise’s operations in Weld County, Colorado, for $70 million in cash and $20 million in SMC equity.
Summit said the deal continues its corporate consolidation strategy, building scale through strategic bolt-on acquisitions in key basins where it can drive additional value through commercial and operational synergies. The deal represents a 5.0x 2024 adjusted EBITDA multiple; the $70 million cash is leverage neutral and represents a 3.9x 2024 adjusted EBITDA multiple.
Summit is already operationally connected to the Moonrise system through multiple existing interconnections, Heath Deneke, Summit’s president, CEO and chairman said in a press release.
“We expect to capture significant operational and commercial synergies with the combined systems,” Deneke said. “The expanded pipeline footprint will alleviate localized pipeline constraints on the northern end of our system and enable Summit to optimize capital expenditures as development shifts further north.”
Following Summit’s December 2022 acquisitions of the Outrigger and Sterling systems, the D-J has seen significant volume growth behind its integrated G&P system and certain areas of the system are nearing full utilization.
“As a result of the limited available system capacity, some of our customers have deferred development activity behind our system in 2025,” Deneke said. “There are currently three rigs running behind our dedicated acreage position in the DJ and two of our key customers have sizeable multi-year development plans beginning in 2026.”
Moonrise’s additional 65 MMcf/d of processing capacity is expected to be available to help alleviate Summit’s integrated D-J system constraints and enable its customers to continue to increase activity and grow volumes in 2026 and beyond, the CEO said.
Additional and expandable processing capacity at Moonrise will further improve plant operating margins, reduce reliance on third-party offloads, increase the company’s overall system reliability and flow assurance and optimize NGL recoveries, he said.
“We remain extremely excited about the long-term opportunities in the DJ Basin as our customers continue to execute their development programs, with more than 800 dedicated undeveloped locations and sizable acreage positions in the area that Summit is very well-positioned to serve with the combined systems," Deneke said.
Under the terms of the transaction, Summit will acquire 100% of the membership interest in Moonrise Midstream with cash consideration financed through Summit's credit facility as well as approximately 500,000 shares of SMC Class A common stock.
Moonrise assets
Moonrise’s assets include the natural gas processing plant, approximately 80 miles of low-pressure natural gas gathering lines, 22,300 hp of compression and crude oil gathering pipelines.
Moonrise’s gathering agreements are long-term, primarily fee-based contracts with approximately 50% of dedicated volumes under life-of-lease agreements and the other 50% have a weighted average remaining term of over 13 years.
Volume throughput on the Moonrise system is underpinned by acreage dedications, with an estimated 60,000 leased acres from its key customers, including Fundare Resources, Verdad, Bison IV and a large integrated energy company. The dedicated acreage spans highly productive, oil prone areas within the DJ Basin, with producers primarily targeting the Niobrara and Codell formations.
Moonrise delivers residue gas to Trailblazer/Rockies Express Pipeline, natural gas liquids to Overland Pass Pipeline and crude oil to Pony Express Pipeline.
Troutman Pepper Locke LLP served as legal adviser to Summit. Evercore served as financial adviser and Baker Botts LLP served as legal adviser to Fundare.