Canes Midstream completes acquisition of Cogent Midstream

It’s a full-circle moment for Scott Brown, founder and chief executive officer of Canes Midstream.

The company has closed on the acquisition of Cogent Midstream LLC and its midstream assets in the southern Midland Basin.

Brown noted that he has been involved with those assets since they were developed by what was then Lucid Energy.

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“I’ve been with these assets since their inception and growing them,” he told the Reporter-Telegram in a telephone interview. “They have good, steady flow, not a hockey stick volume increase.”

Cogent’s system, which spans 10 counties, primarily in Irion and Reagan counties, include 520 million cubic feet per day of processing capacity, more than 800 miles of pipeline, 42 compressor stations, a crude oil gathering system and substantial acreage dedication from a variety of Midland Basin-focused producers.

“There are decades of drilling locations behind these assets and others,” Brown said. The number of drilling locations depends on commodity prices, he added, but today’s price levels have certainly opened new opportunities for the industry. Still, he said the company will evaluate every expansion opportunity before taking action. “We won’t build it and hope they come,” he said.

There is significant activity not only on the acreage already dedicated to Canes’ system but on acreage near and around the system and Brown said the company is actively competing for that business.

“There is 25 years of locations just on the acreage dedicated to our system, even at lower prices,” Brown said. 

Operators continue to be cautious about increasing activity, which is good for midstream companies, he said. He explained that midstream companies are not being compelled to build additional capacity or new pipelines to accommodate a short-lived increase in production. “It helps to have slower, steady growth,” he said.

There are expectations the rise in Permian Basin production will bring about the need for new pipelines and pipeline expansions by the end of next year and into 2024, he said, citing the announcement of the Matterhorn Express pipeline and plans to expand capacity on the Whistler pipeline. Brown said the company has been having discussions about connecting to the Whistler pipeline. Its system is already connected to Kinder Morgan’s Rancho pipeline, and a couple of years ago a 25-mile pipeline was built to deliver residue gas to Kinder Morgan’s Gulf Coast Express and Permian Highway pipelines.

Of focusing on the Midland Basin, Brown said, “The Delaware Basin may be the most prolific, I would say, of all the producing basins in the US, but the Midland Basin is a close second.”

Brown said his team sees a need for incremental increases in gathering and processing capacity in the Midland Basin and will grow Canes’ assets “as our customers need us to grow them.”

Because the assets are relatively new, having been built in 2013-2014, he said they utilize the latest technology. Plans are to update the assets and continue to lower their carbon footprint.

Canes is backed by the private equity firms EIV Capital and Denham Capital.

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