With other U.S. oil and gas producers likely at risk of bankruptcy, Midstream companies are preparing for a wave of hazards trying to get out of collection, processing and pipeline contracts. The terms of these contracts, as well as the way the courts treat them, will determine the protection of midstream operators. But if an upstream client who is seeking bankruptcy is now challenging the real estate interests of a collection or processing contract, pipeline industry veterans are like Williams Cos. Inc President and CEO Alan Armstrong confident that a court would side with the midstream operator. He said in December 2019 – when a wave of potential failures by the automaker was already imminent – that he had never seen one of Williams` bundled contracts rejected by a client who went bankrupt. The most recent decision likely to come into play in the mid-up-up-contract fights is the December 2019 decision of a bankrupt Texas judge that pure stack operator Alta Mesa Resources Inc. and subsidiary Alta Mesa Holdings LP cannot use The Chapter 11 procedure to refuse oil and gas collection contracts with Kinger Midstreams LLC. The agreement between the Insolvent Driller and Carnero Processing LLC and Catarina Midstream LLC reduces costs and allows certain minimum volume commitments or MVCs. The De Sanchez Midstreams pipeline by intra-state Seco natural gas will also “conclude two new transportation agreements with [the] debtors,” but details have not been disclosed. “We are very pleased to have reached this agreement with XTO and look forward to including their charlson production in our collection portfolio,” said Troy Andrews, Paradigm`s Managing Director. “This agreement is part of our long-term strategy to provide Bakken oil and gas producers with cost-effective collection and delivery options.” Some legal alliances or contracts may “run with the country,” meaning that rights or restrictions apply not only to current landowners, but also to future landowners. “The collection company is not interested in the minerals themselves…
but it gives them this alliance – as a relief – that binds to the mineral interest, so that if oil and gas are produced, it is engaged… Through this collection system ,” said Melko in an interview. For example, midstream collection and processing agreements are often written as real estate interests, unlike execution contracts. A real estate interest related to the property cannot be refused in the event of bankruptcy, unlike an enforcement contract that obliges the debtor and another party to meet their conditions at a later date. On the other hand, firm transportation agreements for long-haul pipelines are more like enforcement contracts – which focus on the tasks the parties are supposed to perform – and “almost never with an alliance that works with the country,” Melko said. However, while enforcement contracts may be refused in bankruptcy courts, intergovernmental pipeline managers, such as Rockies Express Pipeline LLC and Stagecoach Pipeline and Storage Co. LLC, are asking the Federal Energy Regulatory Commission to exercise its natural gas law authority to review these tests by producing customers. Running with the country: If the agreements link to the property “The debtor uses the threat to refuse the contract and criticize whether the Confederation is valid as a price renegotiation,” Melko said. If this collection system was built when oil prices were much higher, the land economy can be quite hard. With a well-capitalized position, Paradigm continues to aggressively pursue growth prospects.
Cost-effective transportation, wide choice in the market and custom-made collection, storage and flexible transport solutions have positioned the company to be the future of the region. However, the courts reached a different conclusion when Badlands Energy LLC, headquartered in Utah, filed Chapter 11 in 2017.