ADI investigated the structural shift in midstream commercial transactions, specifically the migration from keep-whole to fee-based contractual frameworks. The project involved a deep dive into SEC filings and senior executive interviews to benchmark average remaining contract lives and minimum volume commitments (MVCs) across 18 major operators. Findings surfaced the inherent commodity price risks remaining in percentage-of-proceeds models and the looming threat of contract expiries in overbuilt basins.
The client
Diversified industrial technology company
The situation
A technology provider required insight into midstream commercial structures to align its performance-based service offerings with operator risk.
ADI’s contributions
Revenue risk benchmarking
Identified the majority type of contracts and exposure to NGL price spreads.
Play-specific MVC analysis
Determined basin-level variations in minimum volume commitments, highlighting the stronger bargaining power of Permian and Appalachia producers.
Partnership model evaluation
Classified evolving JVs between midstream operators, private equity, and upstream producers to understand capital allocation for new projects.
Performance optimization mapping
Correlated corporate structure simplifications (MLP to C-Corp) with increased management focus on asset efficiency and external technical services.
Key outcomes
- Enabled the client to tailor its “Connected Plant” software value proposition to operators seeking to optimize assets under fee-based contracts.
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