Good morning loyal Term Sheet readers, this is energy editor, Jordan Blum, filling in for Allie. The Middle East remains in a state of chaotic conflict, and fuel and oil prices are still sky high.
All these geopolitical variables put a partial freeze on energy dealmaking—potential sellers ask for more money on inflated valuations, while the buyers think longer term and conservatively. It’s hard to meet in the middle on a price tag.
The main exception though is in the so-called midstream sector, essentially the pipelines and gathering and processing systems that move the oil and gas from the wellheads to the refineries, power plants, or liquefied natural gas (LNG) export hubs.
“Midstream has been pretty busy,” said Andrew Dittmar, principal analyst at Enverus Intelligence Research. “There’s just such a demand for infrastructure right now, particularly on the [natural] gas side, as we sort of reshape the U.S. gas market with LNG demand coming online on the Gulf Coast and data center demand increasing.”
That upswing in pipeline plays received a potential boost Wednesday with the Senate introduction of a bipartisan, infrastructure permitting reform bill that could gain legislative momentum before the end of the year. Such a law would benefit all-of-the-above energy to benefit the AI boom. That would mean expediting oil and gas pipelines and projects, but also the wind, solar, and electric transmission projects that have faced opposition within the Trump administration.
And that could further speed up dealmaking. Recently, Tulsa-based ONEOK bought West Texas’s Brazos Midstream’s Permian Basin assets for $4.42 billion. This comes shortly after pipeline giant Williams acquired Momentum Midstream and its Texas and Louisiana pipeline gathering and processing facilities for $5.5 billion. And Western Midstream paid $1.6 billion for Brazos’s Delaware Basin facilities in the western lobe of the Permian.
These deals essentially all involve private equity firms selling high to public companies looking to build scale. “I think the market does favor larger, integrated midstream systems, and we’re going to continue to see some of the smaller players, particularly on the private side, rolled up amid a considerable acquisition appetite from the large companies,” Dittmar said. On the oil side, pipeline giant Enbridge just bought Tallgrass Energy’s crude assets for $2.55 billion, and Plains All American Pipeline paid $585 million for Silver Creek Midstream in Wyoming.
As for the oil and gas production side of the business—the upstream sector—there hasn’t been a massive deal since early February when Devon Energy paid $26.5 billion for Coterra Energy. That notably came weeks before the onset of the Iran war.
The biggest upstream deal since is Magnolia Oil & Gas paying $4 billion for Warburg Pincus’ and Kayne Anderson WildFire Energy in South Texas’ Eagle Ford Shale. None of those companies are exactly household names.
Now, Devon is trying to sell its own Eagle Ford assets to help cut down on the debt it assumed from the Coterra deal. BP was closely eyeing those assets but reportedly backed off. Dittmar said it’s notable BP is even looking to expand in U.S. shale.
“If you have a global major looking at U.S. onshore assets, it continues to speak to how competitive and attractive the opportunities are here, even as we talk about inventory scarcity,” he said.
Major U.S. companies are looking to explore internationally again—as the U.S. shale business matures—while more international players are willing to pay a premium for U.S. assets to ensure long-term supplies, especially for LNG. “It’s interesting that we talk about international capital coming to the U.S. at the same time that U.S. capital is looking to go abroad,” Dittmar added.
Jordan Blum
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@jdblum23
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VENTURE CAPITAL
– GMI Cloud, a Mountain View, Calif.-based cloud-computing provider offering GPU infrastructure for AI workloads, raised $223 million in Series B funding. ARCHIV led the round and was joined by NVIDIA.
– CScale, a Palo Alto, Calif.-based developer of optical interconnect technology for AI data centers, raised $145 million in Series C funding. Atreides Management, Valor Equity Partners, and Premji Invest led the round.
– Hertha Metals, a Conroe, Texas-based producer of high-purity iron and steel for rare-earth magnets, raised $133.7 million in Series A funding. Khosla Ventures and Doerr Capital led the round and were joined by Gates Frontier, Toyota Ventures, and Siemens Financial Services.
– Flow Engineering, a San Francisco-based software platform that helps hardware teams manage requirements, design changes, and testing, raised $50 million in Series B funding. Antonio Gracias and Gavin Baker led the round and were joined by Human Capital, Evantic, SV Angel, Odyssey, EQ, and others.
– Miter, a San Francisco-based AI-powered workforce-management platform for construction companies, raised $40 million in Series B funding. Battery Ventures led the round and was joined by Bessemer Venture Partners and Coatue.
– Relay, a Raleigh, N.C.-based communications and workflow platform for frontline workers, raised $36 million in funding. International Paper led the round.
– Inbolt, a Paris, France-based developer of AI-powered 3D-vision software for industrial robots, raised $12.5 million in funding. Shift4Good led the round and was joined by Bridges Climate Transition Partners and others.
– Rig Security, a Tel Aviv, Israel-based cybersecurity platform that monitors and controls AI agents’ access to corporate systems, raised $12 million in seed funding. Ten Eleven Ventures and Brightmind Partners led the round and were joined by CrowdStrike Falcon Fund.
– Kanu AI, a Seattle, Wash.-based AI platform that turns employee workflows into custom business software, raised $11.7 million in funding. Trilogy Equity Partners led the round and was joined by a16z speedrun, BMW i Ventures, and Accel.
– Hop Aero, an Orange, Calif.-based developer of autonomous hypersonic cargo rockets for military logistics, raised $11 million in funding. Initialized Capital led the round and was joined by Y Combinator, Lunar Ventures, System.One, and Outsized Ventures.
– Osavul, a Luxembourg-based cyber-threat intelligence company, raised €8.5 million ($10 million) in Series A funding. 33N Ventures led the round and was joined by Balnord, G+D Ventures, and existing investor 42CAP.
– Beltic, a San Francisco-based agent verification infrastructure company, raised $8.8 across seed and pre-seed rounds. Norwest led the seed round and was joined by Restive Ventures, Oxford Seed Fund, and Collide Capital.
– Destro AI, a Brooklyn, N.Y.-based AI software provider for warehouse robots, raised $8 million in seed funding. Base10 Partners and Bonfire Ventures led the round and were joined by CoFound Partners.
– Quotr, a San Francisco-based AI-powered construction estimating and procurement platform, raised $4 million in seed funding. Llama Ventures led the round and was joined by angel investors.
PRIVATE EQUITY
– Nuveen acquired Schroders, a London, U.K.-based asset manager, for £9.9 billion ($13.3 billion).
– Aspirity Partners agreed to acquire a majority stake in Onomondo, a Copenhagen, Denmark-based provider of cellular connectivity for internet-connected devices, in a combined investment worth more than €100 million ($113 million).
– Sovos, backed by Hg, acquired Flowie, a Paris, France-based AI-powered platform for finance workflows, and Blue dot, a Tel Aviv, Israel-based platform that helps companies identify and recover VAT overpayments. Financial terms were not disclosed.
– TRG, a portfolio company of Gemspring Capital, acquired Fentron, a Westerville, Ohio-based cybersecurity consulting firm. Financial terms were not disclosed.
EXITS
– Capitolis agreed to acquire eSecLending, a Boston, Mass.-based securities lending business, from Parthenon Capital in a transaction valued at $200 million.
FUNDS + FUNDS OF FUNDS
– Stride Consumer Partners, a Boston, Mass.-based growth equity firm, raised $550 million for its second fund focused on consumer products and services companies.
PEOPLE
– Azarias Capital Management, a Berwyn, Pa.-based private investment firm, promoted Jocelyn Dalkin to Partner.
