Howard Energy Partners: Company Profile

Background

Overview

Howard Energy Partners (HEP) is a diversified, growth-oriented energy infrastructure company headquartered in San Antonio, Texas. Established in 2011, HEP specializes in providing innovative midstream solutions, owning and operating a comprehensive portfolio of assets across Texas, New Mexico, Oklahoma, Pennsylvania, and Mexico. The company's mission is to deliver abundant, clean, low-cost, and reliable energy that powers communities and businesses, contributing to human progress and addressing energy needs.

Mission and Vision

HEP's mission is to deliver positive energy by integrating its belief in capitalism, operational excellence, leadership development, and energy advocacy. The company envisions being a growing part of the industry that powers every other industry, serving as the foundation to fuel everyday life.

Industry Significance

As one of the nation's largest private energy infrastructure companies, HEP plays a pivotal role in the midstream sector, facilitating the transportation, processing, and storage of energy resources. Its strategic asset base and commitment to operational excellence position it as a significant player in meeting the world's increasing demand for energy.

Key Strategic Focus

Core Objectives

HEP focuses on creating long-term value through organic growth and strategic acquisitions, aiming to expand its capabilities and scope of service to meet customer needs. The company emphasizes safety, operational excellence, and community engagement in its operations.

Areas of Specialization

HEP specializes in natural gas and crude oil pipelines, natural gas processing plants, refined products storage terminals, deep-water dock and rail facilities, fractionation facilities, hydrogen production facilities, and renewable diesel logistics facilities. This diverse portfolio enables HEP to offer comprehensive midstream solutions across various energy sectors.

Key Technologies Utilized

The company employs advanced technologies in pipeline construction, processing facilities, and storage solutions to ensure efficient and safe operations. Notably, HEP has expanded its capabilities to support renewable diesel production, reflecting its commitment to sustainable energy solutions.

Primary Markets and Conditions Targeted

HEP primarily operates in the United States and Mexico, focusing on regions with active oil and gas production, such as the Eagle Ford shale in Texas and the Permian Basin in West Texas. The company targets markets with growing energy demands, including those requiring renewable energy solutions.

Financials and Funding

Funding History

HEP has secured significant funding to support its growth initiatives. In 2021, the company closed on a $400 million senior unsecured notes offering due 2027, with proceeds used to finance the build-out of a renewable diesel logistics facility in Port Arthur, Texas.

Recent Funding Rounds

In 2024, HEP launched a $500 million offering of senior notes due 2032, intended to fund the purchase of outstanding 6.75% senior notes due 2027, repay a portion of outstanding borrowings under its revolving credit facility, and cover related expenses.

Notable Investors

Alberta Investment Management Corporation (AIMCo) is a significant investor in HEP, holding an 87% ownership stake as of November 2022. AIMCo's investment supports HEP's long-term growth and value creation strategies.

Utilization of Capital

The capital raised through these funding rounds has been utilized for strategic growth projects, including the expansion of pipeline infrastructure, processing facilities, and storage solutions, as well as supporting renewable energy initiatives.

Pipeline Development

Key Pipeline Candidates

HEP has developed and expanded several key pipeline projects:

Spears Project: A 62-mile, 36-inch pipeline in South Texas, capable of transporting up to 1 Bcf/d of natural gas to Gulf Coast LNG facilities.

Dos Caminos Joint Venture: A partnership with NextEra Energy to develop additional natural gas transportation opportunities in the Eagle Ford shale region of South Texas.

Stages of Development

These projects are in various stages of development, with some completed and operational, while others are in the planning or construction phases. For instance, the Spears Project was completed in early November 2023.

Target Conditions

The pipelines are designed to transport natural gas and support renewable diesel production, addressing the growing energy demands in their respective regions.

Anticipated Milestones

HEP continues to monitor and achieve key milestones in its pipeline development projects, focusing on safety, operational excellence, and meeting customer needs. Specific timelines for future milestones are not publicly disclosed.

Technological Platform and Innovation

Proprietary Technologies

HEP employs proprietary technologies in pipeline construction, processing facilities, and storage solutions to ensure efficient and safe operations. The company has expanded its capabilities to support renewable diesel production, reflecting its commitment to sustainable energy solutions.

Significant Scientific Methods

While specific scientific methodologies are not detailed, HEP emphasizes operational excellence and safety in its operations, guided by its motto "Stop-Think-Execute."

Leadership Team

Executive Profiles

Mike Howard: Chairman and CEO of HEP, Mike Howard founded the company in 2011. He holds a bachelor's degree in chemical engineering from Texas A&M University–Kingsville and has held senior leadership roles in several publicly traded energy firms.

Herbie Goldstein: Chief Financial Officer (CFO) of HEP, Herbie Goldstein has been with the company since 2016, most recently serving as interim CFO.

Key Contributions

Under Mike Howard's leadership, HEP has grown into a diversified, multibillion-dollar midstream energy enterprise operating across four U.S. states and Mexico. Herbie Goldstein has played a pivotal role in managing the company's financial strategies and operations.

Competitor Profile

Market Insights and Dynamics

The midstream energy sector is characterized by significant infrastructure requirements, with companies like HEP focusing on pipeline construction, processing facilities, and storage solutions to meet the growing energy demands. The sector is also witnessing increased investment in renewable energy infrastructure.

Competitor Analysis

HEP's competitors include major energy infrastructure companies such as Tallgrass Energy Partners, which operates over 10,000 miles of energy infrastructure across 15 states.

Strategic Collaborations and Partnerships

HEP has engaged in strategic partnerships, such as the Dos Caminos joint venture with NextEra Energy, to develop additional natural gas transportation opportunities in the Eagle Ford shale region of South Texas.

Operational Insights

HEP's focus on safety, operational excellence, and community engagement differentiates it in the competitive landscape. The company's commitment to renewable energy solutions positions it favorably in the evolving energy market.

Strategic Opportunities and Future Directions

Strategic Roadmap

HEP aims to continue its growth trajectory by expanding its asset base, enhancing operational efficiency, and investing in renewable energy infrastructure. The company's strong liquidity position enables it to pursue new opportunities and scale its platform of assets.

Future Business Directions

HEP is focused on diversifying its energy infrastructure portfolio, including investments in renewable energy projects, to meet the evolving energy needs of its customers.

Opportunities for Expansion

The company seeks to expand its presence in key energy-producing regions and explore new markets to leverage its expertise in midstream infrastructure development.

Positioning for Future Objectives

HEP's commitment to safety, operational excellence, and innovation positions it well to achieve its future objectives and contribute to the global energy landscape.