Patrick Coleman on Midstream’s Most Active Period in Years 

While volatile oil prices have introduced uncertainty across the energy sector, midstream is experiencing something closer to the opposite effect. The geopolitical disruptions reshaping global supply have reinforced one fundamental truth for midstream operators: volumes are coming. The question is no longer whether production will be drilled, but when and that shift in certainty is driving a meaningful acceleration in midstream deal activity. 

Patrick Coleman, Managing Director and Co-Head of Midstream at Jefferies, sat down at the firm’s annual Energy & Power Summit to share his views on M&A trends, the resurgence of infrastructure capital, and the pivotal role natural gas will play in the years ahead. 

Certainty Replaces Caution 

Coleman drew a sharp distinction between how the current environment is affecting upstream and midstream. Where upstream companies face direct commodity price exposure, midstream operators are largely insulated from day-to-day price swings as their business is built on volume. “From a midstream perspective, there’s now a sense of a lot more certainty that things will get drilled,” he explained. “It’s no longer if, it’s when.” 

That shift in sentiment is translating into deal activity. Assets that might have attracted limited buyer interest six months ago are now drawing serious attention, as buyers recalibrate the likelihood of sustained production activity across key basins. “A lot of the buyers are now saying there’s a good chance there’s going to be sustained activity,” Coleman said. 

The public midstream companies — Williams, Energy Transfer, Enterprise, Targa — have been the dominant buyers over the past three years, and Coleman sees that continuing. These companies are being valued on growth and growth alone, creating a strong incentive to acquire even mid-tier assets that would previously have been passed over. “Buying the inventory that’s not must-have but nice-to-have allows them to grow faster than they otherwise would have been able to,” he said, pointing to the synergies and WACC advantages that make smaller bolt-on acquisitions increasingly attractive. 

The Shift Toward Gas 

The more significant structural shift Coleman identified is a reorientation of buyer focus from NGL infrastructure toward natural gas. The conflict in the Middle East has made LNG exports substantially more valuable (some public LNG names have nearly doubled in the past month) and the gas infrastructure needed to supply both existing and prospective export projects has moved to the top of the priority list. 

At the same time, demand growth from data centers and AI is creating a domestic pull for gas that shows no sign of abating. “It’s easy to plot the demand growth,” Coleman said. “There’s a clear line of sight and no one has the same type of viewpoint from a natural gas perspective that they had about oil demand during Covid that it might be permanently destroyed.” 

That confidence is drawing infrastructure funds back into the sector after a period of LP-driven hesitation around hydrocarbon investment. “They’ve raised a lot of money and they’ve been focused in other areas,” Coleman noted, “but I do suspect they’ll start to come back.” With investment horizons of ten to twenty years and cost of capital in the low teens, natural gas infrastructure offers a duration and visibility of return that is difficult to find elsewhere. 

The Permian’s Gas Moment 

Coleman flagged the Permian Basin as the most important near-term dynamic to watch. With 4.5 billion cubic feet per day of new gas takeaway capacity coming online out of the basin by end of 2026, the relief of the Waha pricing bottleneck — where producers have effectively been paying to have gas removed — could unlock a wave of gas-weighted development in the Delaware and Midland sub-basins. “If Waha no longer is negative and you can actually have deep locations that are more gas weighted where you’re getting an economic return from that gas,” Coleman said, “that’s a significant change.” 

He expects the major public upstream companies, which now hold around 90% of Permian acreage following years of consolidation, to remain capital-disciplined through 2026 given commitments made to investors. The action, in his view, will come in 2027 when private players with undeveloped acreage accelerate their drilling cadence to coincide with the new takeaway capacity. 

Canada and the North American Balancing Act 

Coleman closed with a broader geopolitical observation that he sees as underappreciated. As Middle Eastern supply comes under pressure, the United States will need to lean more heavily on North American supply, particularly Canadian heavy crude, which feeds Gulf Coast refineries. The trade tensions of recent months have complicated that relationship at precisely the wrong time. 

“I think we’re going to need all of our help keeping together in North America to make sure that doesn’t creep in and cause massive inflation in the United States,” he said. Midstream infrastructure (pipelines and transportation networks) will be central to managing that balancing act. Coleman expressed cautious optimism that the more adversarial dynamics of recent trade negotiations could give way to more pragmatic cooperation as the global supply picture tightens. 

+++ 

The confluence of geopolitical disruption, surging LNG demand, and returning infrastructure capital has set up midstream for what Coleman described as its most favorable deal environment in years. The biggest catalyst, he suggested, may already have arrived. 

For more insights from Patrick Coleman and Jefferies, the leading advisor on M&A transactions in the energy sector, visit the firm’s dedicated thought leadership site.