EagleClaw Midstream has agreed to acquire Caprock Midstream, a Delaware Basin-focused midstream company, from Energy Spectrum Capital and Caprock Midstream Management for around $950m in an all-cash deal.
Caprock Midstream, currently caters to producers in the Delaware Basin with gathering, processing, and disposal services for natural gas, crude oil, and produced water.
The midstream company’s assets are located in the heart of the southern Delaware Basin in Reeves and Ward counties.
Presently, Caprock Midstream operates two natural gas processing facilities and is expected to have 540MMcf/d of processing capacity upon completion of two more facilities, which are under construction.
It also operates close to 483km of gas, crude, natural gas liquids, and water gathering pipelines apart from having 23MBbls of crude oil storage and 210MBPd water disposal facilities.
EagleClaw Midstream, which is a portfolio company of Blackstone Energy Partners, believes that the acquisition of Caprock Midstream is complementary and further strengthens its position as a midstream services provider in the Delaware Basin.
The transaction will also help EagleClaw Midstream move beyond natural gas gathering and processing related services into crude- and water-related services, thereby giving it scope to provide a comprehensive suite of midstream services.
EagleClaw Midstream president and CFO Jamie Welch said: “This transaction expands our business in every aspect, from asset footprint, to customer diversity, to breadth of service offering, while remaining true to EagleClaw’s core mission of providing customer-focused midstream services in the Permian basin.”
The transaction is anticipated to be completed in 2018 and will be funded with equity and debt financing from Barclays.
Caprock COO David Ferer said: “The Caprock system and the EagleClaw system share a lot of geographical and operational synergy.
“We firmly believe the EagleClaw team will integrate the two systems to provide its combined customers with greater optionality around gas and product takeaway, in-field operational flexibility, and redundancy.”
In another development, EagleClaw Midstream has reached a financial investment decision alongside its partner Kinder Morgan Texas Pipeline on the $2bn Permian Highway Pipeline Project, a new natural gas pipeline system proposed to be built in Texas.