The crude oil gathering system of Reliance Gathering includes more than 370km of gathering and regional transportation pipelines
Rattler Midstream, a subsidiary of Diamondback Energy, and Oryx Midstream, through their newly-formed joint venture, have signed an agreement to acquire Reliance Gathering for $355m.
The crude oil gathering system of Reliance Gathering includes more than 370km of gathering and regional transportation pipelines and nearly 200,000 barrels of crude oil storage in Midland, Martin, Andrews, and Ector counties.
The system’s throughput totals 110,000 barrels per day from six oil and gas operators, including Diamondback and other top-tier operators.
The acquisition includes more than 160,000 gross acres in the Northern Midland Basin. The company said that the acreage is supported under long-term, fixed-fee agreements, some of which benefit from minimum volume commitments.
Ownership of Reliance Gathering will be split 60/40 between Rattler and Oryx
Oryx will operate the system upon closing, and ownership will be split 60/40 between Rattler and Oryx.
The deal amount will be paid in cash, which is subject to certain adjustments under the purchase and sale agreement.
The transaction is expected to be completed in the fourth quarter of 2019, subject to certain closing conditions.
Rattler’s general partner CEO Travis Stice said: “This strategic acquisition demonstrates Rattler’s ability to leverage its relationship with Diamondback to invest in attractive projects underpinned by Diamondback’s operations, providing unique visibility into the growth in volumes expected on this system.
For the transaction, Jefferies is acting as exclusive financial advisor and Sidley Austin is acting as legal counsel to Reliance Gathering. On the other hand, Akin Gump Strauss Hauer & Feld is acting as legal counsel to Rattler, while Shearman & Sterling is acting as legal counsel to Oryx.
Stice said: “Continuing its wellhead to water strategy, Diamondback, through Rattler, will now participate in transporting these crude oil barrels from the wellhead through the Reliance Gathering system and the Epic Crude Pipeline to docks and refineries around Corpus Christi.
“Moreover, the acreage dedicated to Reliance Gathering encompasses some of Diamondback’s highest rate of return projects and deepest levels of inventory at current activity levels, which we expect will support continued production growth for years to come.”
In November 2018, Texas-based oil and gas company Diamondback Energy had acquired Energen, an oil and gas exploration and production company headquartered in Birmingham, Alabama.