Trace Midstream Partners II (Trace), backed by Quantum Capital Group, has signed agreements with LM Energy Delaware, a subsidiary of Old Ironsides Energy, to acquire its natural gas gathering and transportation infrastructure located in the Northern Delaware Basin.
Situated in Eddy and Lea counties, New Mexico, LM Energy’s natural gas gathering and transportation system features both high- and low-pressure gas pipelines along with compression, dehydration, condensate handling, and vapour recovery capabilities.
LM Energy is currently constructing several new compressor stations, additional gathering pipelines, and a 20-inch diameter high-pressure transportation pipeline to link the existing gas gathering system to various gas processing facilities near Loving, New Mexico.
Upon completion, the system will comprise approximately 170 miles of pipeline and 12 compressor stations, with a total design capacity of 650 million cubic feet per day. The system spans over 80,000 dedicated acres and is underpinned by long-term, fixed-fee contracts with multiple producers.
Trace CEO Josh Weber said: “This acquisition marks a significant milestone for Trace as we enter the Northern Delaware Basin. We are excited to build upon LM Energy’s already well-executed system and track record of success.
“With substantial natural gas midstream constraints across the Northern Delaware, we are committed to expanding LM Energy’s assets and providing additional services for the region’s producers.”
In conjunction with the transaction, Quantum Senior Advisor Jack Harper has been appointed to the Trace Board of Directors.
Founded in 2017, Trace Midstream has established a track record in developing and operating large-scale midstream infrastructure projects. In 2022, Trace successfully exited its previous midstream business by selling its Haynesville assets to Williams and its Mid-Continent assets to Energy Transfer for a combined transaction value of approximately $1.5bn.
Vinson & Elkins represented Trace in the LM Energy acquisition, while Piper Sandler and Co. and Kirkland & Ellis represented LM Energy.
