EagleClaw Midstream, a portfolio company of Blackstone Energy Partners, announced Sept. 5 that it has entered into binding agreements to acquire Caprock Midstream Holdings from Energy Spectrum Capital and Caprock Midstream Management for $950 million plus pre-closing adjustments. The all-cash transaction is expected to close in 2018 and will be funded with equity and committed debt financing from Barclays Plc. EagleClaw’s current executive leadership team will lead the combined business, which shall operate under the EagleClaw name, following the closing of the transaction.
EagleClaw is the largest privately held midstream operator in the Permian’s Delaware Basin in West Texas. The company’s assets are strategically located in Reeves, Ward, and Culberson counties and include more than 550 miles of natural gas and NGL pipelines and 720 million cubic feet per day (“MMcf/d”) of processing capacity.
EagleClaw serves many of the region’s leading oil and gas producers, who have committed long-term dedications of natural gas volumes to the company from over 310,000 acres. Since being acquired by Blackstone last year, EagleClaw has more than doubled its processed volumes and system capacity, increased the amount of acreage under long-term dedication by over 55%, and entered into partnerships with Kinder Morgan and Targa to improve its customers’ takeaway options for natural gas and NGL.
Caprock is a privately held midstream operator that provides gathering, processing, and disposal services for natural gas, crude oil, and produced water to producers in the Delaware Basin. Caprock’s assets are located in the core of the southern Delaware Basin in Reeves and Ward counties.
Caprock currently operates two natural gas processing facilities and will have 540 MMcf/d of processing capacity pro forma for the completion of two additional facilities currently under construction. Caprock also operates almost 300 miles of gas, crude, NGL and water gathering pipelines; 23,000 bbl of crude storage (expected to grow to over 60,000 bbl within the next 12 months); and water disposal facilities with capacity of 210,000 bbl/d (with an additional 375,000 bbl/d of additional capacity planned and permitted). Caprock serves several highly active producers, which have made long-term dedications for natural gas, crude and / or water-related services totaling over 115,000 acres.
The acquisition of Caprock is complementary to EagleClaw and further solidifies the company’s position as the midstream partner of choice for producers in the Delaware Basin. Pro forma for the closing of the transaction, EagleClaw will operate close to 850 miles of natural gas, natural gas liquids, crude and water gathering pipelines; 1.3 billion cubic feet per day of processing capacity; and crude and water storage facilities, with over 425,000 acres under long-term dedication for midstream services.
The acquisition of Caprock expands EagleClaw beyond natural gas gathering and processing related services into crude- and water-related services, providing opportunities for EagleClaw to offer a broad suite of midstream services to both existing and new customers. The transaction also benefits EagleClaw’s and Caprock’s customers by improving flow assurance and reliability and providing additional flexibility for customers’ natural gas, crude and NGL takeaway.
The transaction has been structured such that the existing Caprock operating company (which will be renamed EagleClaw Midstream II) will be a sister-entity to the existing EagleClaw operating business (EagleClaw Midstream Ventures LLC) following the closing, under common ownership and management by the same corporate parent.
The acquirer under the transaction documents and borrower of the acquisition financing will be a newly-established partnership, completely distinct from the existing EagleClaw credit group. All field personnel of Caprock will be offered opportunities to remain with the company following the closing. The Caprock water assets will be operated under a services agreement with Waterfield, a Blackstone-backed partnership focused on long-term full-cycle water solutions for upstream companies in the Permian Basin.
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