EagleClaw Midstream is now the largest pure-play, privately-held Delaware Basin midstream business, after its concurrent acquisition of Caprock Midstream Holdings and Pinnacle Midstream, which were announced today.

 

History of planned $950 million acquisition

The planned acquisition of Caprock Midstream was publicly proposed in September.  EagleClaw Midstream is a portfolio company of Blackstone Energy Partners. According to its September statement, EagleClaw planned to acquire Caprock Midstream Holdings  from Energy Spectrum Capital and Caprock Midstream Management for $950 million plus pre-closing adjustments.

EagleClaw’s current executive leadership team would lead the combined business, which would operate under the EagleClaw name, following the closing of the transaction.

 

EagleClaw portfolio and transaction details

In terms of specifics with present-day developments, EagleClaw, along with Caprock Midstream and I Squared Capital announced that its parties have concurrently executed and closed binding agreements in which I Squared Capital has committed over $500 million of cash, in addition to the closing of EagleClaw’s previously-announced acquisition of Caprock Midstream.

I Squared Capital has contributed its Delaware Basin midstream portfolio company, Pinnacle Midstream, and become a partner in BCP Raptor Holdco, the parent company for EagleClaw.

In terms of current assets, EagleClaw owns and operates natural gas gathering and processing facilities located primarily in Reeves County, Texas.

These facilities serve producers targeting stacked pay zones in the Delaware Basin, including the Upper and Middle Wolfcamp, Bone Spring and the Avalon Shale formations.

Proceeds from I Squared Capital’s investment, together with additional investments by Blackstone and EagleClaw’s management team, are being used to fund EagleClaw’s continued growth, including the expansion of EagleClaw’s system, the acquisition of Caprock Midstream, and the ongoing construction of the Permian Highway Pipeline.

 

Updated operations

EagleClaw is a 50% partner with Kinder Morgan on the Permian Highway Pipeline, an approximately $2 billion pipeline project designed to transport up to 2.0 BCFD of natural gas from the Permian Basin to the Katy, Texas area, with connections to the Gulf Coast and Mexico markets

EagleClaw’s operations, pre-transaction, consisted of:

  • Total miles of natural gas pipeline: 550
  • Total miles of NGL pipeline: 73
  • Total processing capacity: 720 MMCFD

Pro forma for these acquisitions, EagleClaw operates nearly 1,000 miles of natural gas, natural gas liquids, crude, and water gathering pipelines; over 1.4 billion cubic feet per day of processing capacity (pro forma the completion of one plant currently in construction); and crude and water storage and disposal facilities.

EagleClaw now has nearly half a million acres in the core of the southern Delaware Basin under long-term dedication for midstream services.

EagleClaw now has nearly half a million acres in the core of the southern Delaware Basin Click to Tweet

Caprock and Pinnacle before acquisition

Caprock was a privately held midstream operator that provided gathering, processing, and disposal services for natural gas, crude oil, and produced water to producers in the Delaware Basin.

Overview:

  • Assets located in the core of the southern Delaware Basin in Reeves and Ward counties.
  • Operates two natural gas processing facilities and will have 540 MMCFD of processing capacity pro forma for the completion of two additional facilities currently under construction.
  • Operates almost 300 miles of gas, crude, natural gas liquids, and water gathering pipelines; 23 of crude storage (expected to grow to over 60 MBBL within the next twelve months).
  • Water disposal facilities with capacity of 210 MBPD (with an additional 375 MBPD 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.

Pinnacle was an independent midstream company providing natural gas gathering and processing and crude oil gathering services to producers in the Delaware Basin.

Overview:

  • Assets located in close proximity to EagleClaw’s existing assets, providing a complementary asset footprint.
  • Operates approximately 100 miles of natural gas and crude gathering pipeline, approximately 30,000 BBL of crude storage facilities, and a 60 MMCFD natural gas processing facility.
  • Pinnacle serves several highly active producers, who have committed approximately 35,000 acres for long-term dedication of midstream services.

The acquisition of Pinnacle enhances flow assurance and reliability and provides additional flexibility for customers’ natural gas, crude, and NGL takeaway.  Pinnacle is now a subsidiary of EagleClaw.

“We are very pleased with the strong operating performance of EagleClaw since the closing of our acquisition in June 2017 and its rapid growth via existing customers as well as through strategic, accretive acquisitions such as Caprock and Pinnacle. We are excited to welcome I Squared Capital to partner with us in this effort. As one of the leading global infrastructure firms, with experience in the midstream sector and substantial financial resources, I Squared Capital is an ideal partner for Blackstone and management as together we enable EagleClaw’s continued evolution into a major, fully-integrated midstream player, delivering comprehensive value-added services to Delaware Basin producers,” said David Foley, CEO of Blackstone Energy Partners.


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