Strategic acquisition reinforces EagleClaw’s best-in-class service
offering by adding complementary natural gas gathering, processing, and
compression assets in close proximity to existing system; expanding
EagleClaw’s offering to crude and water services; and adding new
customers, volumes, and high-quality dedicated acreage
EagleClaw Midstream (“EagleClaw”), a portfolio company of
Blackstone Energy Partners, announced today that it has entered into
binding agreements to acquire Caprock Midstream Holdings (“Caprock”)
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 natural gas liquids (“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 NGLs.
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
strategically 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, natural gas liquids, and water gathering pipelines; 23 MBbls of
crude storage (expected to grow to over 60 MBbls within the next twelve
months); and 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.
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.
EagleClaw CEO Perspective
“We are delighted to welcome Caprock’s customers and their employees
into the EagleClaw team,” said Bob Milam, EagleClaw’s founder and CEO.
“I have known and respected Mike Forbau, Caprock’s co-founder and CEO,
for over 20 years. We look forward to building on the great footprint
that Mike and the Caprock team have assembled to date and providing
Caprock’s customers with best-in-class service consistent with our
record of safe and reliable performance.” Jamie Welch, EagleClaw’s
President and CFO, added, “Following our recent announcement of the
Permian Highway Pipeline in partnership with Kinder Morgan, the
acquisition of Caprock is another exciting chapter in the continued
growth story of EagleClaw. 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.”
From Blackstone Energy Partners
“As investors across the energy value chain, with extensive holdings of
upstream and midstream businesses, we have firsthand appreciation for
the critical nature of EagleClaw’s services, the importance of safe and
reliable operations, and the mutually beneficial relationship with the
company’s producer customers,” said David Foley, CEO of Blackstone
Energy Partners. “We look forward to serving Caprock’s customers under
the EagleClaw platform and continuing to provide midstream services to
address the rapidly growing needs of Permian producers.” Eric Liaw,
Senior Managing Director at Blackstone, added, “We acquired EagleClaw
with a vision of growing the business into a major, fully-integrated
midstream player, delivering comprehensive value-added services to
Permian Basin producers. Following our partnerships with Targa on the
Grand Prix JV pipeline and with Kinder Morgan on the Permian Highway
Pipeline, the acquisition of Caprock further broadens EagleClaw’s
business and enhances the company’s value to its customers.”
From Caprock
“Caprock was formed with the intention of providing producers with a
focused service partner in a high growth basin. We have enjoyed working
with our key customers to facilitate the development of the Delaware
Basin, a world class resource. We are proud of the work our team has
done from tying-in the first exploratory wells on this acreage to
building infrastructure to enable our customer’s transition to pad
development,” stated Mike Forbau, CEO of Caprock. “As the basin
transitions to a larger scale of development, we believe the capital
intensity of a large private equity sponsor such as Blackstone will be a
great addition to the Caprock business,” added Sanjay Bishnoi, CFO of
Caprock. “The Caprock system and the EagleClaw system share a lot of
geographical and operational synergy,” stated David Ferer, COO of
Caprock. “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.”
From Energy Spectrum Capital
“Caprock exemplifies the role that Energy Spectrum plays in the
midstream industry. By backing highly qualified teams, we allow capital
to flow to well thought-out business plans. Caprock has succeeded in
putting early-stage capital to work to develop critical infrastructure
for upstream producers to delineate a key new basin in the United
States. We are proud of our partnership with Mike and his team and
believe that the integration with EagleClaw will be a strong development
for Caprock’s customers,” said Tom Whitener, President of Energy
Spectrum Capital.
Jefferies LLC acted as Blackstone and EagleClaw’s financial advisor in
connection with the transaction. Akin Gump served as legal counsel to
Blackstone and EagleClaw. Evercore and Barclays acted as financial
advisors to Caprock and Energy Spectrum. Vinson & Elkins LLP and Orrick,
Herrington and Sutcliffe LLP acted as legal counsel to Caprock and
Energy Spectrum.
About EagleClaw Midstream Ventures, LLC
Headquartered in Midland and with a core presence in Houston, EagleClaw
is focused on rapid response to the midstream infrastructure
requirements of Permian producers. The Company provides comprehensive
gathering, transportation, compression, processing and treating services
necessary to bring natural gas, natural gas liquids and crude oil to
market. EagleClaw is also partners with Targa on the Grand Prix Pipeline
Project and with Kinder Morgan on the Permian Highway Pipeline Project.
EagleClaw has long term dedications for over 300,000 acres from a broad
number of successful and active producers in the Delaware Basin. For
more information, please visit www.eagleclawmidstream.com
About Blackstone Energy Partners
Blackstone Energy Partners is Blackstone's energy-focused private equity
business, with a successful record built on our industry expertise and
partnerships with exceptional management teams. Blackstone has invested
over $15 billion of equity globally across a broad range of sectors
within the energy industry. Blackstone (NYSE: BX) is one of the world's
leading investment firms. Our asset management businesses, with
approximately $440 billion in assets under management, include
investment vehicles focused on private equity, real estate, public debt
and equity, non-investment grade credit, real assets and secondary
funds, all on a global basis. Further information is available at www.blackstone.com.
About Caprock Midstream
Headquartered in Humble, TX, Caprock was founded in 2015 by Mike Forbau,
David Ferer, Sanjay Bishnoi, John Phillips and Darin Aucoin. In
partnership with Energy Spectrum Partners VII, LP Caprock began
developing assets in the Delaware Basin in 2016. Caprock has developed
gas gathering, gas processing, oil gathering and water gathering and
disposal assets in the Delaware basin.
About Energy Spectrum Capital
Founded in 1995, Energy Spectrum Capital (“Energy Spectrum”) is a
Dallas, Texas-based private equity firm focused on partnering with
premier management teams that are pursuing compelling opportunities in
the midstream sector of the North American oil and gas industry.
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