Western Gas to acquire Delaware basin midstream operator

Oct. 29, 2014
Western Gas Partners LP will acquire Nuevo Midstream LLC for $15 billion in cash, Nuevo Midstream and its private equity backer EnCap Flatrock Midstream have reported.

Western Gas Partners LP will acquire Nuevo Midstream LLC for $15 billion in cash, Nuevo Midstream and its private equity backer EnCap Flatrock Midstream have reported.

The transaction will close by yearend, pending completion of regulatory approvals and closing conditions, the company said.

Formed in April 2011 with initial $65 million equity from EnCap Flatrock Midstream and management, Nuevo has focused on developing and operating natural gas gathering, compression, processing, treating, transportation, and marketing to oil and gas producers in the Delaware basin in West Texas and southeast New Mexico.

Equity commitments to Nuevo ultimately reached more than $300 million from a group of investors led by EFM Funds I and II, management, and Wells Fargo Energy Capital.

Western Gas is master limited partnership formed by Anadarko Petroleum Corp. to own, operate, acquire, and develop midstream energy assets to handle production from Anadarko and other producers.

Nuevo began operations in August 2011 when the company recomissioned a small refrigerated JouleThomson processing plant near Orla, Tex. (OGJ Online, May 10, 2011). Today, the company’s assets include 30 MMcfd of cryogenic processing capacity at its Ramsey processing complex in Reeves County, Tex.; 1,800 gpm of treating capacity; four field compressor stations; and a 275-mile gas gathering system that spans five counties.

An additional 30 miles of gathering pipeline is under construction with an additional 400 MMcfd of processing capacity scheduled to be in service in 2015. Nuevo’s gathering and processing handles production from about 150,000 acres and commitments from 47 producers operating in an area with multiple, stacked pay zones, Nuevo said.