EagleClaw Midstream, Midland, Tex., has agreed to acquire Caprock Midstream Holdings from Energy Spectrum Capital and Caprock Midstream management for $950 million plus preclosing adjustments. The deal expands EagleClaw beyond natural gas gathering and processing-related services into crude and water-related services in the Permian’s Delaware basin.
Privately held Caprock, with assets in Texas’ Reeves and Ward counties, currently operates two gas processing facilities and will have 540 MMcfd of processing capacity pro forma for the completion of two additional facilities currently under construction. It also operates almost 300 miles of gas, crude, natural gas liquids, and water gathering pipelines; 23,000 bbl of crude storage (expected to increase to more than 60,000 bbl within the next 12 months); and water disposal facilities with capacity of 210,000 b/d (with an additional 375,000 b/d of additional capacity planned and permitted). Caprock serves several highly active producers, which have made long-term dedications for gas, crude and water-related services totaling more than 115,000 acres.
Pro forma for the deal’s closing, EagleClaw will operate close to 850 miles of gas, natural gas liquids, crude, and water gathering pipelines; 1.3 bcfd of processing capacity; and crude and water storage facilities, with more than 425,000 acres under long-term dedication for midstream services.
Under terms of the deal, the existing Caprock operating company—to 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. The Caprock water assets will be operated under a services agreement with Waterfield, a Blackstone-backed partnership.
Since being acquired by Blackstone, 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 (OGJ Online, June 26, 2018).
The all-cash transaction will be funded with equity and committed debt financing from Barclays Plc. EagleClaw’s current executive leadership team will lead the combine following the deal’s close, which is expected this year.
