GIP affiliate to buy Medallion Pipeline for nearly $2 billion

An affiliate of Global Infrastructure Partners (GIP) has agreed to acquire Medallion Gathering & Processing LLC from affiliates of Energy & Minerals Group (EMG) and Laredo Petroleum Inc. for $1.825 billion in cash plus additional consideration.

An affiliate of Global Infrastructure Partners (GIP) has agreed to acquire Medallion Gathering & Processing LLC from affiliates of Energy & Minerals Group (EMG) and Laredo Petroleum Inc. for $1.825 billion in cash plus additional consideration.

The Medallion crude oil transportation system, owned 51% by EMG and 49% by Laredo, consists of more than 800 miles of pipeline, 670,000 dedicated acres, and total areas of mutual interest of almost 4 million acres, serving the Midland basin of West Texas.

Medallion will retain its name and headquarters in Irving, Tex., where it will operate as a GIP portfolio company. The leadership team, including Pres. and Chief Executive Officer Randy Lentz, will remain in their current roles and are investing alongside GIP in the deal.

Lentz noted that the deal “will be the catalyst for further expansion of Medallion’s midstream infrastructure in the Permian basin.”

Randy A. Foutch, chairman and chief executive officer of Tulsa-based Laredo, said his firm intends to use proceeds from the deal to repay debt, which should cut its outstanding debt balance by more than half.

“This will afford Laredo additional flexibility in our development plan as we test tighter spacing to add premium locations in the Upper and Middle Wolfcamp formations,” Foutch said.

As part of the deal, GIP also will pay additional cash linked to its realized profits at exit. Funding of the $1.825 billion is expected to occur on or before Nov. 1 and includes $725 million of stapled debt financing.

All proceeds from the sale of Medallion, including both the base payment and the additional payment, will be distributed 51% to EMG and 49% to Laredo. EMG will continue to own Medallion Delaware Basin LLC.

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