EagleClaw Midstream to Acquire Caprock Midstream for $950 Million

Published: September 21, 2018 |

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EagleClaw Midstream, a portfolio company of Blackstone Energy Partners, has entered into binding agreements to acquire Caprock Midstream Holdings 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. EagleClaw’s current executive leadership team will lead the combined business, which shall operate under the EagleClaw name, following the closing of the transaction.

“We are delighted to welcome Caprock’s customers and their employees into the EagleClaw team. 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,” said Bob Milam, EagleClaw’s founder and CEO.

“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,” said Jamie Welch, EagleClaw’s president and CFO.

“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 Partnerss

“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,” added Foley.

“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,” said Eric Liaw, senior managing director at Blackstone.

“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,” said 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,” said Sanjay Bishnoi, CFO of Caprock.

“The Caprock system and the EagleClaw system share a lot of geographical and operational synergy. 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,” said David Ferer, COO of Caprock.

“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.

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 pipelines and 720 million cubic feet per day 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 percent, 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.

About EagleClaw Midstream Ventures
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.

To stop by EagleClaw’s website, CLICK HERE

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.

To stop by Blackstone’s website, CLICK HERE

About Caprock Midstream
Headquartered in Humble, Texas, 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.

To stop by Caprock’s website, CLICK HERE

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