Published: November 16, 2021 |

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Altus Midstream Company said it will combine with privately-owned BCP Raptor Holdco in an all-stock transaction. BCP is the parent company of EagleClaw Midstream, which includes EagleClaw Midstream Ventures, the Caprock Midstream, and Pinnacle Midstream businesses, and a 26.7 percent interest in the Permian Highway Pipeline.

Apache, Blackstone, and I Squared have agreed to customary lock-up provisions of their respective holdings for 12 months post-closing, with a limited exception permitting Apache to sell up to 4 million shares until three-months post-closing provided it invests the first $75 million of proceeds in Alpine High development activity over 18 months.

The transaction is expected to close during the first quarter 2022, following completion of customary closing conditions, including Altus shareholder approval and regulatory reviews. Apache currently owns approximately 79 percent of Altus and has agreed to vote in favor of the transaction.

“This transaction is a transformative event for all parties and their respective stakeholders. The combination creates the largest pure-play midstream company in one of the world’s most prolific hydrocarbon basins, providing the scale, operational capabilities, and fully integrated service offerings necessary for long-term success. The pro forma enterprise is well positioned to capitalize on accelerating activity in the Delaware Basin with expanded processing and transportation capabilities for all three streams from the wellhead to end markets,” said Jamie Welch, president and CEO of EagleClaw.

“The combined business will have a more diversified asset profile and customer base, with a lower risk profile than either entity on a stand-alone basis. Management is committed to a strong balance sheet and continuing to execute on our key ESG objectives laid out in our inaugural Sustainability Report issued in June 2021,” added Welch.

LEADERSHIP AND GOVERNANCE

The new management team will be led by current EagleClaw Midstream president and CEO Jamie Welch. Apache field personnel working at Altus Midstream facilities will be offered employment with the pro forma enterprise.

The pro forma enterprise will maintain its headquarters in Midland with corporate leadership in Houston and operate under a new name, which will be finalized prior to closing.

STRATEGIC RATIONALE

The pro forma enterprise will be an integrated midstream company in the Texas Delaware Basin offering scale and reliability for residue gas, NGLs, crude oil, and water midstream services. The combined operations include approximately 2 Bcf per day of state-of-the-art natural gas processing capacity strategically located near the Waha Hub in West Texas. As measured by processing capacity, Altus will become the largest natural gas processor in the Delaware Basin and third largest across the entire Permian Basin.

The transaction benefits the commercial service offerings to customers of both Altus and EagleClaw. The combined business significantly expands Altus’ system footprint and breadth of services and also broadens its customer base. EagleClaw’s customers will benefit by adding another processing complex with Diamond Cryo, offering customers enhanced reliability and flow assurance, as well as the ability to utilize Altus’ excess amine treating equipment to expand the gas quality range from producer customers on the broader EagleClaw system. The pro forma enterprise will also adopt EagleClaw Midstream’s market-leading sustainability standards while also incorporating legacy Altus best practices.

In addition, the pro forma company will hold a premier portfolio of interests in four contracted Permian export pipelines, including three of the five major non-crude, long-haul pipelines built in the last five years to transport natural gas products out of the Permian Basin. These include a 53 percent majority interest in the Permian Highway Pipeline, a 16 percent interest in the Gulf Coast Express natural gas pipeline, and a 33 percent interest in the Shin Oak NGL Pipeline. Altus also holds a 15 percent interest in the EPIC Crude Pipeline, which connects the Permian and Eagle Ford basins to Corpus Christi.

“The Altus midstream assets and pipeline ownership interests complement EagleClaw’s well-established, diversified customer base. Importantly, the new management team is aligned with Altus’ core objectives of returning capital to shareholders and operating in a safe and environmentally responsible manner,” said Clay Bretches, Altus Midstream president and CEO.

“We are excited to partner with Apache, Altus and management in this transformative merger. Maintaining safe and reliable access to affordable natural gas is critical to every person in Texas and indeed to supply America’s growing energy exports needed for the global energy transition,” said David Foley, senior managing director and global head of Blackstone Energy Partners.

“Blackstone is also pleased to remain a significant and long-term shareholder of the company,” added Foley.

“This transaction marks the next step in EagleClaw’s strategic mission and begins another exciting chapter in the company’s story,” said Adil Rahmathulla, managing partner of I Squared Capital.

“Combining the two companies will help optimize and boost critical infrastructure that is necessary for the success of energy transition in the United States,” added Rahmathulla.

“This transaction builds scale and liquidity, which will be important for Altus’ evolution as a publicly-traded entity. The reduction of APA’s ownership in Altus is a logical continuation of our ongoing work to streamline our portfolio and unlock the value of our midstream infrastructure. We have great confidence in the new management team and look forward to remaining a key customer of Altus for many years to come,” said John Christmann, president and CEO of APA Corporation.

“We evaluated a wide range of strategic options to enhance the value proposition of Altus. The combination with EagleClaw provides the right balance of high-quality businesses and attractive growth opportunities. Reducing APA’s interest in Altus to a minority position will have a number of benefits to APA shareholders, including simplification of our financial reporting and enhanced comparability with our upstream-only peers, which will further underscore APA’s attractive valuation on a relative basis,” said APA Corporation CFO Steve Riney.

About EagleClaw Midstream
EagleClaw Midstream is a fully integrated, private midstream company that safely, responsibly and sustainably operates in the heart of the Delaware Basin with over 650,000 acres under long-term dedication. EagleClaw is headquartered in Midland and has a significant presence in Houston. EagleClaw provides comprehensive gathering, transportation, compression, processing and treating services for E&P companies that produce natural gas, natural gas liquids and crude oil. The company is the largest private gas processor in the Delaware Basin, with 1,320 MMcf/day of capacity and more than 1,300 miles of operated pipelines. EagleClaw has long-term dedications for gas, crude, and water midstream services in place from approximately 30 successful and active producers in the Delaware Basin.  EagleClaw is also a partner on the Permian Highway Pipeline project.

To stop by EagleClaw’s website, CLICK HERE

About Altus Midstream
Altus Midstream Company is a pure-play, Permian-to-Gulf Coast midstream C-corporation. Through its consolidated subsidiaries, Altus owns gas gathering, processing and transmission assets servicing production in the Delaware Basin and owns equity interests in four Permian-to-Gulf Coast pipelines.

To stop by Altus Midstream’s website, CLICK HERE

About APA Corporation
APA Corporation owns consolidated subsidiaries that explore for and produce oil and gas in the United States, Egypt and the United Kingdom and that explore for oil and gas offshore Suriname.

To stop by APA’s website, CLICK HERE

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