Morgan Stanley Private Equity has taken a majority stake in newly formed Sterling Investment Holdings LLC, the firm and Sterling Energy Co. said Thursday. The move is intended to support growth of Sterling Energy's midstream business in Colorado and North Dakota.
Sterling Energy provides gas gathering and processing infrastructure and related services for oil and gas producers through its two gathering systems: the Yenter System, serving Denver-Julesburg (DJ) and Niobrara production in northeast Colorado; and the Ambrose System, serving Williston and Bakken/Three Forks production in Divide County, ND.
The company has begun a multi-year project to extend and expand its Yenter System into the Pony Area of the Niobrara Field to meet recently contracted, long-term commitments with multiple producers. It has also proposed an expansion of its Ambrose System to accommodate both nearby gas that is currently being flared from existing wells, as well as projected new volumes from development in the area.
"We are particularly attracted to the strategic position of Sterling Energy's existing operations across two of the most compelling oil shale basins in North America and the team's plan for further expansion into other areas in need of midstream infrastructure," said John Moon, Morgan Stanley Private Equity managing director.
Terms of the transaction were not disclosed. Members of Sterling Energy management have previously collaborated with Morgan Stanley Private Equity in a series of midstream companies dating back to 1991, including Cantera Natural Gas, Canyon Gas Resources, Highlands Gas Corp. and Mountain Gas Resources.