Brazos Midstream Holdings LLC subsidiaries have purchased Callon Petroleum Co.’s natural gas gathering system in the Permian Basin of West Texas and signed a long-term, fee-based agreement with the producer for gathering and processing services.
The Fort Worth, TX-based operator said Tuesday the agreement with Callon would cover acreage under development in Pecos and Ward counties, in the southern part of the Delaware sub-basin. Including the Callon agreement, Brazos said its midstream infrastructure is anchored by long-term acreage dedications covering about 240,000 acres. Financial terms of the deal were not disclosed.
Specifically, the gathering system acquired would connect to Brazos' existing system and Comanche II, a 200 MMcf/d natural gas processing plant under construction in Reeves County, which would boost total operating capacity to 260 MMcf/d once the facility is completed in January. Last May, the company began operations at Comanche I (60 MMcf/d) and brought associated infrastructure online.
Brazos added that "is accelerating plans" to build a third processing plant, Comanche III, "to meet continued volume growth in the region." The company has secured a site for the proposed plant and plans to begin construction in early 2018.
"The acquisition of these strategic assets builds upon our existing franchise position and provides a platform for growth in an area we know well," said Brazos Chief Commercial Officer Stephen Luskey. "Callon is one of the leading pure-play Permian operators and we are pleased to be able to manage their gas infrastructure needs."
Callon CEO Joe Gatto added that the agreement "supports our current plans for robust growth across our Delaware Basin footprint."
Brazos, an independent midstream company, operates about 275 miles of gas and crude oil pipeline, a gas processing complex, and 50,000 bbl of oil storage in the Delaware sub-basin. The company is supported by equity commitments from affiliates of Old Ironsides Energy LLC.
Last July subsidiary Brazos Delaware LLC completed an expansion of its senior credit facility to $150 million in commitments from a syndicate of nine banks. BOK Financial and Cadence Bank served as joint lead arrangers of the facility. The other seven banks were ABN Amro, Amegy Bank, BBVA Compass, Iberia Bank, JP Morgan, Wells Fargo and West Texas National Bank.