Tulsa’s NGL Energy Partners LP said Thursday it would build water pipeline and disposal infrastructure for oil and gas producers in the Permian Basin with a $600 million deal to acquire Hillstone Environmental Partners LLC.
Hillstone, a portfolio company of private equity’s Golden Gate Capital, provides water infrastructure for producers in the southern Eddy and Lea counties of New Mexico and northern Loving County in West Texas within the Delaware sub-basin.
NGL plans to integrate the Hillstone system into its existing Delaware platform, which includes its recent purchase of Mesquite Disposals Unlimited LLC for $890 million.
“We have made substantial progress in our ongoing water strategy in the Delaware Basin, and the Hillstone acquisition represents another important milestone for our Water Solutions franchise following the closing of our combination with Mesquite in July,” NGL CEO Mike Krimbill said. The transaction “adds a redundant, interconnected produced water pipeline system with significant permitted disposal capacity that fits perfectly within our existing footprint…”
Hillstone has 19 saltwater disposal wells with 580,000 barrels/day of permitted disposal capacity and 22 permits to develop an additional 660,000 barrels/day of capacity. It also has a newly built transportation network of produced water pipelines with 680,000 barrels/day. Hillstone also has more than 110,000 acres contracted under long-term dedications.
“The certainty of offtake and reliability of our integrated system of large diameter pipelines will provide approximately 2.7 million barrels/day of operational disposal capacity in the Delaware Basin, including the addition of Hillstone,” said NGL’s Doug White, executive vice president of Water Solutions. “The high quality Hillstone assets include long-term contracts with investment grade producers. The contracts have an average remaining term of greater than 10 years, minimum volume commitments, and first call priority volume commitments that minimize impacts of timing related to recycle and reuse activities.”