With a $400 million initial capital commitment from EnCap Flatrock Midstream and management, an Ironwood Midstream Energy Partners spin-off Tuesday said it would acquire a pair of crude oil gathering systems in South Texas from a subsidiary of Twin Eagle Holdings NA LLC.
Texas-focused Ironwood Midstream Energy Partners II LLC has a binding agreement to purchase the Gardendale and Asherton systems, which together include 137 miles of active oil gathering pipelines with connections to multiple long-haul pipelines that allow access to the Gulf Coast, Three Rivers and Houston markets.
“I’ve known and worked with EnCap Flatrock’s founder Bill Waldrip for three decades,” said Ironwood II CEO Mike Williams, who also leads Ironwood Midstream I. “The mutual trust and respect we share is an important foundation for a business partnership. Our values are aligned and so is our approach to creating value in the midstream sector. Ironwood II couldn’t ask for a better sponsor.”
EnCap Flatrock managing partner and founder Bill Waldrip touted the “outstanding reputations and track records” of Ironwood’s management team and said the private equity firm was “looking forward to bringing more than capital by bringing our expertise and contacts to the table.”
The Gardendale and Asherton systems span Dimmit and La Salle counties and are supported by long-term dedications totaling more than 124,000 acres. The systems have interconnects with Plains All American Pipeline LP, Harvest Pipeline Co., NuStar Logistics LP and the upcoming Epic crude oil pipeline.
At the transaction’s closing, expected in December, Twin Eagle COO Danny Rea would join Ironwood II in the same role.
EnCap in 2018 also became a sponsor of the 1 million b/d Wink-to-Webster crude pipeline with a $400 million commitment through Lotus Midstream LLC. The company also invested in Cogent Midstream LLC, which is building a 400 MMcf/d residue natural gas pipeline that is scheduled to start up by the end of the year.
Gibson, Dunn & Crutcher LLP served as legal adviser to Ironwood II for the transactions with EnCap Flatrock and Twin Eagle.