EagleClaw to buy Caprock for $950m to boost Permian basin presence

EagleClaw Midstream, a midstream operator in the Permian’s Delaware Basin in West Texas, US, has signed a deal to buy Caprock Midstream for $950m.

The Blackstone Energy Partners-backed company will acquire Caprock from Energy Spectrum Capital and Caprock Midstream Management using equity and committed debt financing from Barclays to fund the transaction.

EagleClaw’s asset portfolio comprises more than 550 miles of natural gas and natural gas liquids (NGL) pipelines and 720 million cubic feet per day (MMcf/d) of processing capacity.

With assets located in Reeves, Ward, and Culberson counties the company serves oil and gas producers in the region.

The proposed acquisition is expected to be closed later this year and will add complementary natural gas gathering, processing, and compression assets near EagleClaw’s existing system.

EagleClaw Midstream president and chief financial officer Jamie Welch said: “This transaction expands our business in every aspect, from asset footprint, to customer diversity, to breadth of service offering, while remaining true to EagleClaw’s core mission of providing customer-focused midstream services in the Permian basin.”

Following the completion of the acquisition, EagleClaw will have a network of around 850 miles of natural gas, NGL, crude and water gathering pipelines and 1.3 billion cubic feet per day (bcfpd) of processing capacity.

The transaction will expand EagleClaw’s midstream services offering to crude and water-related services.

Caprock Midstream chief operating officer David Ferer said: “The Caprock system and the EagleClaw system share a lot of geographical and operational synergy.

“We firmly believe the EagleClaw team will integrate the two systems to provide its combined customers with greater optionality around gas and product takeaway, in-field operational flexibility, and redundancy.”

Caprock is set to be rechristened EagleClaw Midstream II and will operate as a sister-entity to the existing EagleClaw operating business after the transaction is completed.

In a separate development, EagleClaw and Kinder Morgan Texas Pipeline made a final investment decision (FID) on the $2bn Permian Highway Pipeline project, which will carry up to 2bcfpd of natural gas from the Waha to Katy, Texas, areas.

Anticipated to be in service in 2020, the approximately 430-mile, 42in pipeline will also offer connections to the US Gulf Coast and Mexico markets.