Howard Midstream Energy Partners has signed a strategic partnership with WPX Energy to develop crude oil and natural gas gathering and processing infrastructure in the core of the Delaware Basin.
HEP will complete construction of an approximately 50-mile crude oil gathering system (initial construction already started by WPX), build a new cryogenic natural gas processing complex with an initial capacity of 400 million cubic feet per day, and build associated natural gas and product pipelines.
HEP will serve as operator of the assets. The 50/50 joint venture is supported by an area of mutual interest of more than 600 square miles in Lea and Eddy Counties, New Mexico and Reeves and Loving Counties, Texas, with 50,000 net acres currently dedicated by WPX.
To fund the joint venture, HEP partnered with GIC Private Limited, Singapore’s sovereign wealth fund, as well as its existing unit holders Alinda Capital Partners and Alberta Investment Management Company, on behalf of certain of its clients. The partnership is committed to spend initially $563 million of new capital on the joint venture.
“Historically, producer-backed midstream companies have performed well given the strong alignment of interests,” said Mike Howard, Howard Energy Partners’ chairman and chief executive officer. “This joint venture not only diversifies HEP’s footprint into the most prolific basin in the nation, but it demonstrates our team’s ability to differentiate ourselves among our competitors and to raise significant capital for large-scale infrastructure projects.”