KKR has entered into an agreement to acquire Discovery Midstream from TPG Growth for approximately $1.2 billion.
KKR is acquiring the provider of natural gas and oil gathering and natural gas processing services company through a newly formed joint venture with Williams Cos.
The transaction is being funded primarily through KKR's energy and infrastructure funds.
Founded in 2015 and based in Dallas, Texas, Discovery Midstream operates in the southern portion of Colorado's Denver-Julesburg Basin (DJ Basin). The company's infrastructure and related facilities are located across more than 250,000 dedicated acres primarily in Weld and Adams counties. The Discovery Midstream system includes both natural gas and crude oil gathering pipelines, cryogenic gas processing, liquids handling and crude oil storage. The Discovery assets include a 60 million cubic feet per day gas processing plant with an additional 200 million cubic feet per day plant that is fully permitted and under construction. It is expected to be in service by the end of 2018.
Upon close, which is subject to customary closing conditions and expected to occur in the third quarter of 2018, Discovery Midstream will be led by its existing management team and Williams' initial economic contribution and ownership will be 40 percent of the purchase price, while KKR's initial economic contribution and ownership will be 60 percent of the purchase price. Williams will be the operator of Discovery Midstream and will hold a majority of governance voting rights. Williams has committed to fund additional capital as required to bring its economic ownership to 50/50.
