NGL Energy Partners has executed a definitive agreement to acquire all of the equity interests of Hillstone Environmental Partners from Golden Gate Capital for approximately $600 million, subject to certain adjustments.
Hillstone provides water pipeline and disposal infrastructure solutions to producers with a core operational focus in the state line area of southern Eddy and Lea counties, N.M., and northern Loving County, Texas, in the Delaware Basin.
Hillstone has a fully interconnected produced water pipeline transportation and disposal system, which currently consists of 19 saltwater disposal wells, representing approximately 580,000 barrels per day of permitted disposal capacity, and a newly-built network of produced water pipelines with approximately 680,000 barrels per day of transportation capacity. Hillstone also has an additional 22 permits to develop another 660,000 barrels per day of disposal capacity.
NGL expects to integrate the Hillstone system into its existing Delaware Basin platform to maximize uptime and redundancy for its producer customers.
All of the water volumes on Hillstone’s Northern Delaware Basin system are delivered via multiple, large-diameter pipelines. Hillstone also has an aggregate of over 110,000 acres contracted under long-term dedications with priority disposal rights or minimum volume commitments.
“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,” said Mike Krimbill, CEO of NGL. “This transaction is highly complementary to our Delaware Basin asset footprint. It not only adds a redundant, interconnected produced water pipeline system with significant permitted disposal capacity that fits perfectly within our existing footprint, but importantly, it also supports our ongoing strategy of increasing NGL’s cash flow predictability.”
“The integration of the Mesquite assets is fully underway and providing immediate benefit to our customers,” said Doug White, executive vice president of water solutions at NGL. “The certainty of offtake and reliability of our integrated system of large diameter pipelines will provide approximately 2.7 million barrels per day of operational disposal capacity in the Delaware Basin, including the addition of Hillstone.”
NGL has arranged financing for the transaction, including certain preferred equity and debt commitments in an amount necessary to fund the entire purchase price.