TPG Growth, the middle market and growth equity platform of Fort Worth and San Francisco-based alternative asset firm TPG, announced today it is selling Discovery Midstream to a newly-formed joint venture between KKR and Williams (NYSE: WMB) for approximately $1.2 billion. The transaction is expected to close in the third quarter and is subject to customary closing conditions.
Discovery is a provider of oil and natural gas gathering and natural gas processing services in the southern portion of Colorado’s Denver-Julesburg Basin. The company’s infrastructure and related facilities are strategically located across more than 250,000 dedicated acres primarily in Weld and Adams counties. Discovery was established in 2015 by a group of seasoned industry executives.
“Over the last year, Discovery has had tremendous operational and commercial success in expanding its systems and growing its customer base,” said Christopher Ortega, partner at TPG. “It’s been a pleasure to work with the Discovery team, who we’ve known and respected for many years. We are grateful for their partnership.”
The Discovery system includes both natural gas and crude oil gathering pipelines, cryogenic gas processing, liquids handling, and crude oil storage. Assets include a 60 million cubic feet per day (MMcf/d) gas processing plant with an additional 200 MMcf/d plant that is fully permitted and under construction. It is expected to be in service by the end of 2018.
Concurrent with the announcement of the Discovery transaction, Tulsa-based Williams also announced the combined sale of assets and equity comprising WPZ’s Four Corners Area business in New Mexico and Colorado to Harvest Midstream Co. for $1.125 billion in cash, subject to customary closing conditions. The cash proceeds from the FCA transaction will contribute to funding Williams’ extensive portfolio of attractive growth capital and investment expenditures, including those opportunities associated with the Discovery acquisition. The FCA assets being divested of by Williams are located in San Juan and Rio Arriba Counties in New Mexico and in La Plata County in Colorado and include 3,700 miles of pipeline, two gas processing plants, and one CO2 treating facility.
Vinson & Elkins served as legal advisor and Jefferies acted as financial advisor to TPG Growth. For the Discovery acquisition, Simmons acted as the lead financial adviser to both Williams and KKR; Gibson Dunn served as legal counsel to Williams, and Simpson Thatcher served as legal adviser to KKR. For the transaction to divest of its assets in the Four Corners Area, Williams’ lead financial adviser was Morgan Stanley and Davis Polk acted as legal counsel.