Blackstone ups West Texas ante with $2B midstream purchase

In the latest deal in the Permian Basin, Blackstone Energy Partners said it has agreed to acquire Midland-based EagleClaw Midstream Ventures LLC for about $2 billion.

Blackstone Energy Partners is the energy-focused private equity business of Blackstone (NYSE: BX). The all-cash transaction is expected to close by the end of July 2017 and includes approximately $1.25 billion in stapled debt financing provided by Jefferies LLC.

EagleClaw is the largest privately held midstream operator in the Permian’s Delaware Basin in West Texas. The company’s assets are strategically located in Reeves, Ward and Culberson counties and include more than 375 miles of natural gas gathering pipelines and 320 million cubic feet per day (MMcf/d) of processing capacity with an additional 400 MMcf/d under construction. EagleClaw serves many of the region’s leading oil and gas producers, which have made to the company long-term dedications of natural gas volumes from more than 220,000 acres..

“This transaction is a very exciting moment in our advancing growth story,” said EagleClaw President and CEO Bob Milam. “I am extremely proud of our team and grateful for our outstanding, five-year relationship with EnCap Flatrock Midstream. We are very fortunate to have had such a great financial partner. EnCap Flatrock brought consistent value to our strategic planning process. They helped us navigate the opportunities and challenges of our early years with growth capital, technical expertise, decades of commercial experience and valuable contacts.

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Jefferies LLC acted as EagleClaw’s exclusive financial adviser in connection with the transaction and was the sole provider of the committed debt financing. The Jefferies team was led by co-head of Energy Investment Banking Peter Bowden. Blackstone was advised by Trevor Heinzinger of Morgan Stanley & Co. LLC and Skip McGee of Intrepid Partners LLC.

Frost Brown Todd LLC served as legal counsel to EagleClaw with partner Edward W. Moore, Jr. in the lead role from the firm’s Dallas office. Thompson & Knight LLP represented EnCap Flatrock Midstream, with partner Sarah E. McLean in the lead role from the firm’s Houston office. Blackstone was represented by Vinson & Elkins LLP, whose team was led by partner Keith Fullenweider.