Western Gas Partners, a partnership formed by Anadarko Petroleum Corp., will pay $1.5 billion cash for Nuevo Midstream, a Houston midstream company focused on gathering, processing and moving oil and gas from the Permian Basin.
Nuevo Midstream's assets include a processing plant, a treatment facility, four compression stations and a 275-mile gas gathering system, plus another30 miles of pipeline and additional processing capacity that is under construction and slated to come online in 2015.
"We are buying an early stage asset that we believe will deliver significant growth as the basin continues to develop," Don Sinclair, CEO of The Woodlands-based Western Gas, said in a statement.
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The partnership is funding the deal with cash on hand, a revolving credit facility and the issuance of $750 million in units to an Anadarko subsidiary, according to a Securities and Exchange Commission filing made Tuesday.
Western Gas Partners will immediately offer the right to acquire a 50 percent interest in Nuevo Midstream to an undisclosed third party that is part of an existing joint venture with Anadarko. Western Gas Partners would buy 100 percent of Nuevo if that third party declines to participate in the deal.
The assets owned by Nuevo Midstream serve production in Reeves, Loving and Culberson counties in Texas and Eddy and Lea counties in New Mexico.
Nuevo Midstream was formed in 2011, with initial investment by EnCap Flatrock Midstream, a private equity firm.
"Our strategy was to enter the Delaware Basin early, execute quickly to get sufficient infrastructure in place ahead of drilling schedules and continue building in our first-mover advantage," Jay Lendrum, Nuevo Midstream president and chief executive, said in a statement.
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