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    Permian Midstream Assets Change Hands in $1.6bn Deal

Summary

Lucid Energy Group agreed on January 8 to sell a package of midstream assets in the Permian Delaware Basin to Riverstone Holdings for $1.6bn in cash.

by: Dale Lunan

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Permian Midstream Assets Change Hands in $1.6bn Deal

Lucid Energy Group, sponsored by private equity provider EnCap Flatrock Midstream, agreed on January 8 to sell Lucid Energy Group II, which operates a package of midstream assets in the Permian Delaware Basin, to a joint venture controlled by Riverstone Holdings for $1.6bn in cash.

The assets, known as the South Carlsbad and Artesia natural gas gathering and processing systems, include about 2,720 km of natural gas gathering pipelines, about 585mn ft3/day of operating processing capacity and another 200mn ft3/day of processing capacity currently under construction, with in-service expected by the middle of this year. The assets serve a number of the region’s supermajor and independent oil and gas producers, who have together made long-term production volume commitments from about 450,000 acres of the Delaware Basin in Eddy and Lea counties in southeast New Mexico.

Joint venture partners include Riverstone Holdings’ Riverstone Global Energy and Power Fund VI and several investment funds managed by the merchant banking division of Goldman Sachs Group.

Lucid II will retain its name and all of its management team. The transaction is expected to close in 1Q2018, subject to customary approvals and closing conditions.