Blackstone Group LP is going to buy out the pipeline company, EagleClaw Midstream Ventures, for $2 billion, marking the latest deal to be made in the oil-rich Permian Basin of North America.
Under the agreement, ownership of more than 603 kilometers of natural gas pipes will be transferred to Blackstone Group. EagleClaw retains its name and continues operating as a portfolio company of Blackstone, without any changes to be made to its executive team. Also, the pipeline company will have a financial sponsor called Encap Flatrock Midstream, which is a joint venture between EnCap Investments LP and Flatrock Energy Advisors LLC.
Upon completion of this deal, Blackstone will join an increasing number of pipeline buyers in the Permian Basin that are currently drilling to boost production and make the most of higher oil prices. In fact, Baker Hughes Inc. reported that the total number of rigs being drilled in the region has already risen to 339 just in the second week of this month, recording the highest number in two years.
Commenting on the acquisition, EagleClaw CEO Bob Milam said:
“Blackstone has a deep understanding of the compelling fundamentals of the upstream and midstream economics in the Permian, an outstanding reputation as an investor in the energy sector and the scale to take EagleClaw to the next level.”
The negotiation followed recent acquisitions by other companies in the Permian Basin, including NuStar Energy LP and Targa Resources Corp. It is expected to close by the end of July this year.