Meritage Midstream Services II LLC (Meritage) is using up to $500 million in newly acquired equity to develop midstream systems in North American shale plays.
Funds are being invested by Riverstone Holdings LLC (Riverstone), which will partner with Meritage in developing a natural gas based midstream business. The strategic partnership was announced July 18.
Under the partnership, Riverstone will hand over up to $500 million in private equity capital, which will be used to focus on developing midstream systems that serve gas and natural gas liquid (NGL) producers.
According to a Meritage news release, the companies will zero in on areas where it thinks “existing infrastructure is insufficient to handle expected volume growth or lacks the optionality and flexibility to optimize producer pricing.”
Meritage will also strive to grow both organically and through acquisitions.
Steven B. Huckaby, Meritage’s chairman and chief executive, said his company was seeking to build long-term relationships with customers as it works to build stability.
The new partnership will help the company do just that, he said.
“Riverstone’s financial strength and insight together with our deep midstream experience and industry relationships put Meritage II in a very strong position,” Huckaby said in a public statement.
“We look forward to working with the team at Riverstone to develop highly strategic gathering systems and processing facilities for natural gas and NGL producers. We are confident in our ability to create value for our customers and investors through operational excellence and a unique, strategic approach to midstream.”
In a joint public statement, Riverstone co-founders Pierre Lapeyre and David Leuschen said they were also pleased to partner up.
“(Meritage management) has delivered in the past, and we believe its experience and deep knowledge of many of the emerging resource plays will yield exceptional results once again.”
Under the precursor company Meritage 1, Huckaby and co-founder Nick Thomas led midstream operations focused in the Eagle Ford Shale. There, Meritage I developed the play’s Escondido and Cuervo Creek gathering systems.
Both were acquired by Howard Energy Partners in April.
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