Solaris Water Midstream LLC expanded its existing joint venture (JV) with Permian shale producer Concho Resources Inc., the Houston-based company said July 29.
In conjunction with the new transaction, Solaris Water’s private equity sponsors and management have increased their capital commitments to the company.
In the new agreement, Solaris Water and Concho extended and increased the scope of their long-term produced water management JV in the northern Delaware Basin to include all of Concho’s acreage in New Mexico’s Eddy and Lea counties. The previous JV agreement only covered Concho’s Eddy acreage.
“This new agreement provides a comprehensive water solution for our northern Delaware Basin footprint and advances our water recycling efforts,” said Concho President Jack Harper in a statement.
Concho’s position in the Delaware Basin is the largest of its core areas in the Permian Basin. The Midland, Texas-based company holds about 520,000 gross acres in the Delaware spanning southwest corner of New Mexico and parts of West Texas, according to its website.
As a result of the new agreement, Solaris Water now manages Concho’s produced water gathering, transportation, disposal and recycling for a 2.3 million-acre area of mutual interest located. The transaction included the acquisition of nine additional saltwater disposal wells and approximately 80 additional miles of existing large-diameter produced water gathering pipelines from Concho. Terms of the transaction weren’t disclosed.
“The growth of Solaris Water’s relationship with Concho provides us with a long-term partner and the scale to continue to provide effective water management services for our customers across the entire northern Delaware Basin, including the rapidly increasing use of our extensive infrastructure for water treatment and recycling for water reuse,” said Solaris CEO Bill Zartler in a statement.
Solaris Water’s infrastructure in the northern Delaware Basin now includes more than 500 miles of high-capacity water pipelines in service or under construction, over 1 million bbl/d of disposal capacity, more than 2.2 million bbl/d of additional permitted disposal capacity and 500,000 bbl/d of water treatment and recycling capacity. The integrated system spans approximately 1 million acres in Eddy and Lea counties in New Mexico and Culberson, Loving and Reeves counties in Texas. The system currently serves 24 oil and gas producers, including Concho.
The additional equity commitments made to Solaris in conjunction with the new Concho agreement will be used to support the continued expansion of Solaris Water’s infrastructure systems in New Mexico and Texas. Commitments include from funds sponsored by Trilantic Capital Management LP, Yorktown Partners LLC, HBC Investments and Solaris Water management.
In a statement commenting on the additional commitments, Trilantic North America Managing Partner Christopher Manning said: “Since we partnered with management to start the business in 2016, Solaris has become one of the leading water solutions providers in the U.S. by building a ‘cradle to grave’ water infrastructure system in the core of the Delaware Basin.”
“With this additional capital, the team will be able to take advantage of a number of compelling organic and inorganic opportunities that we see in an otherwise challenging business environment,” Manning added.
Latham & Watkins LLP represented Solaris Water Midstream in the expansion of its JV with a Houston-based team led by partners Chris Bennett and Lauren Anderson.
Matt Fox, who served in several leadership roles at ConocoPhillips before becoming COO in 2018, helped guide the company’s “successful transformation” into an independent E&P, says CEO Ryan Lance.
The Concho acquisition gives ConocoPhillips about 700,000 net acres in the Permian Basin—more than quadruple the size of its previous position in the Permian.
With the Eagle Ford Shale expansion, Wyatt Water Solutions also rebranded under Goodnight Midstream.