Tailwater E&P, the upstream portfolio company of Tailwater Capital LLC, said Oct. 1 it has acquired non-operated working interests in 5,000 net acres in the “core” of the Midland and Delaware basins.

Tailwater E&P made the off-market acquisition from Accelerate Resources Operating LLC. Financial terms of the transaction were undisclosed.

The acquired assets include more than 5,000 net leasehold acres in the Permian Basin’s Midland and Delaware plays. The assets, predominantly HBP, currently produce more than 5,000 net boe/d.

The interests include "future inventory" held by premier operators including Exxon Mobil, ConocoPhillips, Diamondback Energy, EOG Resources, Mewbourne Oil Co., Apache (APA Corp.), Occidental Petroleum, Devon Energy and Coterra Energy, Tailwater said.

The acquisition solidifies the position of Tailwater E&P, Tailwater Capital's upstream platform, as a leading investor in Lower 48 energy-producing assets, Tailwater said in a press release.

"This acquisition highlights Tailwater E&P's ability to identify and secure exceptional assets in off-market, negotiated transactions in which we expect to generate substantial value for our limited partners, resulting in a win-win transaction for all involved," said Doug Prieto, CEO of Tailwater E&P. "These assets represent a diversified portfolio of the best that the Permian has to offer…”

The assets have a consistent history of strong development levels throughout commodity cycles, Tailwater said.

"It has been an honor to lead the creation, development and growth of Accelerate Resources over the last eight years. Its performance is the result of our dedicated team of industry experts and the support of our private equity investor, Pine Brook Partners," said Brennan Potts, CEO of Accelerate. "We are confident that Tailwater E&P is the right group to take these assets forward."

Tailwater E&P anticipates additional upside potential in the asset base as operators identify new drilling targets and optimize production. Tailwater E&P said it strategically hedged a significant portion of the asset's production profile alongside the execution of a purchase and sale agreement to mitigate market risk and solidify its return profile.

Edward Herring and Jason Downie, managing partners and co-founders of Tailwater Capital, said the assets generate a "stable production profile that supports strong current equity yields for our investors while offering diversified exposure to a deep inventory of future development. Aligning ourselves with these high-quality operators in Tier 1 inventory in the core of the Permian provides a significant opportunity to create limited partner value."

Kirkland & Ellis LLP, Winston & Strawn LLP and Foley & Lardner LLP represented Tailwater E&P in connection with the transaction.

Vinson & Elkins LLP represented Accelerate in connection with the transaction.

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