XRI Holdings LLC acquired the water treatment and recycling division of Fountain Quail Energy Services LLC, which the Midland, Texas-based company said April 24 will boost its network of water midstream systems in the Permian Basin.
The acquired division, Fountain Quail Water Treatment, is a produced water treatment, recycle, and reuse business with operations throughout the Permian Basin and other key producing basins across the U.S. The specific terms of the deal weren’t disclosed, but XRI, backed by Morgan Stanley Energy Partners, said consideration consisted of cash and equity.
Members of the Fountain Quail Water Treatment senior leadership team have joined XRI and will lead the company’s water treatment division, which will be a wholly-owned subsidiary of XRI operating under the Fountain Quail name. Fountain Quail Energy Services, an Irving, Texas-based portfolio company of CSL Capital Management LP, will retain operation of its water business in the Marcellus and Utica shale basins, according to the press release.
XRI President John Durand believes the acquisition will strengthen XRI’s over 300 miles of permanent, buried pipeline water midstream infrastructure located throughout the Permian Basin.
“This acquisition will enhance XRI’s owned network of water midstream systems with full recycle and reuse capabilities that set the standard for flexibility and sustainability for water used in advanced completion techniques in the Permian Basin,” Durand said in a statement.
Fountain Quail Water Treatment pioneered the development of cost-effective, reliable water treatment, recycling, and reuse technologies for deployment in the oil field with a successful track record of commercial operations dating back to the mid-1990s. The company’s low-cost, high-efficiency recycle technology is second-to-none, said XRI CEO Matthew Gabriel.
“When paired with the natural, non-potable water sourced on our owned water midstream systems in the Delaware and Midland Basins, it is now possible for our customers to reuse, blend or swap 100% of their produced water with our water to obtain water of virtually any specification,” Gabriel said in a statement.
Fountain Qual Water Treatment’s suite of proprietary water treatment solutions include the fixed and semi-fixed ROVERTM systems, the mobile SCOUTTM systems and mobile MAVREXTM chlorine dioxide water treatment systems. The company’s units are currently deployed by the leading energy companies operating in the Permian Basin, according to the release.
Kirk Trosclair, CEO of Fountain Quail Energy Services, said in a statement: “The sale of our treatment division to XRI is an exciting outcome for us and for a business that traces its lineage back to treating oilfield wastewater in the early days of the shale revolution. We look forward to seeing the continued growth of the combined platform with XRI and to sharpening the focus on our remaining water logistics, supply and disposal business focused in the Marcellus and Utica basins.”
Law firm Sidley Austin LLP led by partner Tim Chandler represented XRI Holdings in its acquisition. Simmons Energy, a division of Piper Jaffray, served as exclusive financial adviser to Fountain Quail Energy Services and CSL Capital Management on the transaction.
Callon Petroleum, currently a Permian Basin pure-play, will gain core oil-weighted positions in both the Permian and Eagle Ford Shale through its combination with Carrizo Oil & Gas.
An undisclosed company agreed to buy the Arkoma Basin assets from Encana for $165 million cash, which is in line with analyst estimates.
Ares-backed Development Capital Resources agreed to partner with an unnamed private operator to fund development of the Permian’s Wolfcamp Shale.