NGL Energy Partners LP (NYSE: NGL) said Nov. 12 it will exit the Bakken saltwater disposal business as the Tulsa, Okla.-based company shifts its focus elsewhere.
Tallgrass Energy LP (NYSE: TEP) agreed to buy NGL Water Solutions Bakken LLC and as a result acquire NGL’s Bakken water operations for $91 million cash. NGL’s Bakken water operations include five saltwater disposal wells located in McKenzie and Dunn counties, N.D. The company plans to use proceeds from the transaction to lower debt.
NGL made the decision to exit the Bakken saltwater disposal business, where it does not have a dominant position, to focus on other shale plays primarily in the Permian Basin, according to Mike Krimbill, the company’s CEO.
“We are pruning our water disposal business to further achieve prudent capital allocation, an increasing shift to a self-funding model and a continued focus on balance sheet strength and financial flexibility,” Krimbill said in a statement.
Krimbill noted the sale of the Bakken saltwater disposal business will reduce the company’s bank leverage to less than 3.25 times by fiscal year-end.
David G. Dehaemers Jr., president and CEO of the Tallgrass general partner, said the addition of NGL’s Bakken saltwater disposal business to Tallgrass’ recently expanded portfolio in the Bakken will further enhance the Leawood, Kan.-based company’s presence in the play.
“Over the past five years we have built preeminent water services infrastructure and this acquisition further expands our position as a leading provider of midstream water solutions in five of the nation’s most rapidly growing production regions,” Dehaemers said in a statement.
Most recently, Tallgrass acquired Buckhorn SWD Solutions LLC and Buckhorn Energy Services LLC, which collectively owned 10 saltwater disposal wells and about 39 miles of produced water gathering infrastructure in the Bakken.
The roughly $95 million acquisition established Tallgrass’ water infrastructure footprint in the Bakken when it closed in February 2018.
NGL Energy Partners said it expects to close the sale of its Bakken saltwater disposal business by year-end. Raymond James & Associates Inc. is the company’s financial adviser for the transaction.
Overall, 2018 was the Year of Consolidation as several E&Ps agreed to merge throughout the U.S., including inside and outside the prolific Permian Basin.
Activist investor Elliott Management offered to buy oil and gas producer QEP Resources in an all-cash deal valued at $2.07 billion, saying that the company is "deeply undervalued."
Hess is looking to sell its Bakken water services business in a proposed $225 million-cash transaction with a midstream energy joint venture between Hess and Global Infrastructure Partners.