WhiteWater Midstream LLC is exploring a sale that its private equity owners hope will value the U.S. oil and gas pipeline operator at more than $2 billion, including debt, people familiar with the matter said Nov. 28.
The move shows how operational pipeline systems in the Permian Basin, the heart of the U.S. shale boom, have become highly-prized assets, as the production of oil and gas in that area has outpaced the ability of the industry to move it to market.
This has led to a number of pipeline companies or stakes in them being sold, attracting interest from private equity and infrastructure funds, which like the steady revenue streams these assets generate.
It is possible that WhiteWater's effort to sell itself may not lead to a deal, the sources cautioned, asking not to be identified because the matter is confidential.
Austin, Texas-based WhiteWater was founded in 2016 with backing from Denham Capital Management and Ridgemont Equity Partners.
Denham declined to comment. Ridgemont and WhiteWater did not immediately respond to requests for comment.
WhiteWater's main asset is a stake in the Agua Blanca natural gas pipeline in the Delaware portion of the Permian Basin, which commenced commercial operations earlier this year.
The Agua Blanca gas pipeline was initially set up as a joint venture between WhiteWater and WPX Energy Inc. (NYSE: WPX), with a capacity of 1.25 Bcf/d. In May, MarkWest Energy Partners took a 20% stake in the project, leaving WPX with 20% and WhiteWater holding the majority position.
Other Permian midstream deals that have been announced this year include assets belonging to Occidental Petroleum Corp. (NYSE: OXY) that were sold to a unit of EnCap Flatrock Midstream, and the Caprock Midstream system, bought by EagleClaw Midstream.
Apache Corp. (NYSE: APA) set up a $3.5 billion joint venture with Kayne Anderson Acquisition Corp. to help fund development of pipelines to support its Alpine High project.
Partners Group, which manages $84 billion worth of assets, said it was looking to make more acquisitions in Norway.
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.
Expect plenty of capital, plenty of volatility, plenty of shifts in investor strategies—and plenty of unfolding stories to track as the new year progresses.