Pipeline company gobbling up competitor
EagleClaw Midstream, a Midland pipeline company, is buying Caprock Midstream of Humble for $950 million, scooping up a rival as pipeline capacity in West Texas remains in high demand.
Both companies, backed by private equity investors, are focused on the Delaware Basin, the western lobe of the Permian Basin, where producers are pumping crude and natural gas at record levels. The Delaware, which stretches into New Mexico, is the fastest-growing part of the Permian in oil and gas development.
Caprock, jump-started with funding from Dallas private equity firm Energy Spectrum Capital, was founded in 2015. EagleClaw is supported by Blackstone Energy, a New York investment firm. Blackstone last year bought EagleClaw for $2 billion from another equity firm, EnCap Flatrock Midstream of San Antonio
Eagle Claw’s acquisition of Caprock acquisition is expected to close later this year.
Pipeline capacity has become a precious commodity in the Permian, where bottlenecks are slowing delivery and forcing producers to discount crude by more than $10 a barrel to the U.S. benchmark price. The demand for pipe-
lines to move oil and gas to Gulf Coast markets has not only led to a boom in pipeline development in West Texas, but also pipeline acquisitions. Last year, Plains All American of Houston paid $1.2 billion to buy the Alpha Crude Connector pipeline gathering and storage system from Concho Resources of Midland and Dallas private-equity firm Energy Spectrum Capital.
Last month, Lotus Midstream struck a deal with Occidental Petroleum Corp. to buy the Houston company’s Centurion pipeline system, which extends from the Permian to the Cushing, Okla., oil storage and transportation hub. The sale was part of $2.6 billion deal in which Occidental also sold its export terminal near Corpus Christi to Moda Midstream.
EagleClaw’s acquistion of Caprock will make it the largest privately owned oil and gas pipeline and processing player in the booming West Texas basin.
EagleClaw recently partnered with Houston pipeline giant Kinder Morgan to start building the $2 billion Permian Highway Pipeline to carry natural gas from the Permian to the Houston region. The companies said Wednesday that they will go ahead with the project.
“Following our recent announcement of the Permian Highway Pipeline in partnership with Kinder Morgan, the acquisition of Caprock is another exciting chapter in the continued growth story of EagleClaw,” EagleClaw President Jamie Welch said.