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Blackstone Agrees To Purchase EagleClaw At $2 Billion Pricetag

Pipeline

Funds managed by private equity giant Blackstone will purchase EagleClaw Midstream for $2 billion in a deal expected to close in July, according to a new report by Reuters.

EagleClaw is the largest private pipeline operator in West Texas’ Delaware basin.

Last August, Blackstone said it had budgeted for $1.5 billion in investments in the Permian basin, encouraged by low barrel prices that have sunk the value of oil and gas companies for the past 2.5 years. Other private equity firms, such as the Carlyle Group and CV Partners, are also pursuing similar growth strategies.

The private equity money from Blackstone and others is crucial to the resurgence of drilling in unconventional areas. Blackstone’s funding for the deals comes from an $8 billion pool raised in early 2015, but had mostly been unused until last year.

In 2016, the Permian basin became a national favorite for new investments as oil prices recovered to the $50 range. The basin, shared between Texas and New Mexico, garnered tripled investment last year compared to 2015 figures.

Operators of oil fields in the Permian started started up production as oil inched higher, and a number of private equity firms got interested in the play. Pioneer Resources, for one, said in June that it was planning to allocate $1.8 billion – that’s 90 percent of its budget – to its Permian business. Occidental Petroleum, another major in the Permian, said it was going to spend $3 billion to raise its output in the play by 4-6 percent.

Barclays estimates that the Delaware portion of the Permian has garnered 46 percent of total private equity investments since the resurgence began.

EagleClaw’s assets consist of 375 miles of natural gas pipeline and 320 million cubic feet per day of processing facilities.

By Zainab Calcuttawala for Oilprice.com

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