WaterBridge raises $345 million for Permian expansion

By Rachel Adams-Heard on 12/18/2019

HOUSTON (Bloomberg) - WaterBridge Holdings LLC, a U.S. company that supplies water to the fracking industry, is scooping up more infrastructure in the Permian basin, this time from private equity-backed drillers.

The closely held company has acquired almost 100 miles of pipeline and seven disposal wells from Ares Capital Corp.’s Primexx Energy Partners Ltd., Warburg Pincus’s Tall City Exploration III LLC and Blackstone Energy Partners’ Jetta Permian LP, according to people familiar with the matter, who asked not to be named because the information isn’t yet public.

To finance those deals, WaterBridge issued $195 million of common equity to private equity firm Five Point Energy, the people said. It also issued $150 million of preferred equity to hedge fund Magnetar Capital, which has the right to acquire another $100 million, they said.

While drilling activity in the Permian has been cooling in recent months, the business of supplying water to shale producers in the biggest U.S. oil patch – and disposing of the wastewater – continues to attract private equity. Spending on oilfield water management in the U.S. is forecast to average $17 billion per year in 2019 through 2028, according to a recent report from Bluefield Research.

WaterBridge, which is backed by Five Point Energy, has signed deals with Permian operators including Concho Resources Inc., Halcon Resources Corp. and PDC Energy. Singaporean sovereign wealth fund GIC Pte acquired a minority stake in WaterBridge earlier this year in a deal that valued the company at about $2.8 billion, a person familiar with the matter said at the time.

The latest acquisitions mean that WaterBridge now has long-term commitments for more than 600,000 acres in the southern portion of the Permian’s Delaware sub-basin.

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