Quantum Energy, partners to sell Oryx Midstream to Stonepeak Infrastructure for $3.6 billion

4/2/2019

MIDLAND -- Affiliates of Quantum Energy Partners, Post Oak Energy Capital, Concho Resources, WPX Energy and other investors have announced that they have entered into a binding agreement to sell substantially all of the assets of Oryx Southern Delaware Holdings LLC and Oryx Delaware Holdings LLC (collectively, "Oryx") to funds managed by Stonepeak Infrastructure Partners ("Stonepeak") for a cash purchase price of approximately $3.6 billion. For Stonepeak, Oryx represents an ideal platform for providing critical crude oil transportation services in the Permian Basin that is well-positioned to capitalize on growing production, given its differentiated service offering, expansive geographic footprint, scalable in-place infrastructure, and unique customer diversification. Oryx will retain its name and continue to be headquartered in Midland, Texas. Its leadership team, led by Brett Wiggs and Karl Pfluger, will remain in their current roles and are investing alongside Stonepeak in this transaction.
 
Oryx is the largest privately-held midstream crude operator in the Permian Basin. The company owns and operates a crude oil gathering and transportation system underpinned by nearly one million acres under long-term dedications from more than 20 customers, including many of the Permian's leading oil and gas producers. The system's 2.1 MMbbl of storage and approximately 1,200 mi of in-service and under-construction pipeline span eight counties in Texas and two in New Mexico, representing a footprint across the core of the Delaware Basin that features the most economic and long-lived drilling resource in the United States. Upon completion of the remaining part of the system under construction, Oryx's total Delaware Basin transportation capacity will ultimately exceed 900,000 bpd and access multiple takeaway options, providing customers the differentiated service flexibility they need to maximize the value of their production.
 
Brett Wiggs, CEO of Oryx commented, "We are grateful for our productive five-year relationship with Quantum and Post Oak, whose knowledge and industry expertise were strong factors in our growth and success to-date. As we begin our next chapter and new partnership with Stonepeak, we look forward to the operational and capital support they will provide our team as we continue to aggressively grow our footprint in the Permian Basin. Most importantly, we are fortunate to have the opportunity to lead Oryx as we enter this next growth stage, maintaining strong relationships with our customers, and continuing to provide the highest level of service."
 
Dheeraj Verma and Garry Tanner, partners at Quantum Energy Partners commented, "We would like to thank all of our partners who helped build Oryx into the premier privately-owned midstream system in the Permian basin. Partnering with exceptional entrepreneurs like the Oryx management team has been the hallmark of our success over the years. Additionally, this business is a great example of how our combined upstream and midstream expertise can translate into significant value creation for our portfolio companies and limited partners over time. We are also grateful for our cornerstone industry partners, Concho and WPX, who were a key component of Oryx's success."
 
"The development, buildout and ultimate commercialization of the Oryx crude oil gathering and transportation system in the preeminent oil basin in North America has resulted in exceptional value creation for customers and owners," remarked Frost Cochran, managing director of Post Oak Energy Capital. "We have great respect for the foresight and execution capabilities of Oryx's management team, our producer partners, capital partners and Midland based partners that led to the formation of this extraordinary infrastructure asset."
 
Jack Howell, partner and head of Stonepeak's energy business, commented, "Stonepeak is delighted to partner with the Oryx management team to build upon the impressive franchise they have established, and our extensive experience in the Permian uniquely qualifies us to help transition Oryx into the next phase of its evolution. Oryx is the most attractive private Permian midstream asset Stonepeak has evaluated and we view it as a strategic platform and a core North American crude infrastructure asset. Our critical focus will be on continuing to provide Oryx's diversified customer base with best in class service offerings to accommodate their growing production while also pursuing new commercial opportunities across the value-chain."
 
Advisors
Barclays, acting through its investment bank, advised Stonepeak Infrastructure Partners on the transaction. A Barclays-led arranger group including Goldman Sachs, RBC Capital Markets, and Jefferies LLC have provided a $1.5 billion Term Loan B in support of the transaction, which will include a refinancing of the existing Oryx Southern Delaware Holdings, LLC facility and consolidation of Oryx Southern Delaware Holdings LLC and Oryx Delaware Holdings LLC (collectively, "Oryx") into a single Borrower.
 
Jefferies LLC and Citi acted as financial advisors to Oryx and its sellers.
 
Shearman and Sterling LLP and Vinson & Elkins LLP served as legal counsel to Oryx. Stonepeak was represented by Hunton Andrews Kurth LLP and Sidley Austin LLP with regards to the transaction, and Simpson Thatcher & Bartlett LLP, its fund counsel. Latham & Watkins, LLP represented the lender group.

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