Houston midstream companies form DJ Basin joint venture

By Patrick C. Miller | December 15, 2017

Two Houston-based companies—Noble Midstream Partners and Greenfield Midstream—have formed a new joint venture partnership in the DJ Basin called Black Diamond Gathering.

Black Diamond will acquire Saddle Butte Rockies Midstream—a Colorado company—and its affiliates for $625 million. Saddle Buttes’ assets include a large integrated crude gathering system with about 160 miles of pipeline, 300,000 barrels per day of transport capacity and 210,000 barrels of oil storage capacity.

“Saddle Butte is a strategic expansion of our footprint in the DJ Basin, which creates a premier DJ Basin crude gathering system and significantly enhances our third-party customer base,” said Terry Gerhart, Noble Midstream CEO. “The expanded crude gathering system and JV structure provides Noble Midstream flexibility to enhance returns on future capital projects.”

Saddle Butte has roughly 115,000 dedicated acres from six customers under fixed-fee arrangements, including about 72,000 dedicated acres from PDC Energy. After the acquisition closes, PDC Energy plans to expand its Saddle Butte acreage dedication to around 96,000 acres and extend its dedication by five years, bringing the dedication contract duration to 12 years from close.

Noble Midstream will operate and control the Saddle Butte system upon closing, which is expected in the first quarter of 2018. Noble Midstream and Greenfield Midstream will jointly provide commercial efforts to attract additional producer dedications.

“This is a powerful combination,” said Jeremy Ham, Greenfield CEO. “The Denver Julesburg Basin is one of the fastest growing plays in the country, Noble Midstream is a world class midstream provider, and we bring strong producer relationships and a long history of creating value for our stakeholders.”

Greenfield Midstream is an EnCap Flatrock Midstream portfolio company. Noble Midstream will fund 50 percent of the purchase price and will receive a 4.4 percent ownership in the joint venture. The partnership’s 54.4 percent ownership will be held in a wholly owned Noble Midstream subsidiary, Laramie River DevCo LP. Greenfield Midstream will own 45.6 percent of the joint venture.