Partnership will develop Salt Creek Midstream in Delaware Basin

By Patrick C. Miller | April 23, 2018

Ares Management LP and ARM Energy Holdings LLC have formed a partnership to develop Salt Creek Midstream LLC in the Delaware Basin.

Once operational, Salt Creek will include multiple cryogenic processing facilities, as well as gas and crude gathering pipelines, compression and treating facilities. Salt Creek is owned by funds managed by the Ares Private Equity Group and ARM Energy. ARM Midstream Management—a subsidiary of ARM Energy—will serve as operator of the project.

Commissioning of the project’s initial phase is expected this month. By the end of 2018, Salt Creek is expected to have 260 million cubic feet per day of processing capacity, with additional expansion investments planned as producers are added to the system.

Salt Creek has currently secured commitments for more than 250,000 dedicated acres from multiple Delaware Basin producers. The company expects these commitments to provide decades of high-return drilling inventory, driving additional project growth and scale in a rapidly expanding basin.

“ARM’s downstream intelligence and in-depth fundamentals analysis provided us with the insight to identify Salt Creek as a unique midstream offering for Delaware Basin producers as we continue to build world-class midstream assets spanning the entire basin, as well as downstream market solutions for residue gas, NGLs and crude,” said Zach Lee, ARM Energy’s CEO.

Salt Creek also announced the successful close of its $350 million term loan facility. Deutsche Bank acted as sole arranger and underwriter of the credit facility, the proceeds from which will be used to fund further development and expansion of the project in the Delaware Basin. Key phases of Salt Creek’s development plan will continue to enter service throughout 2018.

“We believe that this company will benefit from the combination of our industry experience and long-term relationships in the sector, as well as ARM’s extensive midstream, downstream and marketing knowledge,” said Nate Walton, Ares partner and co-Head of North American private equity.

Headquartered in Houston—with offices in Calgary, Denver, Midland and Pittsburgh—ARM Energy is a producer services firm, active across all major North American oil and gas basins. Salt Creek is a full-service midstream provider covering more than 250,000 acres across Culberson, Reeves, Ward, Winkler, Lea, Pecos, and Eddy counties within the Delaware Basin.

Ares Management is a publicly traded global alternative asset manager with approximately $106.4 billion of assets under management through 2017. It has 18 offices in the U.S., Europe, Asia and Australia.