Permian shale’s premiere private midstream assets sell for $3.6B

By Luke Geiver | April 02, 2019

Stonepeak Infrastructure Partners will pay $3.6 billion for the largest privately-held midstream crude operation in the Permian Basin. Through the acquisition, Stonepeak will take control of Oryx Midstream, a crude oil gathering and transportation that already has long-term contracts in place with more than 20 customers and spans nearly one million acres. The total system runs roughly 1,200 miles across eight counties in Texas or New Mexico.

A section of the system is currently under construction, but upon completion will give Stonepeak more than 900,000 barrels per day of storage and takeaway capacity.

The Oryx system grew through the oversight and partnership of the Oryx management team, but also by private investors Post Oak Energy Capital, Quantum Energy Partners and two major Permian operators in WPX Energy and Concho Resources.

Concho owned a 23.7 percent equity interest in the system and will earn more than $2 billion in the sale of the asset to Stonepeak.

“Our investment in Oryx supported the continued growth of our assets in the Southern Delaware Basin with secured transportation for our production and improved oil price realizations,” said Jack Harper, president of Midland, Texas-based Concho Resources.

WPX will earn $350 million in net proceeds from the sale in addition to another $40 million it will save on equity investments. Proceeds from the sale will go to the operators balance sheet. “We secured flow assurance and ownership interests in critical midstream projects in the Delaware Basin before constraints ever occurred,” said Rick Muncrief, chairman and CEO of WPX, adding that the strategy helped protect the company’s pricing for production from the basin.

The existing Oryx management team will continue to run the assets and work to grow further the footprint across West Texas and New Mexico.

“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,” said Jack Howell, head of Stonepeak’s energy business. According to Howell, Stonepeak will work to maintain the current customer list while looking for new commercial opportunities across the value-chain.