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Blackstone agrees to $2bn Permian Basin gas pipeline buy

The firm is the latest private equity house to spend big on assets in the US oil and gas industry this year.

The energy-focused division of The Blackstone Group has agreed to pay $2 billion for one of the largest natural gas pipeline operators in the resource-rich Permian Basin in West Texas.

EagleClaw Midstream Ventures, based in Midland, Texas, will become a portfolio company of Blackstone after the New York-based private equity firm agreed to purchase the company from its financial sponsor, EnCap Flatrock Midstream. EagleClaw is focused on developing energy infrastructure opportunities in the Permian Basin and operates more than 375 miles of natural gas pipelines.

The deal is expected to close in July. EagleClaw’s management team will remain in their current roles.

Jefferies LLC served as EagleClaw’s financial advisor and provided $1.25 billion in debt financing for the transaction.

Blackstone’s acquisition comes at a moment of increased oil and natural gas production. The Permian Basin is projected to be the only oil-drilling location in the US to see an increase in production this year, according to Barclays analysts, with the number of wells expected to rise by more than 30 percent.

Several private equity firms have made recent transactions for oil and gas infrastructure.

Last week, energy buyout firm First Reserve sold its oil pipeline and terminal company to NuStar Energy for $1.47 billion. And earlier this month, Europe’s CVC Capital Partners purchased a 25 percent stake in Spanish oil transport and storage company CLH from Ardian for an estimated $1.5 billion.

Blackstone has invested over $12 billion across the energy industry. The group has said numerous times this year it is planning to launch a fund dedicated to infrastructure investing.