Texas-based EnCap Flatrock Midstream will exit its interest in Nuevo Midstream for $1.5 billion in cash. Western Gas Partners will pick up the natural gas midstream support provider.
Nuevo was first created in 2011 through a $65 million EnCap investment. Commitments to Nuevo reached more than $300 million from an investor group led by EnCap Flatrock, management and Wells Fargo Energy Capital.
The transaction is likely to close by the end of the year, subject to regulatory approvals.
EnCap was unavailable for comment on the transaction at press time.
Nuevo is a pure-play midstream company focused on developing and operating natural gas gathering, compression, processing, treating, transportation and marketing services to oil and gas producers in the Delaware Basin in West Texas and Southeast New Mexico.
Western Gas is a growth-oriented master limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets to serve Anadarko and other third-party producers and customers.
EnCap Flatrock most recently closed its third fund on $3 billion, exceeding its $2.25 billion target, PEI reported in May. Fund III was oversubscribed and closed after four months in market.
LPs in the fund include the Public Employees Retirement Association of New Mexico and the Hartford Healthcare Corporation, according to Private Equity International’s Research and Analytics division. The Teachers’ Retirement System of Louisiana also committed $25 million to the fund.