Fundraising

GE backs I Squared’s Whiptail Midstream

GE Energy Financial Services has paid $79.8m for a 28% stake in the NY fund manager’s new gathering system, in the San Juan Basin.

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GE Energy Financial Services has bought a 28 percent stake in Whiptail Midstream less than a month since I Squared Capitalacquired the newly constructed gathering system from oil and gas group WPX Energy for $285 million.

The New York-based infrastructure investment firm said GE Energy Financial Services bought the stake for $79.8 million. Whiptail is a subsidiary of Cube Midstream, a portfolio company of the ISQ Global Infrastructure Fund, I Squared’s debut vehicle that closed on $3 billion in April 2015.

I Squared retains the controlling 72 percent interest in the midstream company, while WPX will continue to operate the system for at least two years, at which time it will have the option of continuing its operations role. In addition to the $285 million I Squared paid for the asset in cash, it has also pledged to invest an additional $24 million in the system.

“When we initially acquired the gathering system in March, the idea was to bring in a high-quality partner,” I Squared Capital partner Adil Rahmathulla told Infrastructure Investor. “We’re very pleased to be working with GE Energy Financial Services given both their financial strength and their deep expertise in the oil and gas industry. We have a long history of working with GE and I’m happy to be collaborating with them again,” he added.

Designed and constructed by WPX, the 220-mile long system comprises three gathering lines – oil, gas and water – that span nearly 100,000 acres in north-western New Mexico and south-western Colorado.

Whiptail will continue to support WPX’s multi-year drilling programme in the basin, but will also look to expand and offer other producers an efficient and reliable means of transporting commodities to market, I Squared said in a statement.

“The idea is to position Whiptail as the premier midstream company in the San Juan Basin,” Rahmathulla said.

According to the statement, the collaboration between GE and I Squared extends beyond Whiptail, with the two companies looking to invest together in other oil and gas infrastructure in the basin.