Goldman, Riverstone partner on $1.6bn midstream purchase

Riverstone Holdings and the Goldman Sachs Group have banded together to purchase $1.6 billion of natural gas midstream assets in West Texas.

Their joint venture was created to acquire natural gas gathering and processing assets in the northern Delaware Basin, continuing a trend from 2017 that saw a high demand for such assets as natural gas production continues to increase in the US. The investors did not disclose how much they each committed to the deal.

Riverstone did not reply to a request for comment and Goldman Sachs declined to comment.

The two investors agreed to purchase the South Carlsbad and Artesia Natural Gas Gathering and Processing Systems from Lucid Energy Group, a US-based energy company backed by EnCap Flatrock Midstream. The assets together include around 1,700 miles of natural gas pipelines. The gathering systems are managed through the subsidiary Lucid Energy Group II, which will retain its name and management team, according to a statement.

Riverstone, which counts Goldman Sachs as a 12 percent minority owner, invested through its Global Energy and Power Fund VI, a fund launched in 2014 with a $7.5 billion target. Goldman Sachs invested through three managed funds – West Street Capital Partners VII, West Street Global Infrastructure Partners III and West Street Energy Partners.

Goldman Sachs’ $500 million deal last year for a stake in Riverstone was to gain access to one of the world’s largest energy investment firms. The deal valued New York-based Riverstone at $4 billion. Launched in 2000, the firm has since raised over $37 billion.

Riverstone took a hit when oil prices plummeted in 2014, but has been rebounding thanks to stabilised oil prices and a diversified portfolio that includes more natural gas and transmission assets.