Pictured is a WaterBridge produced water handling facility. The company owns and operates a system of produced water assets throughout the Southern Delaware Basin. (Source: WaterBridge Resources LLC)
WaterBridge Resources LLC kicked off the New Year by continuing its deal making spree. This time buying the produced water assets of Concho Resources Inc. (NYSE: CXO) in the Southern Delaware Basin.
WaterBridge said Jan. 3 it acquired the produced water assets comprised of three disposal wells with 45,000 barrels per day (bbl/d) of permitted capacity and about 44 miles of pipeline from COG Operating LLC, a subsidiary of Concho, for an undisclosed amount. The company also entered a long-term produced water management services agreement for the Permian Basin producer’s Southern Delaware Basin operations.
The Concho transaction follows a series of acquisitions WaterBridge, a Houston-based portfolio company of private-equity firm Five Point Energy, has made in recent months as it works to build out its Southern Delaware system to meet the produced water needs of shale producers in the region.
In late October, Halcón Resources Corp. (NYSE: HK) said it had agreed to sell all of its water infrastructure assets across the Delaware Basin. WaterBridge, which will pay up to $325 million for the assets over the next five years including a $200 million cash payment at closing, completed the transaction on Dec. 20.
Additionally, WaterBridge entered an agreement on Dec. 19 to buy Southern Delaware Basin water infrastructure assets from affiliates of NGL Energy Partners LP (NYSE: NGL). The $238.8 million cash transaction remains subject to customary closing conditions and is expected to finalize by February.
“As our Delaware Basin customers further evolve their well completion techniques, resulting in higher IPs and EURs, we continue to expand our asset base to meet their growing capacity needs,” Stephen M. Johnson, founder, president and CEO of WaterBridge, said in a statement on Dec. 21. “The WaterBridge team remains focused on improving and increasing our unique infrastructure footprint to better serve Delaware producers current and future requirements.”
Pro forma the Concho transaction, WaterBridge owns and operates over 1.2 million bbl/d of produced water disposal capacity throughout the Southern Delaware Basin that is connected via 300 miles of pipeline. The Delaware platform has about 285,000 dedicated acres under long-term contracts from 19 producers.
Under the terms of the water handling agreement with Concho, WaterBridge will manage all of the company’s produced water transportation and disposal subject to the dedication of operated acres and any future acreage operated by Concho within an 800,000-acre area of mutual interest in Reeves, Pecos and Ward counties, Texas.
“Concho’s decision to expand their relationship with WaterBridge further validates our approach in developing a large, integrated produced water handling network that offers producers the capacity and flow assurance needed to scale their development programs,” David Capobianco, CEO and managing partner of Five Point, said in a statement Jan. 3.
White & Case LLP represented WaterBridge in connection with the Concho transaction. Gibson, Dunn & Crutcher LLP represented Concho Resources in the transaction.
Emily Patsy can be reached at epatsy@hartenergy.com.
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