Lucid Energy Group LLC and its financial sponsor, EnCap Flatrock Midstream, said on Jan. 8 that they have entered into a definitive agreement to sell Lucid Energy Group II LLC for roughly $1.6 billion in cash.

Lucid and Encap will be selling to a joint venture (JV) controlled by Riverstone Global Energy and Power Fund VI LP, an investment fund managed by Riverstone Holdings LLC, and investment funds managed by the merchant banking division of The Goldman Sachs Group Inc. (NYSE: GS).

The participating investment funds managed by Goldman Sachs are West Street Capital Partners VII LP, West Street Global Infrastructure Partners III LP and West Street Energy Partners LP.

The transaction includes committed debt financing provided by Jefferies LLC. Closing is expected in first-quarter 2018 and is subject to customary approvals and closing conditions. Lucid II will retain its name and operate as a Riverstone and Goldman Sachs portfolio company. The members of the Lucid management team will remain in their current roles with Lucid II.

The Lucid II assets included in the transaction are located in the core of the northern Delaware Basin and are known as the South Carlsbad Natural Gas Gathering and Processing System and the Artesia Natural Gas Gathering and Processing System. Assets include about 1,700 miles of natural gas gathering pipelines and 585 million cubic feet per day (MMcf/d) of processing capacity, with an additional 200 MMcf/d under construction and scheduled to be in service by mid-2018.

Lucid II serves the region’s leading supermajor and independent oil and gas producers, which together have made long-term dedications and production volume commitments from about 450,000 acres spanning Eddy and Lea counties in southeast New Mexico.

Kirkland & Ellis represented the Lucid management team in connection with the sale. Kirkland also represented Jefferies in connection with providing fully underwritten financing to the new JV.