NGL Energy Partners To Add High Sierra To Its Coffers

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price
693MM
Description

Bought company with 3 core business segments, gaining crude oil segment handling approximately 50,000 bbl/d of crude & controls 32 pipeline injection facilities, 3 crude oil terminals & approximately 90 tractor-trailers; water services segment handling more than 80,000 bbl/d water through a 60,000 bbl/d recycling plant in WY Pinedale anticline, 7 disposal plants DJ Basin Niobrara crude oil play and a transportation and frac tank rental operation with 50 tractor trailers in OK & KS Mississippi lime; gas liquids transportation & marketing segment leases more than 2,000 rail cars, owns 6 transloaders and leases 4 rail sites to move approximately 45,000 bbl gas liquids/d from coast to coast.

NGL Energy Partners LP, Tulsa, Okla., (NYSE: NGL) has acquired Denver-based High Sierra Energy LP, and its general partner High Sierra Energy GP LLC for $693 million in cash and units.

Total consideration includes working capital of approximately $38 million, $153 million in cash, assumed indebtedness of $95 million and $445 million in equity.

High Sierra Energy has three core business segments: crude oil gathering, transportation and marketing; water treatment, disposal, recycling and transportation; and natural gas liquids transportation and marketing.

The crude oil segment handles approximately 50,000 barrels per day of crude and controls 32 pipeline injection facilities, three crude oil terminals (two of which provide barge service) and approximately 90 tractor-trailers.

The water services segment handles over 80,000 barrels of water per day through a 60,000 barrels-per-day recycling plant in the Pinedale anticline of Wyoming; seven disposal plants (two of which include treating and recycling facilities) in the Niobrara crude oil play in the D-J Basin; and a transportation and frac tank rental operation with 50 tractor trailers within the Mississippian lime crude oil play in Oklahoma and Kansas.

The natural gas liquids transportation and marketing segment leases over 2,000 rail cars, owns six transloaders and leases four rail sites to move approximately 45,000 barrels per day of natural gas liquids from coast to coast.

NGL chief executive Michael Krimbill says, “Combining NGL and High Sierra creates a dynamic and diversified mid-cap MLP that will provide multiple services to upstream customers including water treatment and transportation, crude oil gathering, transportation and marketing as well as natural gas liquids transportation and marketing. With our combined fleet of more than 3,000 rail cars, 18 natural gas liquids terminals from coast to coast, three crude oil terminals, over 90 trucks, a substantial wholesale marketing and supply network plus retail demand in excess of 140 million gallons of propane annually, we will be a full-service midstream solution for gas plant and fractionation operators, crude oil producers, refiners and retailers across the country.”

High Sierra CEO James J. Burke says, “This merger has great synergies and creates a diversified midstream company with multiple solutions for the producer operating in some of the country’s most prolific oil and gas plays. The combined entity will have a strong balance sheet and ready access to the public debt and equity markets. This will enable us to expand our geographic footprint and exploit the vast opportunities in the exploding water and crude oil arenas. We could not ask for a better fit between the two companies.”

Tortoise Capital Resources Corp., Leawood, Kansas, (NYSE: TTO), a capital sponsor of High Sierra, received $9.2 million in cash and approximately 1.2 million units of NGL at the close valued at approximately $28.2 million, implying aggregate consideration of approximately $37.6 million.

Robert W. Baird & Co. Inc. was financial advisor to NGL Energy Partners. Winston & Strawn LLP was legal counsel.