NGL Energy Partners LP Announces Definitive Agreement to Acquire Hillstone
September 26 2019 - 6:31AM
Business Wire
NGL Energy Partners LP (NYSE: NGL) (“NGL” or the “Partnership”)
announced it has executed a definitive agreement to acquire all of
the equity interests of Hillstone Environmental Partners, LLC
(“Hillstone”) from Golden Gate Capital for approximately $600
million, subject to certain adjustments. Hillstone provides water
pipeline and disposal infrastructure solutions to producers with a
core operational focus in the state line area of southern Eddy and
Lea Counties, New Mexico and northern Loving County, Texas in the
Delaware Basin.
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Pro Forma Northern Delaware Basin Asset
Map includes existing assets, assets under construction, pipelines
and pipeline rights of way. (Photo: Business Wire)
Hillstone has a fully interconnected produced water pipeline
transportation and disposal system, which currently consists of 19
salt water disposal wells, representing approximately 580,000
barrels per day of permitted disposal capacity, and a newly-built
network of produced water pipelines with approximately 680,000
barrels per day of transportation capacity. Hillstone also has an
additional 22 permits to develop another 660,000 barrels per day of
disposal capacity. NGL expects to integrate the Hillstone system
into its existing Delaware Basin platform to maximize uptime and
redundancy for its producer customers.
All of the water volumes on Hillstone’s Northern Delaware Basin
system are delivered via multiple, large-diameter pipelines.
Hillstone also has an aggregate of over 110,000 acres contracted
under long-term dedications with priority disposal rights or
minimum volume commitments.
“We have made substantial progress in our ongoing water strategy
in the Delaware Basin, and the Hillstone acquisition represents
another important milestone for our Water Solutions franchise
following the closing of our combination with Mesquite in July,”
stated Mike Krimbill, NGL’s CEO. “This transaction is highly
complementary to our Delaware Basin asset footprint. It not only
adds a redundant, interconnected produced water pipeline system
with significant permitted disposal capacity that fits perfectly
within our existing footprint, but importantly, it also supports
our ongoing strategy of increasing NGL’s cash flow
predictability.”
“The integration of the Mesquite assets is fully underway and
providing immediate benefit to our customers. The certainty of
offtake and reliability of our integrated system of large diameter
pipelines will provide approximately 2.7 million barrels per day of
operational disposal capacity in the Delaware Basin, including the
addition of Hillstone,” stated Doug White, NGL’s Executive Vice
President of Water Solutions. “The high-quality Hillstone assets
include long-term contracts with investment grade producers. The
contracts have an average remaining term of greater than 10 years,
minimum volume commitments, and first call priority volume
commitments that minimize impacts of timing related to recycle and
reuse activities.”
NGL has arranged financing for the transaction including certain
preferred equity and debt commitments in an amount necessary to
fund the entire purchase price. This transaction, which NGL
estimates has been made at an approximately 7x multiple of
forecasted run-rate EBITDA once certain contracted volumes are
online next year, is expected to be accretive to distributable cash
flow per unit in Fiscal 2021, the first full year of ownership.
The transaction remains subject to satisfaction of specified
closing conditions, including expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. NGL expects this transaction to close in
2019.
Barclays is acting as financial advisor to NGL. Barclays and
Jefferies have provided a committed debt financing to NGL to
support the transaction. Winston & Strawn LLP is acting as
legal counsel to NGL on the Hillstone transaction. Hunton Andrews
Kurth LLP is serving as legal counsel to NGL on the financing
transactions.
Tudor, Pickering, Holt & Co. and Jefferies are acting as
financial advisors to Golden Gate Capital and Hillstone. Kirkland
& Ellis LLP and Nob Hill Law Group, P.C. are acting as legal
counsel to Golden Gate Capital and Hillstone.
Forward-Looking Statements
Certain matters contained in this press release include
“forward-looking statements.” All statements, other than statements
of historical fact, included in this press release may constitute
forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that these expectations will prove
to be correct. These forward-looking statements are subject to
certain known and unknown risks and uncertainties, as well as
assumptions that could cause actual results to differ materially
from those reflected in these forward-looking statements. Factors
that might cause actual results to differ include, but are not
limited to: the conditions to the completion of the acquisition may
not be satisfied or the regulatory approvals required for the
acquisition may not be obtained on the terms expected, on the
anticipated schedule, or at all; financing may not be available on
favorable terms, or at all; closing of the acquisition may not
occur or be delayed; the Partnership may be unable to achieve the
anticipated benefits of the acquisition (including with respect to
contracted volumes); revenues following the acquisition may be
lower than expected; the risk factors discussed from time to time
in each of our documents and reports filed with the SEC.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this press release, which
reflect management’s opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL
owns and operates a vertically integrated energy business with four
primary businesses: Crude Oil Logistics, Water Solutions, Liquids,
and Refined Products and Renewables. For further information, visit
the Partnership’s website at www.nglenergypartners.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20190926005405/en/
NGL Energy Partners LP Investor Relations: Trey Karlovich,
918-481-1119 Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com or Linda Bridges, 918-481-1119 Senior Vice
President - Finance and Treasurer Linda.Bridges@nglep.com
Commercial: Doug White, 720-213-1579 Executive Vice President -
Water Solutions Doug.White@nglep.com
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