NGL Energy Partners LP Closes Acquisition of Hillstone
November 01 2019 - 6:30AM
Business Wire
NGL Energy Partners LP (NYSE: NGL) (“NGL” or the “Partnership”)
announced it has closed its previously announced acquisition of 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, which complements NGL’s existing Delaware Basin
water franchise.
“Combined with our recent acquisition of Mesquite, we now have
over 250,000 acres dedicated to our Delaware Basin water disposal
system, with over 330,000 barrels per day of minimum volume
commitments and an acreage weighted average remaining contract term
of over 10 years,” stated Doug White, NGL’s Executive Vice
President of Water Solutions. “The acquired Hillstone contracts are
with high-quality, investment-grade producers, including some of
the largest oil and gas companies in the United States. Our
Delaware Basin water disposal system now consists of approximately
58 disposal facilities, 112 injection wells, approximately 2.8
million barrels per day of operating disposal capacity and
approximately 380 miles of water disposal and transportation
pipelines. We expect over 80% of the volumes on this system to be
delivered via pipeline and to continue to grow our pipeline
infrastructure and interconnectivity of the system.”
The long-term, fee-based Delaware Basin contracts acquired
through this acquisition include the following:
- 20 year Poker Lake acreage dedication, including first-call
rights for water disposal covering approximately 70,000 acres, with
XTO Energy, an ExxonMobil subsidiary;
- 10 year acreage dedication, including first call rights, with a
leading independent exploration and production company; and
- Multiple contracts, including certain minimum volume
commitments and acreage dedications, with one of the largest crude
oil and natural gas exploration and production companies in the
United States.
NGL financed this transaction utilizing $200 million of
preferred equity, with the remaining balance funded under the
Partnership’s revolving credit facility. The Partnership’s
revolving credit facility was recently amended to re-allocate the
working capital and acquisition facilities, along with certain
adjustments to financial covenants, which better aligns with the
Partnership’s operational strategy following the recent sale of the
majority of its refined products segment. The Partnership’s
revolving credit facility now has a total borrowing capacity of
$1.790 billion, with $600 million allocated to the working capital
facility and $1.190 billion allocated to the acquisition facility.
Beginning with the period ending December 31, 2019, the Partnership
will be subject to a total leverage covenant (including working
capital borrowings) of 5.75x which will adjust to 5.50x on June 30,
2020, a senior secured leverage covenant (also including working
capital borrowings) of 3.50x, and an interest coverage covenant of
2.50x.
Barclays acted as financial advisor to NGL. Winston & Strawn
LLP acted as legal counsel to NGL on the Hillstone transaction.
Hunton Andrews Kurth LLP served as legal counsel to NGL on the
preferred equity financing transaction.
Analyst/Investor Call – November 8, 2019
Members of NGL’s management team intend to host a call to
discuss the Hillstone acquisition and other current events, along
with the results of its fiscal second quarter ended September 30,
2019 on Friday, November 8, 2019 at 10:00 am CST. Analysts,
investors, and other interested parties may access the conference
call by dialing (800) 291-4083 and providing access code 2980107.
An archived audio replay of the call will be available for 7 days
beginning at 1:00 pm CST on November 8, 2019, which can be accessed
by dialing (855) 859-2056 and providing access code 2980107.
An updated investor presentation will be posted on NGL’s
Investor Relations website at
www.nglenergypartners.com/investor-relations/presentations after
the filing of the Partnership’s Quarterly Report on Form 10-Q.
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 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 business segments: 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/20191101005106/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, 303-815-1010 Executive Vice President -
Water Solutions Doug.White@nglep.com
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