Midstream agency Kinetik Holdings Inc. is buying Durango Permian LLC, which expands its operations in Eddy and Lea Counties, New Mexico.
The Durango Acquisition will increase Kinetik’s processing capability by 420 million cubic toes per day (MMcfpd), doubles gathering pipeline mileage, and provides over 60 new clients, a lot of whom are non-public, together with probably the most energetic producers within the Delaware Basin, the corporate stated in a current information launch.
Kinetik acknowledged it’ll purchase Durango for an mixture $765 million of money and fairness with as much as $75 million of contingent consideration tied to the capital value for the Kings Touchdown, which is at present beneath building.
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Durango’s belongings, positioned in Eddy, Lea and Chaves Counties, New Mexico, embrace roughly 2,400 miles of fuel gathering pipelines and roughly 220 MMcfpd of processing capability, in response to the discharge.
Durango is at present establishing Kings Touchdown, a brand new 200 MMcfpd greenfield processing complicated in Eddy County, which is predicted to be accomplished in April 2025. Kinetik stated it estimates a further $78 million of internet capital expenditures required to finish Kings Touchdown building.
Kinetik can even present low-pressure and high-pressure pure fuel gathering and processing companies beneath a newly executed, 15-year settlement with a big present Kinetik buyer in Eddy County, New Mexico. The infrastructure is predicted to be roughly $200 million of mixture capital by 2026, the corporate famous.
Additional, Kinetik plans to divest its 16 p.c fairness curiosity within the Gulf Coast Categorical pipeline (GCX) to an affiliate of ArcLight Capital Companions LLC for a complete of $540 million in money to assist fund the primary two introduced agreements. The acquisition value consists of $510 million in upfront money and a further $30 million deferred money fee due upon a remaining funding determination on a capability growth undertaking. The transaction is predicted to shut within the subsequent few weeks.
“Following on from our super success with our current Lea County, New Mexico system growth, we’re delighted to now announce this sequence of strategic transactions that additional our growth into New Mexico and considerably improve our footprint throughout the Northern Delaware Basin,” Kinetik President and CEO Jamie Welch stated.
“The Durango Acquisition and New Eddy County Settlement collectively characterize roughly $1 billion of latest funding,” Welch continued. “The construction for the Durango Acquisition has roughly 60 p.c upfront consideration with 40 p.c of the consideration deferred till July 2025, which is after the anticipated Kings Touchdown in-service date”.
“Following the Durango Acquisition and the anticipated completion of Kings Touchdown, Kinetik will personal and function over 2.4 billion cubic toes per day of processing capability, completely within the Delaware Basin, and roughly 4,600 miles of pipelines throughout eight counties,” he outlined.
“Moreover, the Durango Acquisition and New Eddy County Settlement supply full management of plant merchandise together with greater than 350 million cubic toes per day of residue fuel and effectively over 60,000 barrels per day of pure fuel liquids, offering vital extra upside worth by way of system optimization, modifications to present industrial contracts, and integration with our Pipeline Transportation section,” he concluded.
Kinetik describes itself as a completely built-in, pure-play, Permian-to-Gulf Coast midstream C-corporation working within the Delaware Basin. Kinetik is headquartered in Houston and Midland, Texas. Kinetik gives complete gathering, transportation, compression, processing and treating companies for corporations that produce pure fuel, pure fuel liquids, crude oil and water.
To contact the writer, electronic mail rocky.teodoro@rigzone.com
