In yet another deal involving water infrastructure for the U.S. oil and gas industry, TPG Capital announced Monday that it agreed to acquire a majority stake in Tailwater Capital-backed Goodnight Midstream of Dallas for $930 million.
The sale preempts Goodnight’s plans to go public, although Bloomberg reported in November that Tailwater was also looking at a possible sale of the company that would value it at $2 billion. Tailwater wouldn’t comment at the time.
Kirkland & Ellis was outside legal counsel to TPG Capital, which used BMO Capital Markets as its financial advisor.
Corporate partners Adam Larson and Kevin Crews co-led the deal, which included partner Sam Peca and associates Scott Delaney, Mike Pangrac and Cameron McCollum.
Also weighing in were Kirkland tax partners David Wheat and Lane Morgan; and environmental transactions partners Paul Tanaka (who works out of San Francisco and Houston) and Alexandra Farmer (who works out of D.C. and Houston) and associate Ty’Meka Reeves-Sobers.
Vinson & Elkins was outside counsel to Goodnight, which used Jefferies and Credit Suisse Securities (USA) as its financial advisors. Partner Gillian Hobson led the deal team with senior associates Ali Choate and Jeannie Poland.
Also advising on corporate matters were partner Chris Collins, senior associate Robbie Hopkins and associate Ayman Haq. Partners Ryan Carney and James Meyer and associate Christine Mainguy provided tax expertise.
Hobson and partner David Oelman were going to work on the IPO.
Water is essential for fracking operations in shale regions and there’s been a lot of deal activity around the sector.
Five Point Energy-backed WaterBridge Resources has been an active buyer, picking up water assets from Concho Resources unit COG Operating for an undisclosed sum, from Halcón Resources Corp. for $200 million and from NGL Energy Partners for $238 million.
WaterBridge also is thought to be considering an initial public offering in the first half of the year that could value it at $1 billion.
Gibson Dunn & Crutcher and Bracewell worked on the transaction for COG while White & Case’s Houston office assisted WaterBridge. Porter Hedges also has done work for WaterBridge.
Willkie Farr & Gallagher represented the management of Goodnight. The Willkie team was led by Houston partner Michael De Voe Piazza.
Existing Goodnight shareholders, including management, will keep a large minority interest in the company.
TPG Capital said it and existing shareholders agreed to commit more equity capital to support the continued growth of the business, which will have access to $300 million including that capital plus proceeds from committed debt financing.
The parties expect to close the transaction in the second quarter.
CEO Patrick Walker said in a statement that Goodnight is focused on building long-term innovative and cost-effective produced water solutions. “Our piped systems save our customers money while reducing the environmental impact of oil and gas production,” he said.
Goodnight has a network of 420 miles of dedicated produced water gathering and transportation pipelines and 50 saltwater disposal wells. It gathers, transports and disposes 350,000 barrels of produced water per day in the Permian, Bakken and Eagle Ford through long-term contracts with producers in the areas.
The company said that with 800,000 dedicated gross acres and 1.4 million barrels per day of permitted water disposal capacity, the company is well positioned to sustain high growth.
Christopher Ortega led the deal from TPG, which was founded in 1992 and has more than $100 billion in assets under management. TPG’s investments have included Discovery Midstream, EnLink Midstream, Jonah Energy and Copano Energy.