Blackstone to acquire EagleClaw for $2bn

June 2017 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

June 2017 Issue

In a deal worth approximately $2bn, EagleClaw Midstream Ventures, LLC has announced that it is to be sold to funds managed by Blackstone Capital Partners.

An all-cash transaction, the binding agreement will see Blackstone Energy Partners – the energy-focused private equity business of Blackstone – acquire EagleClaw, a subsidiary of EagleClaw Midstream Services, LLC. The deal also includes approximately $1.25bn in stapled debt financing provided by Jefferies LLC.

Headquartered in Midland, Texas, EagleClaw is a midstream company focused on developing infrastructure opportunities in the Permian Basin. The company provides natural gas producers with a wide array of midstream services including gathering, compression, treating, processing and transportation. EagleClaw is led by president and chief executive Bob Milam, executive vice president and chief operating officer Curtis Clark and executive vice president and chief commercial officer Blake Bixler. The company’s financial sponsor is EnCap Flatrock Midstream.

“This transaction is a very exciting moment in our advancing growth story,” said Mr Milam. “I am extremely proud of our team and grateful for our outstanding, five-year relationship with EnCap Flatrock Midstream. We are very fortunate to have had such a great financial partner. EnCap Flatrock brought consistent value to our strategic planning process. They helped us navigate the opportunities and challenges of our early years with growth capital, technical expertise, decades of commercial experience and valuable contacts.

“As we begin a new chapter, we will continue to deliver the same outstanding level of service our customers expect while we work with Blackstone to deploy additional capital and to expand our footprint in the Delaware Basin. Blackstone has a deep understanding of the compelling fundamentals of the upstream and midstream economics in the Permian, an outstanding reputation as an investor in the energy sector and the scale to take EagleClaw to the next level.”

EagleClaw will retain its name and operate as a Blackstone portfolio company following the completion of the transaction. In addition, the leadership team and fundamentally all of the company’s employees will remain in their current roles.

“Our extensive experience over the past two decades as an investor across all segments of the energy sector, access to capital on a very large scale and firsthand knowledge of the Permian as an owner of oil and gas producers in this region make Blackstone uniquely well qualified to acquire EagleClaw,” said David Foley, senior managing director of Blackstone and CEO of Blackstone Energy Partners. “Bob Milam and his team have established excellent relationships with the leading Permian-focused oil and gas companies. We are pleased to partner with management to ensure EagleClaw is well positioned to continue to serve the rapidly growing future needs of its expanding customer base, creating additional jobs for American workers and providing significant benefits to the economy.”

Acting as EagleClaw’s exclusive financial adviser in connection with the transaction and sole provider of the committed debt financing was Jefferies LLC. Advising Blackstone was Morgan Stanley & Co. LLC and Skip McGee of Intrepid Partners LLC. Serving as legal counsel to Eagleclaw was Frost Brown Todd LLC, with Thompson & Knight LLP having represented EnCap Flatrock Midstream. Blackstone was represented by Vinson & Elkins LLP.

The Blackstone/EagleClaw transaction is expected to close by the end of July 2017.

EnCap Flatrock Midstream managing partner and founder Bill Waldrip concluded: “The sale to Blackstone rewards the EagleClaw team for many years of very hard work. We are confident that Blackstone is the right partner to take EagleClaw to the next level and look forward to watching its story evolve.”

Fraser Tennant