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NGL Energy Partners to acquire another Delaware Basin water company for $600M

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NGL Energy Partners to acquire another Delaware Basin water company for $600M

As part of its ongoing water strategy in the Delaware Basin, NGL Energy Partners LP agreed to acquire all equity interests of Hillstone Environmental Partners LLC from private equity investment firm Golden Gate Capital for approximately $600 million.

NGL Energy Partners plans to integrate the Hillstone system into its Delaware Basin platform to boost efficiencies, according to a Sept. 26 news release.

Hillstone's interconnected water pipeline transportation and disposal system in the basin has a permitted disposal capacity of about 580,000 barrels per day. It also has a new network of produced water pipelines with about 680,000 bbl/d of transportation capacity. Hillstone holds another 22 permits for the development of an additional 660,000 bbl/d of disposal capacity. Hillstone has over 110,000 acres contracted under long-term dedications.

"This transaction is highly complementary to our Delaware Basin asset footprint," NGL Energy Partners CEO Mike Krimbill said. "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."

NGL Energy Partners also acquired the assets of Mesquite Disposals Unlimited LLC for $892.5 million in July. Mesquite's assets include a produced water pipeline transportation and disposal system in the Delaware Basin.

Barclays and Jefferies provided a committed debt financing for the deal, which is expected to close this year, subject to certain closing conditions.

Barclays is serving as financial adviser to NGL Energy Partners. Winston & Strawn LLP is acting as legal counsel for the Hillstone deal, while Hunton Andrews Kurth LLP is serving as legal counsel for the financing deals. Tudor Pickering Holt & Co. and Jefferies are acting as financial advisers to Golden Gate Capital and Hillstone, while Kirkland & Ellis LLP and Nob Hill Law Group PC are acting as legal counsel to Golden Gate Capital and Hillstone.