Private equity firms to give Eagle Ford focused BlackBrush, TexStar Midstream a boost

EIG Global Energy Partners (EIG) and HM Capital Partners (HM) will form a new partnership to grow the Eagle Ford shale-focused BlackBrush Oil & Gas LP and TexStar Midstream Services LP.

EIG has committed $420 million of capital ($220 million equity and a $200 million senior credit facility) for a controlling interest in the partnership with HM contributing its existing interest in San Antonio, TX-based BlackBrush and TexStar Midstream Services.

BlackBrush has 70,000 acres under lease in the Eagle Ford shale while TexStar Midstream Services has been expanding its 125 mile low pressure gathering system in Frio and LaSalle Counties in Texas in order to handle future expected Eagle Ford and Buda gas volumes.

The EIG investment will be used to expand operations in the Eagle Ford and other unconventional tight oil plays in South Texas including Olmos, San Miguel, Buda and Chalk. It will also be used to continue the build out of TexStar Midstream Services facilities, including low pressure sour gas gathering, treating and compression as well as oil pipelines and terminals.

Currently, Houston-based TexStar is expanding its 125 mile low pressure gathering system in Frio and LaSalle Counties in Texas to handle future expected Eagle Ford and Buda gas volumes. Treating capacity is being increased and the sour gas capacity will be over 30 MMcfd by the end of the first quarter 2011. In addition, over 40 miles of new gathering lines are currently being planned which will also be in place by December. TexStar will be installing over 2,000 hp in additional compression to the current 1,400 hp. TexStar is routing a gas export line to the Three Rivers area.

HM Capital Partners of Dallas, Texas will continue to maintain a material ownership position in the partnership. BlackBrush Oil & Gas LP and TexStar Midstream Services LP became a part of the HM portfolio in 2004.



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