Navitas Midstream recently announced it bought natural gas gathering and processing assets from a subsidiary of Apache Corporation. The gas pipelines currently serve East Texas counties Midland and Upton. Financial specifics regarding the deal are undisclosed. This is the second acquisition of assets for Navitas within the Midland Basin.
Roughly 114 miles of low- and high-pressure pipelines with ranges in diameter from 2 to 12 inches. The natural gas and natural gas liquids will be sent to a nearby cryogenic processing plant included in the acquisition. Cryogenic processing is used to separate natural gas from its liquid counterparts. By lowering the temperature of the natural gas liquid to triple-digit subzero degrees, butane, ethane and propane are condensed and extracted. During the process, methane is stripped as well for use in other facilities. The Midland/Upton cryogenic plant has a production capacity of 30 million cubic feet per day.
"We are excited to further expand our footprint in the core of the Midland Basin with an active, high quality producer such as Apache," Navitas founder and CEO R. Bruce Northcutt said in a press release. "This transaction marks our second natural gas gathering and processing acquisition in the area. The addition of these assets signals our continued confidence in the long-term growth potential of this basin. Our team has a track record of successfully acquiring, expanding and operating assets in competitive basins."
Navitas expands its presence in Texas
Private equity firm Warburg Pincus provided equity to Navitas for the deal. Warburg Pincus, a globally recognized firm, previously worked with Navitas in closing a separate East Texas-based natural gas deal in September 2015.
Navitas has steadily gained pipelines and processing plants across Texas since its inception. According to a company press release, Navitas purchased an estimated 1,000 miles of natural gas pipeline in Martin, Midland and Glasscock counties from DCP Midstream. The associated cryogenic processing plant acquired in that deal has a 60 million cubic feet per day capacity.
Owned and operated by Phillips 66 and Spectra Energy, DCP is the largest producer of natural gas liquids and third-largest operator of natural gas liquid pipelines in North America. The company announced a drive toward financial flexibility in its investments in a September 2015 company press release, as well as an effort to sell noncore assets.
Navitas Midstream Partners started construction in 2014 on a gathering and processing system in the Eagle Ford Shale, a major oil and gas vain in South Texas. The La Bahia system, as it's called, transfers gas from Brazos County to a plant in Grimes via a 20-inch pipeline. The Grimes County cryogenic plant included in construction is set to produce 120 million cubic feet of natural gas liquids per day.
Navitas, based in the The Woodlands, Texas, was founded in 2013. The following June it closed a private equity deal with Warburg Pincus for $500 million. According to its chief financial officer, James Wade, the company means to sidestep crude oil prices.