Delek Logistics will acquire Clearlake Capital Group-backed Gravity Water Midstream in a deal worth $285 million. Delek called the bolt-on deal synergistic to its recent acquisition of H2O Midstream and supplemental to its integrated crude and produced-water gathering and disposal offering in the Midland Basin. Delek expects the transaction to close during the first quarter of 2025.
Gravity Water Midstream provides gathering, transportation, recycling, storage, and disposal solutions for produced water in the Midland Basin in Texas and the Williston Basin in North Dakota. The company’s assets include a system comprised of 200-plus miles of permanent pipeline, 46 saltwater disposal facilities, and 14 freshwater facilities with over 6 million bbl of storage capacity.
“The acquisition of Gravity Water Midstream by Delek Logistics creates a path to continue to build incredible scale in our water midstream platform in the Midland Basin,” said Rob Rice, chief executive officer of Gravity. “Building this water midstream platform would not be possible without the incredible support and partnership of Clearlake. I am excited to welcome in this new era for water management in the Midland and Williston Basins under the capable leadership of Delek Logistics.”
Under the terms of the deal, Delek will pay $200 million in cash and $85 million in Delek units. While Gravity is divesting its water midstream assets, the company will retain ownership and operation of its power infrastructure assets.
Clearlake and Gravity partnered in 2017 to pursue produced-water midstream opportunities. Over the past several years, Gravity has focused on organically growing its water infrastructure business to support producers in the Midland and Williston basins, and its water business segment has grown into one of the largest commercial operators of disposal wells in the Midland Basin.
Separately, Delek also secured an additional 34,000-acreage dedication incremental to a previously announced 50,000-acreage dedication in the Midland Basin. The additional acreage improves the overall economics and opens the possibility of a cross commodity offering in the future. The addition takes total acreage dedication to Delek in the Midland Basin to 400,000. The latest acreage dedication is supported by the Delek Permian Gathering System located in west Texas.
