Water management

NGL Acquires Hillstone, Adds to Delaware Water Infrastructure

The $600-million deal sees NGL net around 580,000 B/D in disposal capacity and 680,000 B/D in transportation capacity via 19 saltwater disposal wells and a network of produced water pipelines. Hillstone also holds an aggregate of more than 110,000 acres in the Delaware Basin.

Water disposal facility
Hillstone Environmental

NGL Energy Partners will acquire Hillstone Environmental Partners, a provider of water pipeline and disposal infrastructure in the Delaware Basin, for approximately $600 million.

Hillstone’s core area of focus is on the state line area of New Mexico and Texas, in southern Eddy and Lea Counties in the former and northern Loving County in the latter. The company has a fully interconnected produced water pipeline transportation and disposal system, which currently consists of 19 saltwater disposal wells (representing approximately 580,000 B/D of permitted disposal capacity) and a network of produced water pipelines with approximately 680,000 B/D of transportation capacity. Hillstone also has an additional 22 permits to develop another 660,000 B/D of disposal capacity.

Hillstone’s assets will add 19 saltwater disposal wells with around 580,000 B/D of capacity and a network of produced water pipelines with around 680,000 B/D of transportation capacity to NGL’s infrastructure in the Delaware Basin. Source: NGL Energy Partners.

Multiple large-diameter pipelines deliver all of the water volumes on Hillstone’s Northern Delaware Basin system. The company has an aggregate of more than 110,000 acres contracted over long-term dedications.

“This transaction is highly complementary to our Delaware Basin asset footprint,” NGL 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, it also supports our ongoing strategy of increasing NGL’s cash flow predictability.”

NGL said it expects to integrate the Hillstone system into its existing Delaware Basin platform. Work is already underway to integrate the assets NGL acquired in a $892.5-million purchase of Mesquite Disposals in early July, a move that added more than 1 million B/D of disposal capacity over 35 disposal wells.

“The integration of the Mesquite assets is providing immediate benefit,” said Doug White, NGL executive vice president of water solutions.

The transaction is expected to close in 2019.