Community Relations
EIG Global Energy Partners to partner with HM Capital Partners to grow San Antonio, Texas-based BlackBrush Oil & Gas, LP and TexStar Midstream Services, LP
EIG Global Energy Partners (“EIG”) and HM Capital Partners (“HM”) have jointly announced that they will form a new partnership to further grow San Antonio, Texas based BlackBrush Oil & Gas, LP and TexStar Midstream Services, LP. EIG managed funds have committed $420 million of capital for a controlling interest in the partnership with HM contributing its existing interest in BlackBrush Oil & Gas, LP and TexStar Midstream Services, LP. EIG’s commitment of $420 million is a combination of a $220 million equity commitment and a $200 million senior debt facility.
According to EIG Managing Director Curt Taylor “We are excited about the opportunity to partner and back the growth of both the existing upstream and midstream platforms in what is arguably the most exciting producing area in the Continental United States.”
Blackbrush Oil & Gas LP and TexStar Midstream Services, LP have been in the forefront in working the South Texas Eagle Ford which has the potential to be one of the largest crude-oil discoveries in the United States in the last 40 years. BlackBrush Oil & Gas, LP has 70,000 acres under lease in the Eagle Ford trend of South Texas while TexStar Midstream Services, LP has been rapidly 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.
“One cannot overestimate the importance of being properly capitalized in the development environment in South Texas today”, said BlackBrush Oil & Gas LP Co-CEO Scott Martin. “EIG brings both capital and technical expertise that we believe will be invaluable to our success and we look forward to a long and productive relationship.”
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. In addition, the EIG investment will also be used to continue the build out of TexStar Midstream Services, LP facilities which include low pressure sour gas gathering, treating and compression as well as oil pipelines and terminals.
It was recently announced that TexStar Midstream Services, LP plans to construct approximately 65 miles of pipeline, extending from the gathering assets of its affiliate, Frio LaSalle Pipeline, LP in Frio County to interconnect with the proposed NuStar facilities in Three Rivers, Texas. At least two truck loading facilities will be located along the pipeline to gather crude oil produced in Frio, La Salle, McMullen and Live Oak counties. An expansion of the FLP natural gas gathering system is currently underway in Frio and La Salle counties.
TexStar Midstream Services LP Co-CEO Phil Mezey notes “We have a first mover advantage with our existing sour gas facilities and find ourselves uniquely positioned to aggressively grow these assets and complement our suite of services to producers with the addition of strategically situated crude oil gathering. Both services provide much needed solutions that facilitate the continued growth of Eagle Ford production in South Texas.”
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.
According to Jason Downie, a Partner at HM Capital Partners, “We have long been believers in the management team and the asset base assembled under BlackBrush and TexStar. The welcome addition of EIG as a strategic partner helps to ensure continued success as we move toward our next phase of development in what we believe to be is one of the most exciting growth opportunities in the industry today.”
TexStar Midstream Services, LP provides a full range of midstream services to its customers including gathering, treating, and processing by reactivating idle pipelines and constructing new pipelines in South Texas. Currently, TexStar is rapidly 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. 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. This will access multiple pipelines with gas processing capabilities and new gas markets. This pipeline will also provide access for producers in Atascosa and McMullen Counties.
Additionally, TexStar is planning and acquiring lines to the Houston area. The oil gathering system will allow for not only lower gravity sour Eagle Ford crude, but also high gravity Eagle Ford condensate. TexStar plans on having this line in service in the second quarter of 2011.
BlackBrush Oil & Gas, LP is a San Antonio-based oil and gas exploration and development company with a solid track record of value creation and is constantly acquiring quality upstream assets. An active operator in South Texas with over 100,000 acres featuring 500 wells, two drilling rigs owned by affiliate companies, one workover rig owned by an affiliate company and operating over 80 miles of pipeline.
EIG Global Energy Partners, formerly the Energy & Infrastructure Group at Trust Company of the West (TCW), is a leading independent investor to the global energy sector. With 44 professionals solely dedicated to the sector, many with industry or technical backgrounds, EIG specializes in private investments in energy and energy-related infrastructure. During its 29-year history, EIG has invested $11 billion in the sector through more than 260 projects or companies in 33 countries on 6 continents. EIG currently has approximately $9 billion of assets under management and approximately $4 billion available for new investments. EIG’s clients include many leading institutional investors in the US, Asia and Europe. EIG is headquartered in Washington DC, with offices in Houston, New York, London and Sydney. Additional information is available on the company’s website: www.eigpartners.com.
HM Capital Partners is a sector-focused private equity firm that primarily makes control investments in the energy, food and media industries, where the Firm has extensive experience, expertise, relationships and access to differentiated deal flow. Since inception, the Firm has completed more than 150 transactions in these sectors for a total transaction value in excess of $26 billion.
This press release is current as of the date noted, and does not constitute an offer to sell or the solicitation of an offer to buy an interest in any investment fund. Moreover, any specific company or investment information detailed above should not be deemed as a recommendation to purchase or sell any securities or investments mentioned. Such offer or solicitation may only be made by means of delivery of a confidential private offering memorandum or other appropriate document which contains a description of the material terms (including risk factors, conflicts of interest, fees and charges) relating to such investment fund.