NGL Energy Partners LP , Tulsa, Okla., (NYSE: NGL) has entered merger agreements with Denver-based High Sierra Energy LP and its general partner High Sierra Energy GP LLC for is $693 million in cash and equity.
NGL Energy will pay $150 million in cash and issue approximately $433 million in common units.
High Sierra Energy has three core business segments: crude oil gathering, transportation and marketing; water treatment, disposal, recycling and transportation; and natural gas liquids transportation and marketing. The crude oil segment handles approximately 50,000 barrels per day of crude and controls 32 pipeline injection facilities, three crude oil terminals (two of which provide barge service) and approximately 90 tractor-trailers.
The water services segment handles over 80,000 barrels per day of water through a 60,000 barrels per day recycling plant in the Pinedale Anticline of Wyoming; seven disposal plants (two of which include treating and recycling facilities) located in the Niobrara crude oil play in the DJ Basin; and a transportation and frac tank rental operation with 50 tractor trailers within the Mississippian lime crude oil play in Oklahoma and Kansas. The natural gas liquids transportation and marketing segment leases more than 2,000 rail cars, owns six transloaders and leases 4 rail sites to move approximately 45,000 barrels per day of natural gas liquids from coast to coast.
Pro forma, NGL will have four segments: water treatment, disposal, recycling and transportation; crude oil, gathering, transportation and marketing; gas liquids transportation and marketing; and retail propane.
NGL chief executive H. Michael Krimbill says, “Combining NGL and High Sierra creates a dynamic and diversified mid-cap MLP that will provide multiple services to upstream customers including water treatment and transportation, crude oil gathering, transportation and marketing as well as natural gas liquids transportation and marketing. With our combined fleet of more than 3,000 rail cars, 18 natural gas liquids terminals from coast to coast, three crude oil terminals, over 90 trucks, a substantial wholesale marketing and supply network plus retail demand in excess of 140 million gallons of propane annually, we will be a full service midstream solution for gas plant and fractionation operators, crude oil producers, refiners and retailers across the country.”
Robert W. Baird & Co. Inc. is financial advisor to NGL Energy Partners in the transaction, while Winston & Strawn LLP is legal counsel.
The deal is expected to close in early June.