Lucid selling Delaware Basin unit to Riverstone, Goldman for $1.6B

Lucid Energy Group, which bills itself as the Permian Basin’s largest privately-held natural gas processor, and its financial sponsor, EnCap Flatrock Midstream, said Monday they’re selling Lucid Energy Group II for roughly $1.6 billion in cash.

The buyer is a joint venture controlled by investment fund Riverstone Global Energy and Power Fund VI, managed by Riverstone Holdings, and investment funds managed by Goldman Sachs’ Merchant Banking Division (MBD).

The Lucid II assets included in the transaction are located in the core of the northern Delaware Basin and are known as the South Carlsbad Natural Gas Gathering and Processing System, and the Artesia Natural Gas Gathering and Processing System.

Assets include roughly 1,700 miles of natural gas gathering pipelines and 585 million cubic feet per day (MMcf/d) of processing capacity, with an additional 200 MMcf/d under construction and scheduled to be in service by mid-2018.

“The South Carlsbad system has tremendous growth potential, and we are confident that Riverstone and Goldman Sachs MBD bring the right combination of financial strength and strategic experience we need to continue our pace of growth in Lucid II,” said Lucid president and CEO Mike Latchem.

Lucid II serves the region’s supermajor and independent oil and gas producers, which together have made long-term dedications and production volume commitments from roughly 450,000 acres spanning Eddy and Lea counties in southeast New Mexico, Kallanish Energy learns.

“Our firsthand knowledge of the Delaware Basin, experience as energy investors and access to capital uniquely qualify us to sponsor Lucid II’s continued growth,” said Baran Tekkora, Riverstone partner.

The transaction includes committed debt financing provided by investment bank Jefferies. Closing is expected in the first quarter of 2018. Lucid II will retain its name and operate as a Riverstone and Goldman Sachs MBD portfolio company. Members of the Lucid management team will remain in their current roles with Lucid II.

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