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Lucid Energy to sell Delaware Basin subsidiary for $1.6bn

EBR Staff Writer Published 09 January 2018

Lucid Energy and its financial sponsor EnCap Flatrock Midstream have signed an agreement to sell Lucid Energy Group II, which has a portfolio of natural gas processing properties in the Delaware sub-basin of New Mexico, for $1.6bn.

Lucid Energy Group II will be acquired by a joint venture controlled by Riverstone Global Energy and Power Fund VI, an investment fund managed by Riverstone, and investment funds managed by the Merchant Banking Division (MBD) of The Goldman Sachs Group.

The investment funds managed by Goldman Sachs MBD include West Street Capital Partners VII, West Street Global Infrastructure Partners III, and West Street Energy Partners.

Upon completion of the deal, Lucid II will retain its name and operate as a Riverstone and Goldman Sachs MBD portfolio company.

Subject to customary approvals and closing conditions, the transaction is anticipated to be completed in the first quarter of 2018.

Lucid II operates the South Carlsbad Natural Gas Gathering and Processing System and the Artesia Natural Gas Gathering and Processing System located in the core of the northern Delaware Basin.

Lucid president and CEO Mike Latchem said:  “EnCap Flatrock Midstream has been instrumental in helping us acquire, expand and optimize the assets in our Agave transaction.

“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.”

The firm’s assets also include approximately 1,700 miles of natural gas gathering pipelines and 585 million cubic feet per day (MMcf/d) of processing capacity. It has an additional 200MMcf/d under construction and scheduled for commissioning by mid-2018.

Goldman Sachs managing director Scott Lebovitz said: “Goldman Sachs MBD is excited about the opportunity to partner with Lucid II to continue its growth as the leading independent gas gathering and processing business in the northern Delaware Basin.”