Kinetik Holdings Inc. entered agreements for around $1 billion to expand its New Mexico operations and footprint in Permian’s Delaware sub-basin.
The Permian Basin pure-play agreed to acquire Durango Midstream LLC for $315 million, with up to $75 million contingent on the final cost of Durango’s Kings Landing project in Eddy County, NM.
The 200 MMcf/d greenfield gas processing complex is currently under construction and has a scheduled completion date of April 2025.
Separately, Kinetik executed a new 15-year low-pressure and high-pressure gas gathering and processing (G&P) agreement with one of its largest customers. Kinetik said the unnamed customer has a substantial presence throughout Eddy County.
The Midland, TX-based operator was created last year in an all-stock transaction between EagleClaw Midstream and Altus Midstream. The combination created the third largest gas processor in the Permian and the largest in the Delaware, with 2 Bcf/d processing capacity, more than 470,000 hp of compression capacity and 90,000 bbl of crude storage.
When the deal is finalized, Kinetik would own and operate more than 2.4 Bcf/d of processing capacity in the Delaware and about 4,600 miles of pipelines across eight counties. The Durango assets are in Eddy, Lea and Chaves counties in New Mexico.
Additionally, the Durango acquisition and G&P agreement offer full control of plant products, including over 350 MMcf/d of residue gas and over 60,000 b/d of natural gas liquids.
These would provide “significant additional upside value via system optimization, modifications to existing commercial contracts, and integration with our pipeline transportation segment,” CEO Jamie Welch said.
This series of strategic transactions “further our expansion into New Mexico and significantly increase our footprint across the Northern Delaware Basin,” Welch said.
Kinetik also plans to sell its 16% stake in the Gulf Coast Express pipeline (GCX) for $540 million to fund a portion of the acquisition.
