US firm backed by GIC-affliate raises US$345m for Permian expansion

[HOUSTON] WaterBridge Holdings LLC, a US company that handles water for the fracking industry, is scooping up more infrastructure in the Permian Basin, this time from private equity-backed drillers.

The closely held company has acquired almost 100 miles (161 kilometres) of pipeline and seven disposal wells from Primexx Energy Partners Ltd, Warburg Pincus's Tall City Exploration III LLC and Blackstone Energy Partners' Jetta Permian LP, according to people familiar with the matter, who asked not to be named because the information isn't yet public.

To finance those deals, WaterBridge issued US$195 million of common equity to private equity firm Five Point Energy, an affiliate of Singaporean sovereign wealth fund GIC Pte, and to its own management, the people said. It also issued US$150 million of preferred equity to Magnetar Capital, which has the right to acquire another US$100 million, they said.

While drilling activity in the Permian has been cooling in recent months, the business of supplying water to shale producers in the biggest US oil patch - and disposing of the wastewater - continues to attract private equity. Spending on oilfield water management in the US is forecast to average US$17 billion per year in 2019 through 2028, according to a recent report from Bluefield Research.

WaterBridge, which is backed by Five Point Energy, has signed deals with Permian operators including Concho Resources Inc, Halcon Resources Corp and PDC Energy. GIC acquired a minority stake in WaterBridge earlier this year in a deal that valued the company at about US$2.8 billion, a person familiar with the matter said at the time.

The latest acquisitions mean that WaterBridge now has long-term commitments for more than 600,000 acres (about 243,000 hectares) in the southern portion of the Permian's Delaware sub-basin.

BLOOMBERG