Kansas City-based Tallgrass Energy Partners LP just plunked down $95 million this week to expand its water infrastructure assets in the Bakken.
The company looks upon the purchase as a platform to build additional midstream business in the oil and gas play in North Dakota. Tallgrass , through its subsidiary BNN Water Solutions, LLC announced it acquired Buckhorn SWD Solutions, LLC and Buckhorn energy Services LLC. Buckhorn owned 10 salt water disposal wells and nearly 39 miles of produced water gathering infrastructure.
The system services nearly 133,000 dedicated acres for several producers in the Bakken including XTO Energy, Inc. BNN Water Solutions plans to spend another $45 million this year in expanding the system. It wants to be able to handle increased dedicated water volumes resulting from expected new drilling and completions. Tallgrass anticipates that once the expansion is completed, the total investment will approximate a five times cash flow multiple.
The acquisition also means BNN will now own and operate more than 230 miles of water supply and gathering pipelines, making it one of the largest independent operators of water infrastructure in the industry.
“The acquisition of this Bakken water infrastructure expands BNN’s footprint into another premier oil and gas producing region of the country, while establishing and expanding important customer relationships for BNN and Tallgrass,” said BNN Vice President and General Manager Jeff Nelson. “In addition, this acquisition provides Tallgrass with an opportunity to grow its midstream service offerings in the Bakken.”
Tallgrass has operations in eleven states including crude-carrying pipelines into Oklahoma.